E576 | Dom Hallas, Startup Coalition: Founder-Led Policy & The Startup Coalition's Fight for European Tech

25:32And so actually, in those cases, it's much more about how do you continually spotlight this story and keep the people who are responsible for the change as feet to the fire and keep kind of creating that burning platform necessary for government to move the process to the next stage or whatever. that. And then the other kind of issue, which is a bit more short-termist, which can be either in response to a particular issue, like a reactive policy problem, or just simply that, as I always say, the tides of policy then are suddenly going for you and you have an opportunity to have a big impact on a wide range of issues or an individual issue because the opportunity is presenting itself.

26:12So as an example, right now, the British government is looking at a whole swathe of regulatory reforms because they're in a very difficult fiscal position that the sort of tax environment is tricky for them and so that the solution to the sort of growth that they need in the economy they think will come from cutting red tape and looking at bureaucracy and so it's okay great we will go out and we'll find all these issues that are impacting startups that we think are regulatory issues and we'll see how many of them we can then funnel to the government to try and address now obviously that's an issue that you know was that is that been permanently the thing that we spend all day thinking about like not necessarily because these might be like really small changes but if there's an opportunity to go and do it we'll take as much as we can get and so it's kind of like having that level of flexibility about how we think about it but but treating it as an exercise in you know how much can we get basically dom i used to be student president at my university back in the days um was that was that a popularity contrast andrea so when you just Yes, it was.

27:08Everyone picked the guy with the best hair. Everyone voted for me, of course. No, but when we did, when we, I'm trying to draw a parallel here between how your organization is built and how you try and influence versus then this setup. If I describe this setup, every year we'd pick another student president. I think I was two years. The board would kind of, we come together, the annual assembly would say, okay, these are the agenda points for the year. And then we'd also have a national assembly that we would also be meeting in where on the national level, we'd be defining what should be the politics or the policy that would represent the students on a national level.

27:52And then this would kind of be the flow. And then of course, you'd also be reactive to what did the university want? What did the politicians want? How does the annual wheel of the start of coalition look like is that dom hallis or or is that is that so so i think it comes back to there are a set of issues that you know we spend every day talking to fans right and consistently they tell us broadly speaking what the issues in the ecosystem are which are roughly in the three buckets that i outlined right as in and our good our job is to go out and improve the environment for those things. That then can mean different things in different years, because there might be a different government priority on the table.

28:35The environment for companies might change. You know, like, for example, you weren't talking about the AI Act or AI regulation in the UK or whatever five years ago. That wasn't under discussion, right? But it is now. You know, and ditto, like we were talking about potential changes to the GDPR five years ago, because they just come in and like, you know, again, in the UK, you know, so there's all these things that naturally move, right? That are outside of our control. But we'll go in sort of on the basis of that understanding and all the conversations that we have and the relationship that we have with the sort of 3 ,000 plus companies in our community.

29:07We'll go out and build a set of policy agendas and we'll be like, we think that this is an opportunity now or we think this is something we want to make progress on this year. We'll also talk to the government, right? As in we'll be quite proactive about trying to co-create things that they're interested in doing. Like there's no point in thinking about it as a one-way process. actually, I always say our job is to translate between both sides. And if we don't get what the government's priorities are, then we're not going to achieve policy change. And then we have, you know, we have a board overseas, my work, but also a whole swath of founders who care about it.

29:35And we'll go out and censor the things that we're committed with and thinking about. And we'll go and solicit ideas and be like, well, you know, what do you care about? What would solve your problem? And so it's quite an organic process, actually. It's not necessarily a kind of we set a strategy at the start of the year. And then we look at the end and we'd be like, did we achieve bit. And one of the reasons why we don't do that, and one of the reasons why I think policy is quite difficult to KPI for want of a better description, is that it's more art than science, right? Like, as in, it's actually a much more nuanced process than people think.

