We should make the UK a nature reserve for our fledgling apps
Britain has plenty of promising start-ups in the app economy. They could do with some nurturing, says Matthew Lynn.


Only a few months after its controversial float, the food-delivery company Deliveroo may be heading off the market again. Last week, its German rival Delivery Hero revealed it had taken a 5% stake in the business, sending the shares almost back up to the price they were listed at. A full-scale offer is not imminent, but it is hard to understand why you would want to own a twentieth of the loss-making Deliveroo unless you were planning an offer for the whole business. If it does eventually take the business over, it will be far from alone. Last year, its rival JustEat was folded into the Netherlands-based Takeaway and the merged company is now listed in Amsterdam. And last week, the US-based Gopuff, operating in the fast-growing instant delivery market, acquired the British start-up Dija, to add to its earlier acquisition of another UK start-up, Fancy.
Eat or get eaten
We can expect to see a lot more deals over the next couple of years. In most markets, the app economy only has space for one or two dominant players. There isn’t room on our phone screens for nine or ten ride-sharing apps, and few of us can be bothered to switch between different ones to get the best price. One, or at most two, is enough. The same is true for takeaways. Or come to think of it, for banking, or events, or buying a new car, or any of the other things we might do on our phone. In just about every sector, one global player is likely to emerge. The challenge for the UK is, how can we make sure that some of our emerging stars eat up their rivals before they get gobbled up themselves?
After all, Britain has plenty of emerging app-economy giants. In finance, there is Wise, Revolut and Monzo. In events, there is Hopin. In used cars, there is Cazoo. In insurance, there is Marshmallow, and in fashion, BooHoo and Asos. Overall, the UK now has more “unicorns”, as tech start-ups worth more than $1bn are known, than any rival apart from the US and China. But we need to make sure they can expand globally and don’t simply get acquired along the way. How could we do that?
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
First, the City needs to get behind them. Building a dominant global lead is almost certainly going to cost a lot of money. Local rivals may well have to be bought out in countries right around the world, and those acquisitions won’t be cheap. Losses at local subsidiaries may have to be carried for years before they ever turn a profit. It might end up costing £10bn, £20bn, or even £30bn to make that happen (Uber, for example, has raised $25bn to get to where it is and arguably it still doesn’t completely control the ride-sharing market). If so, the City should be willing to fund that, possibly in round after round of capital expansion, without complaining that the company burning through all that cash hasn’t generated any profits yet. The American capital markets have been very good at doing that, but the British less so.
Just a little bit of protection
Next, the government needs to discourage foreign bidders. No one would argue for an outright ban, or the brand of simplistic economic nationalism that the French specialise in. That would be a mistake, and over the next few years a number of promising British start-ups will inevitably get sold off. But the government could tilt the scales slightly against bidders from other countries. Regulators could scrutinise the deals more closely and throw up a few restrictions. Licensing rules could be tweaked and employment law changed to make it just slightly harder for a British firm to be bought. With a little more protection, a few of the UK start-ups would have a chance to get to the scale where they could start acquiring rivals.
Finally, the entrepreneurs need to show some courage and vision, and aim to build the Amazons of the next decade, and not just sell out at the first offer that comes along. And, perhaps more importantly, so do the investors. The London-based VC funds need to back companies for the long haul, even if it means they don’t make any quick profits.
Sign up for MoneyWeek's newsletters
Get the latest financial news, insights and expert analysis from our award-winning MoneyWeek team, to help you understand what really matters when it comes to your finances.
Matthew Lynn is a columnist for Bloomberg, and writes weekly commentary syndicated in papers such as the Daily Telegraph, Die Welt, the Sydney Morning Herald, the South China Morning Post and the Miami Herald. He is also an associate editor of Spectator Business, and a regular contributor to The Spectator. Before that, he worked for the business section of the Sunday Times for ten years.
He has written books on finance and financial topics, including Bust: Greece, The Euro and The Sovereign Debt Crisis and The Long Depression: The Slump of 2008 to 2031. Matthew is also the author of the Death Force series of military thrillers and the founder of Lume Books, an independent publisher.
-
What will the unravelling of US-China trade mean for the economy?
What will a US-China decoupling mean for the global economy?
-
Scottish Mortgage: why we’re turning to private companies and China for exceptional returns
When it comes to delivering growth, Scottish Mortgage will stop at no end in its hunt for exceptional long-term returns - this includes China, unicorn companies and sectors such as space exploration
-
Why did the government take over British Steel – and was it a good idea?
The government has stepped in to take control, not ownership, of British Steel, citing national security and other factors. But does that make sense?
-
'Rachel Reeves' plan to force pension funds into UK assets won't work'
Opinion Hustling pension fund cash into British assets sounds like a good idea. It would be better to make Britain an attractive place to invest, says Matthew Lynn
-
What caused the Birmingham bin strike – and what does it mean for British businesses?
The Birmingham bin strike is the fallout from an equal-pay claim brought by female cleaners. That bodes ill for the rest of British business
-
Supersonic travel: How China could 'leapfrog' US and Europe's commercial aviation industry
Opinion Innovation in commercial aviation has been stuck for 60 years. A commercial supersonic jet might be back on the market soon, but will China get there first?
-
How British businesses can tackle Trump's tariffs
The majority of British businesses are likely to take a hit from the chaos caused by Trump’s tariffs to reorder global trade. Companies in the firing line face some difficult decisions, says David Prosser
-
Trump wants to colonise Mars – will it happen?
Donald Trump wants to plant the US flag on Mars. Could humans really live there?
-
A new wealth tax is a terrible idea. The rich are already being hit by sneaky taxes – Merryn Somerset Webb
Opinion Ideologues want to squeeze more tax out of the rich with a wealth tax. They’re already wrung dry, says Merryn Somerset Webb
-
Why are energy bills so expensive in the UK?
Electricity bills in the UK are higher than in any comparable rich country. Some blame the net-zero zealotry of the government for that. What is really to blame for high energy bills?