British technology is being crippled by a lack of venture funding, according to a leading UK entrepreneur who made his fortune in Silicon Valley. TiVo founder Mike Ramsay says that a lack of cash is forcing inventors to lower their hopes and ambitions.
Edinburgh-raised Ramsay, who invented the trailblazing TV hard disk recorder the TiVo, told weekly technology podcast OUT-LAW Radio that a lack of investment forces inventors to trim their own sails before they have the chance to test out ideas.
"There's no question in my mind that the talent is here, the entrepreneurs are here, and they're every bit as passionate and smart and savvy as any of them in Silicon Valley," said Ramsay. "The issue is money. Sources of funding for young entrepreneurs are not nearly as fluid as they are back there."
"As a result I think companies that could be high potential are not able to raise the funds that they want, and they reset their expectations to something that fits with the funds that they can get, and if those expectations are below critical mass the company won't break out, and that's a shame," Ramsay said.
Ramsay said that UK business is awash with private equity funding, but that very little of it is available for start-up tech firms. "I think the money is there, it's just not applied to that type of activity. There's private equity out there but only a small portion of that goes to venture capital. I think it's much more fluid in the US," he said.
Ramsay worked at Hewlett-Packard after leaving Edinburgh University and moved with the company to Silicon Valley, where he eventually joined animation computer specialists Silicon Graphics.
He and Jim Barton left Silicon Graphics to form a company in the late 1990s and managed to raise $3 million in venture capital funding before even having a fixed business plan. The pair came up with the idea for the TiVo and faced extreme legal pressure from the television networks which believed their business was threatened by the machines' ability to fast-forward past advertising.
"There were all sorts of arguments about, 'your right to watch television in the United States is a right that is only granted if you watch the commercials,'" he said. "At the end of the day it was the Sony/Betamax ruling, that was a Supreme Court ruling, that came out of a lawsuit Sony was involved in when they first came out with the video recorder. The result of that ruling gave people freedom to record for personal use."
TiVo won its arguments and television networks eventually even invested in the company. "Over time they realised this was not a TiVo thing, we had created a DVR [digital video recorder] and it had a life of its own and it was going to exist independently of us. Over time the climate changed, but initially it was interesting."