30:06And I think that, you know, our biggest wins as an organization have been to reactive events in individual moments that then you can have huge impacts. And like, you can't have planned for that. Like, as in, And there's no way. What you can do is have built a reputation of trust within the community and then with your stakeholders on the other side in government or anyone else that's necessary in order for it to be that in that moment you are trusted as an advocate and you're trusted to have relationships. So that's necessary. But the sense in which it's all planned out, it's like we do do some of that, but it's not.

30:42It's genuinely quite difficult to be like, what's the year ahead? So it's a bit more flexible, but that's sort of generally For our audience, both as UK domiciled funds and European domiciled funds, how do they best engage with the startup coalition to either influence where you focus or just get involved in the work you do? Yeah, I mean, come and have a chat, right? As in where the team's really open, both myself, you know, I'm always happy to chat to people. And I'm sure that if they ever got in touch with you, Andres, you'd happily pass them on. but like you know i'm around and on socials and stuff and always have to equally equally so whether you're uk or denmark based yeah 100 right like i mean i think from our perspective like you know there's two things first of all we have a bunch of relationships with places and and orgs that are building stuff you know you know a lot of them as well and in different parts of europe and and from from our point of view like we've always seen one of the reasons why we care about european policy deeply not just because i used to learn in brussels and think it's important it's precisely because the UK, in addition to being the largest technology hub in Europe, in particular on venture capital, it's the home of European venture capital, right?

31:49And I think that these things have huge knock-on effects regardless of the ecosystems. And so we kind of collaborate really closely with our counterparts in different countries and where they're better placed to talk to you about a thing, I'll pass them on. But in truth, if anybody's reaching out to us, probably knows the org in their country, it should be said hi anyway. But we're always really interested in having those because that's like the starting point. But if there are particular, the other way in, and I think this is a lot of what we end up doing is people come to us with a problem, right?

32:19You know, one of the things about our org and orgs like it is for the most part, you're not needed, this is a good thing, you're not needed unless like there's an actual issue. You know, most founders don't want to think about policy that much, right? As in, you know, and thank God, frankly, like as in, because when you meet founders that are obsessed with policy, they're usually a little bit estranged. And it's like, you know what I mean? spend all their time doing politics, right? That would be a really strange thing. So in reality, they'll come and they'll be like, this thing's in my way, or our company's having this issue, or one of my poor co-hosts has an issue with this.

32:52And that's great for us, because we're there to solve this problem. So that's the sort of starting point for other conversations. All right, then now let's shift the conversation to a little more topical one, not just startup coalition focused, but where do you see the European tech landscape being today? We've never seen more turbulence we've never had a time where there's more moving what is the first thing that you think of when i ask you where are we today in the european tech ecosystem yeah i say i mean we're in a strange time right i i i sort of feel like it's a simpsons meme to say that we're at crossroads but and but we're at crossroads right you can see i was talking to a friend in germany who said that german foreign policy had changed more in three three years so three weeks than they had changed in 30 years.

33:39And I think you see this huge shift in the way in which governments are thinking about what the global landscape for their economy, but also foreign policy and security means now in the context of the shift in sands, particularly in the United States, but not just there, but the knock-on effects of the tariffs and things like that and what that means. I think that for technology and for the ecosystems, this um so startups and investors and innovators actually almost always thrive in a situation where there's flux right as in like one you know they're often best placed to take advantage of change that's not always the case and things can still you know go wrong but but ultimately like the ability to react quickly to to the changing environment is something that is a real strength of innovative businesses and entrepreneurs there is looking at the landscape clear opportunities and clear kind of changes that are happening that it's logical for the community to lean into.

34:37And there's also then clear kind of stories that we need to tell to say to governments, like, don't overreact to this because like, this is why we still need X or we still need Y, right? For example, on security and defense, obviously now there's going to be a push towards understanding what more sovereign capability in Europe would look like, whether that's a sort of very defined kind of domestic version of sovereignty, but actually much more likely a kind of pan-European sense of what sovereignty looks like. And clearly, that's a story that a lot of innovative businesses can lean into and is of huge value.

