Our secret weapon for attracting world-class tech talent is broken

Published in The Times on 5 June 2025

Guy Podjarny knows better than most about the ups and downs of building a business from Britain. When he founded the cybersecurity firm Snyk in 2015 in London and Tel Aviv, the Enterprise Management Incentive scheme (EMI) was his secret weapon for attracting world-class talent. The EMI let Podjarny’s cash-strapped start-up offer tax-efficient equity stakes, giving his UK-based employees a slice of the pie if Snyk succeeded.

Today, though, Podjarny faces a cruel irony. Snyk is a global success story, most recently valued at $7.4 billion. Yet Podjarny’s new start-up, Tessl — an AI-native software development platform that he founded last year — is locked out of the scheme that contributed to Snyk’s success. Having raised $125 million in funding, Tessl can’t use the EMI because of its arbitrary £30 million asset cap, which is unchanged since 2012.

This is economic self-harm. In the global war for talent, British start-ups are fighting with one hand tied behind their backs. While the UK excels at nurturing innovative businesses, Tessl’s predicament shows how we abandon our best entrepreneurs, just as they’re poised to achieve global scale. The government likes to talk about building a homegrown Silicon Valley, yet while ministers debate billion-pound infrastructure projects, three simple policy changes could unlock Britain’s tech potential immediately.

First, we must modernise EMI for the AI-age. The current thresholds — 10 years, 250 employees and £30 million in assets — were designed for a time when start-ups exited within seven to eight years. Today is starkly different: AI start-ups require larger funding rounds due to compute costs and higher salaries for AI talent, while the average time to exit has stretched beyond 12 years. Tom Leathes, the chief executive of online used car marketplace Motorway, has advocated strongly for changes to protect his loyal and longer-tenured staff from a possible EMI options cliff-edge.

What’s more, arcane rules make it hard for employers to revise their EMI schemes to let employees take any money off the table tax-efficiently in secondary sales. This traps working people in a decade-long gamble, where fair financial reward depends on a single exit that might never materialise. Beyond protecting current employees, attractive EMI schemes are crucial for recruitment. When top talent chooses between major corporate players and scale-ups, outdated equity incentives can tip the balance away from Britain’s most promising companies.

Thankfully, the solutions are straightforward: raise the asset thresholds to £200 million and employee limits to 1,000; extend EMI’s duration to 15 years; and allow post-facto scheme modifications for secondary share sales. These changes would immediately level the playing field for Britain’s most ambitious ventures.

Second, Britain should incentivise software investments, not just investment in physical infrastructure. The current policy of full expensing allows companies to write off capital expenditures against tax, which the Office for Budget Responsibility estimates will boost investment by £3 billion annually. Yet in a digital economy, software — not machinery — increasingly drives productivity and innovation. Extending these incentives to software spending would deliver a triple dividend: give big corporations a productivity boost, accelerate tech adoption, and provide start-ups with a domestic income stream. Today, most have to chase that revenue with customers in the US.

Third, the UK should do its part to eliminate cross-border friction for start-ups. The EU Inc movement and petition — signed by over 16,000 tech leaders, including founders and executives from companies such as Revolut, Supercell and Wise — is calling for a single pan-European legal entity. We are working with the European Commission on proposals expected by the first quarter of next year, which is a pivotal opportunity for regulatory alignment. Similarly, the UK and US should fast-track and simplify start-up visas, ensure mutual recognition of stock option regimes, and avoid penalising employees who move internationally. Advocating to remove these friction points is critical to enabling the next generation of start-ups to scale globally.

The stakes are high. Countries that build and retain the world-leading technology companies of tomorrow will define the century’s economic landscape. Britain possesses genuine advantages, including world-class universities and a thriving tech ecosystem. But these are being eroded by policy frameworks fashioned for a different era. The fixes require no new spending, no major legislation — just recognition that our most promising companies, such as Tessl, shouldn’t be punished for their ambition.