Why entrepreneurs are leaving large firms to create start-ups

Elizabeth Varley, founder of TechHub, says that tech innovation is coming primarily from start-ups

More and more entrepreneurs are jumping ship from large enterprises to form their own businesses, according to the founder of TechHub, which provides networking opportunities and workspaces for tech entrepeneurs in London.

Innovation in areas such as the Internet of Things (IoT) and mobile payments is coming from start-ups more and more, Elizabeth Varley told IT Pro, and those start-ups are increasingly being formed by those leaving larger companies armed with their own ideas.

She said: "We often see that from people who have worked in corporates and industry for a while, who have identified a need or a problem. They leave and go and start up their own business to create the thing that fits that gap. Obviously that tends to be quite successful because they've very clearly identified the need.

"If they've worked in an enterprise product company, they understand the way that enterprise sales cycles work it's not the same as a small company or an individual. It can sometimes be a very lengthy process, so if you've already worked in that environment, that can really make a big difference to your success."

But large manufacturers and corporations are also acquiring start-up teams and their products, she added.

Speaking of the "aqui-hiring" trend in the business world, she said: "You look at companies like Google who are continually innovating, we don't think that's going to slow down. But more and more now you'll see some of the large companies acquiring small companies to either get access to their technology or to their team."

However, she added that the diaspora of talent from large companies is set to carry on, with skilled workers preferring to set out on their own to play a bigger role in their small firm than they can in an enterprise.

"We are going to continue to see people leaving larger companies because they want to start their own thing, both for lifestyle reasons but also because the pace of change you can effect as a small company is often hugely accelerated compared to what you can do as a small cog in a large company," Varley said.

"It's one of the reasons that we find out corporate partners want to work with us they want to tap into this innovation culture. Large companies are extremely risk averse, they make decisions by committee."

London has been a notable hub of innovation for the past few years, with a 75 per cent increase in the number of IT companies investing in the city's tech companies from abroad since 2010.

TechHub itself is expanding to meet growing demand for membership from entrepreneurs, with new premises in Boston and London opening this year, adding to its existing premises in Shoreditch, Swansea, Bangalore, Berlin, Boston, Bucharest and Riga.

Speaking to IT Pro, Guy Mucklow, co-founder and CEO of Postcode Anywhere and Big Data start-up Triggar, said: "The UK is at the forefront of global tech innovation, and in my view it is the small and medium-sized technology companies that are right at the cutting edge.

"We're seeing more and more industries being disrupted by challengers driven by technology, aided by lower barriers to entry and supported by a thriving ecosystem in which ambitious entrepreneurs can thrive."

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