35:10Likewise, in terms of the opportunity landscape, right now you have a science funding landscape in the US in particular, where you're seeing huge cuts and changes in the environment for universities, of which the Americans have got a lot of the best ones in the world, really materially changing. now the uk in particular but europe in general uk has an amazing higher education sector and you know innovative sort of um foundational science sector that could be huge beneficiaries of that right ultimately if we like think carefully about how we attract the kind of people who are being pushed away by the american administration's approach to science like there's there's amazing chances from that and so i think there's kind of obvious stories there first of all but then the flip side of that and i think this is is reflected in the uk but but also elsewhere is understanding like right now for the kind of venture-backed ecosystem in the UK, around two-thirds of the capital comes from overseas.

36:02The largest proportion of that is from the United States. And so ultimately, what does that mean for our economy and how do we make sure that we maintain the most logical relationship in so many different ways? It still matters, right? We know it still matters. I think from a UK government perspective, but I think also from a European-wide perspective, people have managed to maintain thus far that sort of sensible balance in that conversation and understand that you know these relationships have to be sort of carefully managed regardless of what's going on and long may that continue ultimately that's the i think that's the name of the game for the foreseeable future but for founders it's like okay well what what does that mean for me like potentially some opportunity potentially some downsides and you know oftentimes it's a question of who reacts the best to those and who reacts the quickest and you know i would always put my money in startups on that situation.

36:53You described it before the three pillars, the talent, the finance and the regulation pillars. Where in each of those are you focusing right now? What are the core agenda points you're driving forward as the startup coalition? Yeah. So on talent, it's a couple of things. The first is domestic talent base here in the UK and how do we incentivize and keep the most talented people here? And so whether that's looking at things like share options reform, where we want to make sure that employees are the best incentivized they can be. And we have systems that are competitive as they have been in the past.

37:27Here we have a thing called the Enterprise Management Incentive, EMI, which is a pretty good tax incentivized stock option scheme, but we want to make it even better. Then on the other side of the talent is often immigration policy stuff and understanding how we can attract the best and brightest to the UK to build. Again, like if you look at all the data, about 40 % of unicorn founders in the UK are from overseas. We've been a traditional kind of importer of talent on technology for a long time. In a way, that's been hugely beneficial to our economy and in particular to our tech ecosystem. So how do we make the system much more functional?

38:00Because actually the policy itself isn't necessarily keeping people out anymore. Generally speaking, people can get visas. The problem is that the bureaucracy of the system is absolutely atrocious. And so the ability to kind of make that more functional. So that's probably the base one on the talent side. and then a couple of bits like the science stuff I'm looking for and how we track the sort of top, top tier time. Can I ask you just because this is one thing that I was thinking about, and of course I was thinking about this because I just did the conversation with Andreas Klinger, but is there a playbook around what was done with EU Inc and also with the not optional work that was done by Index and others earlier?

38:37Do you see a playbook that we can more efficiently run when it comes to doing this? And do you see a role for the startup coalition in doing that? So I think that's, like I said, I treat it as like different issues need different approaches. Because absolutely. And, you know, for example, even literally who has responsibility, right? So if you take immigration policy, that's always going to be dealt with at national level, regardless of within the EU, regardless of how much power the EU has, right? And so the question is then, actually what approaches work in different places? And, you know, how do we collectively as, you know, an ecosystem, and sort of European sense, but also like myself and my counterparts in other places, like learn from each other what the best approaches are.

39:20And then how do we tailor those to our different national jurisdictions or to that kind of pan-European conversation? And so I think that it's not necessarily like, like I said, if you treat it less as like there is a model that can be replicated and more like there is a toolbox that we have to understand and the different tools can be utilized on different topics. I think that's definitely true. So there's clearly models that can be thought about and stolen from other people. I always say that when I went to Bloomberg Philanthropies, we did a lot of work on urban innovation. And one of the things that Mike Bloomberg really cared about was copying people's policy ideas is not a bad thing.

39:56That's a great thing. And it's like stealing the best ideas. That is what you should do. And so actually in truth, when politicians steal my ideas, I'm fucking delighted. And it's like, that's what I willing to do. And it's like, so I think we always need to do a little bit more of that from each other and learn more works for sure. I just wanted to say one thing. I obviously asked this question because I want everyone that's listening in to understand how you work and so on. And my question here is obviously, well, the startup coalition won't be running an EO Inc. initiative inside of itself because it can't.

40:33That would be incepted within or with good work from the startup coalition. But then it would be spun out as something that's run by another group still with association. And I really think that there's a beautiful power in that. And I just wanted to say to everyone, just a couple of weeks ago, you and I spoke and I said, I think we need a pan-European summit happening around this topic of how do we get tech more involved. and you're like all ears, you're all open, you're leaning in and we're hopefully doing it in Q4 this year. So I think that that is exactly how I want everyone to hear that you can actually engage with you.

41:15So if you have an agenda point within the, if you think that there's a big opportunity in getting the talent that's now trying to flee the States, well, maybe Startup Coalition might be the place where you should say, I would love to work on this, but I'm alone. I'm the only one. and might this be a home for it? 100%. Yeah. And I think in two different ways, right? The first, like I said, if it's that you've got some great org that's doing stuff that we have in our kind of community and network and you come to me and you say, oh, I'm an Irish founder and I'm doing actual Y. Like, look, like Martina at Scale Island who's a dear friend and like is doing awesome work.

41:53It's like, so actually quite often, frankly, we'll be like, there you go, go speak to her. Like she's building something out that's really great. And then what we're thinking about and kind of trying to collectively deal with a lot of different orgs and the conversations we're having is understand how best to translate that and both create that toolbox that then can be leveraged by others as best possible, but also then think about what the bigger national, sort of the bigger pan-national story is and how we best tie it together with EU Inc and all the amazing work that loads of other people have been doing over a number of years in different places.

42:21And so I think that's really what we're starting to think about a lot more is like, what are the best kind of mechanisms for doing that and ways of doing it? and I don't think there's any single right answer. I think a lot of people have done interesting stuff already and so we're trying to learn from what's going on. Let's flip to finance then, the second leg. Tell me, what are you focusing on right now when it comes to finance? Yeah, so it's a few different things. The first is there's a really sort of specific challenge in the UK where the tax environment for founders is becoming more difficult, taxes are going up, whether that's on capital gains, which really matters because people are fleeing the country or individual or what was entrepreneur's relief in the UK but also carried interest, which has a big impact on the venture capital environment.

43:02And so we're doing some sort of really detailed work on that. And what I would characterize as kind of UK competitiveness, for want of a better description, which is like, how do we make sure that we're able to compete? And I actually think this is a broader, where the broader European story matters, which is ultimately where these people are going for the most part is not, they're not going to Germany, right? They're going to one of two places. They're either going to Dubai, like where they had 0 % capital gains. And like quite often, people have already made their money. or they're going to the United States because they can raise money from the deeper pools of capital.

43:32And so I think understanding what it means and how not just the UK but European governments in general can create a package and a sort of environment in which those most innovative and exciting businesses are able to stay here and build here and then grow here will really, really matter. So that's one side of it. But then there's obviously this sort of second conversation around late-stage capital in particular and ensuring that that all flows down from all UK pension funds, but European pension funds in general, investing in venture in the right way. And thus far, the answer has been no, and we need the answer to be yes.

44:07So like the significant amount of work to be done there and significant amount of push required. And that's been an ongoing process for a long time, but it's still an awfully wrong way to go. And the third, and I think this is sort of slightly different and more nuanced, is just we have a big project called Funding the Underfunded, which is all about understanding in the UK context, which are the founders that don't typically have access to capital at the moment, and why is that the case, and what can we do about it? So there's four distinct groups in our mind. There's female founders, where the data we know is absolutely horrible in comparison to male founders.

44:43There are ethnic minority founders in the UK, where again, the data is pretty shocking based on racial diversity. There's what in the UK we call regional founders, but basically founders outside London and the Southeast, the kind of gold triangle where I'm from the North of England, the truth is actually it's much, much, much harder to raise capital there than it is if you're based in London. And then the fourth group, which is a very British problem actually, which is working class founders, right? Is that in the class system runs still pretty strong in the UK and understanding what that means for how you think about building businesses and who can access the capital to build businesses.

45:13And so there's not just a clear policy work there as well. So that's probably like the biggest things. but yeah like ultimately that's the kind of overall environment for for raising money is is where there's sort of core priorities for this it's funny do you recognize working class as a british issue so to say because i think it's definitely a broader problem i think that we probably articulate it in that way in a sort of distinct category in the uk context but but i have no doubt whatsoever i mean you know you can go anywhere and what we're really fundamentally talking about privilege in all its forms right and ultimately like you know it might be that i think when we say working class part of the reason why we do that is like you know it's it's sort of tinged with economic privilege for once of a better description but it's not just about economic privilege in the uk there is something distinct about about like class system here but but ultimately like of course economic privilege is hugely beneficial and like ultimately if you're you know if you're sort of from a lower economic decile then you're it's much harder for you to access the support you need and raise capital you need.

46:16So I think that it's clearly something that cuts across different countries. It's just maybe the language that's different in the UK. Yeah, I get that 100%. And then finally, let's move to it really quick so we make it the regulation part. Where are you focusing right now? I talked a little bit earlier about the where can we push hard to sort of roll back some of the things that are obviously in Favre's way. In the UK, that looks a couple of different ways. It looks like a thing called the Regulatory Innovation Office that the British government is bringing in and the opportunities to use that as a kind of cudgel to identify the areas of where barriers exist and address them clearly and make sure that regulators are moving fast to understand what companies are trying to do.

47:01So that's kind of the micro intervention version of it. It's identifying really particular markets like, okay, we're going to make sure that people can build cultivated meat startups here, right? And it's like, what does that require? It requires the UK Food Standards Agency to understand how to more effectively build mechanisms to allow approval of cultivated meat startups, right? And it's like, that's niche, but those things matter. And there'll be 101 of those. And we need to kind of go and tackle those micro battles in order to win the World War. And then there are the big chunky questions around access to some of the things that matter most, whether that's like data policy.

47:36So in the UK, there's a new data use and access bill that's really significant, but also this new national data library, which is given the data to build businesses. There is a conversation, obviously, in the sort of EU level then about GPR reform and the potential impacts of that as well. So that's kind of a pan-manacal conversation at this point around the way in which data would be used or not used. Then there's AI regulation discussion. So again, at European level, this conversation has been hard, but now we're going to be having it again, probably the next 15 years will be a permanent discussion.

48:06In the UK, we're sort of starting to have some of those, like, will there be a bill? Will there not be a bill? What does that mean? Discussion suit. So that's sort of inevitable as well. And then the other one that's really material without getting into the weeds of some of the verticals where we do significantly more work and there's what's going on is around procurement. And ultimately, how do we think about the environment, the support that government can give in terms of, frankly, they're paying for services and goods that hasn't been as effectively leveraged in the past. and it's resulting in both as a citizen and me getting pretty crappy public services and pretty poor outcomes, both in terms of financial and literal, but also then the founders themselves not having the opportunity to produce the kind of public service to the scale that our country would need.

48:53And so they're the sort of obvious places to look, but there's a million and one things to address. You know, like my team, we've got a team of 12 and we spend like all day obsessing about like random little stuff that we can fix. So I could talk you off of this stuff. Well, but that's the beautiful thing about organizations like yours. It's incredible the passion that is within the employee base of these organizations. I am always inspired by whenever I meet them, it is quite like meeting a startup because people are so passionate. I want to ask you one final question. And we had a VC on the podcast recently, ended up talking about regulatory capture.

49:38And I've often been on my way to ask ChetGPT to do a deep research report for me on regulatory capture in Europe, because it's not something we hear much about. But this VC ended up saying, and because I'm using the words here and I won't name him because I might be saying something that he didn't mean exactly. Though I did ask, do you mean to say this is actual straight up regulatory captain? He said, absolutely. The case here was in the AgTech space that he was basically seeing that the established players would be sandbacking or drowning the field for new applications so that all the new starters that would come in with new patent filings and so on would not be able to get them through because the large organizations had flooded the system with applications for shit they know they won't get through and thousands and thousands almost of versions of almost the same thing because they know that it blocks anything new to come through.

50:47What's the level to which you've seen this type of issues in Europe and the UK? Now you've been close to the EU as well, so interested to hear what you see there. So I think the best way of putting it is that, look, it certainly exists. And now I view that as, you know, that's very unsurprising that it exists. I know that sounds really stupid. It's like, you know, shock horror, like a large business would use all the tools at its disposal to keep its market position. actually quite often what we find is it definitely exists in the technology space and that's why there's so many kind of conversations happening around competition reform and you know it's been a live agenda for a long time you know we have a relatively nuanced viewer competition at the startup coalition like in that we want to make sure these problems are addressed but actually what we find is founders also quite like exits so quite like you know and that's the the tension that you face right but um but you know clearly there's there's a lot of issues there there's also just a load of issues in the wider economy right which is like people don't talk about as much because it's not as sexy as it has been to talk about technology for the past decade.

51:45But we polled VCs on this, I think, a few years ago. And we said, you know, what are the biggest competition policy problems? And it was about 20 % of them said, you know, a lot of big sort of tech companies. And 80 % said, like, oh, no, it was like the analog incumbents of the issue. You know, like, and it's like, and actually, so it really depends. Like, the dumb example, this is the word off the top of my head, was a founder who was building a business in the vet space in the UK. So like, you know, pet care, basically. And the regulator, the Royal College of Veterinary Surgeons, it's called.

52:16It's like a sort of very traditional British institution, which is run by like basically old vets, right? And so it's like they were building an innovative technology solution to this market that was like kind of like Babylon for pets, basically. So it was like a school for a video doctor for pets. And funnily enough, the old vets who owned all the other vet practices didn't like this. You know what I mean? And it was like, and it meant that the regulator was not happy with them. And I think so it's natural. That's the thing that we're going to see over and over, ultimately. That's the reality.

52:47And I think that the challenge for founders is twofold. One is, what's the solution to the problem, basically? And I think that in many cases, quite rightfully, the answer is we work out how to plow through. To sort of give an example of that in some form is actually what you've seen originally, the playbook built in the States from places like Uber, right? Which is like, we're going to operate in the gray area and we're going to build this thing. And we're going to build it so big and we're going to make our product so great that like, the truth is like, it will not be displaced regardless of how unhappy people are about, you know, and that sort of incumbent interest is about what we're doing.

53:25Now that works when you're in the kind of regulated market that, that, that was. And frankly, even at the time, technology was treated differently, but you can't do that if you're building your medical devices, right? You know what I mean? It's not going to play in the same way. So you have to be a bit more careful. There's different approaches for different minds. It's all going to be complicated. But ultimately, I always say that policy and a policy solution to the problem is often much more sensibly the last resort to these conversations. Because it's slow. It takes time. sometimes the government wants to pull a lever, but actually the lever they're pulling isn't, you know, the exact right answer to the question because it's impossible for government to solve the problem in that way.

54:09And, and, you know, it's genuinely hard. Like if you're seeking this, you know, you only have to look at competition policy, you're seeking a solution in competition policy. It'll take you a decade, right? Like, and I think in truth, like for the most part for founders, almost always the Occam's razor solution is like, what's the version that I can build and And how do I operate within the market as best possible? And how do I do the next thing? And it's like, so the market is stats games we as currently structured. How do I do the next thing? And one of the things that we're really focused on is making sure that our work on regulation is driven around clearing the way for the next thing.

54:46This isn't, you know, how do I compete to build the best, you know, the fastest horse? It's like, no, no, no. How do I build a car? Right? And I think that that's the sort of thing that makes most sense from a company perspective. And then the regulators will deal with some bashing on the head. I think that is the perfect place to close this conversation. The regulators will bash them on the head. Tom, thank you for giving me that one line. And to stop on, thank you for doing all the hard work you're doing for the UK and the European startup scene. Awesome. Thanks very much, Alan. Appreciate it.

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