Britain at Risk of Startup Brain Drain as Report Urges Action to Keep Young Founders in the UK

Britain risks losing a generation of young entrepreneurs to faster-moving global rivals as rising costs, sluggish regulation and tightening immigration rules make the UK an increasingly difficult place to start and scale a business, a new study has warned.

The study, Ambition Unlimited, published by the Young Entrepreneurs Forum - part of The Entrepreneurs Network - and launched in Parliament, concludes that the UK's startup ecosystem has become less competitive over the past five years, with hubs such as the US, UAE and Singapore drawing both talent and capital away from the UK.

Sean Kohli, Chair of the Young Entrepreneurs Forum, said much of Britain's entrepreneurial energy was being wasted because 'so many systems are not designed for modern startups'. He added that while the UK had a wealth of creativity and ambition, it risked losing that potential without stronger backing for young founders.

'If we get this right,' he said, 'the next generation of founders can drive a new era of growth and invention. They're ready to lead; we just need a country ready to back them.'

Among the report's main recommendations is the abolition of Stamp Duty on shares to make the UK a more attractive place to list by reducing the cost of capital and broadening the pool of domestic investors willing to back growing companies. The report argues that greater liquidity would strengthen Britain's markets, improve access to capital and help innovative firms scale at home.

Competitiveness in Decline

The report paints a stark picture of an economy losing its edge. Based on a nationwide survey of young founders and several in-depth case studies, it finds that early-stage investment has failed to keep pace with global competition.

Limits in the Enterprise Investment Scheme (EIS) and Seed Enterprise Investment Scheme (SEIS) have not been updated in line with inflation or rising startup costs, while regulation in high-growth industries such as AI, biotech and fintech was repeatedly cited as a brake on progress.

At the same time, tightening immigration rules are constraining Britain's talent pipeline, and universities, once regarded as the launchpads of British innovation, are struggling to keep up with international peers.

How to Turn Things Around

To reverse these trends, Ambition Unlimited sets out a series of reforms to strengthen the UK's startup ecosystem and help young founders thrive. At its core is a call to modernise the EIS and SEIS by raising investment limits, expanding eligibility and aligning reliefs with inflation to reflect market conditions.

Updating these schemes, the report argues, would unlock new private capital and make the UK a more attractive location for early-stage investment. It also urges regulatory reform to accelerate innovation, calling on the government to empower the new Regulatory Innovation Office to work across departments, cut duplication and help British startups bring breakthrough technologies to market more quickly.

On immigration, the Forum recommends keeping Britain open to high-skilled and promising talent, with visa pathways that are navigable and competitively priced, and recognising startup equity in lieu of salary where appropriate to attract founders and early employees.

The report further highlights the role of education and research in driving entrepreneurship, advocating a shift towards Professor's Privilege to give academics greater ownership of intellectual property, and embedding entrepreneurship across the education system to inspire more graduates to build and scale businesses.

It also calls for a stronger entrepreneurial culture that celebrates ambition, learns from failure and supports today's founders as the role models who will inspire those of tomorrow.

Kohli described Ambition Unlimited as 'a report not about pessimism, but about potential', arguing that young entrepreneurs could lead 'a new era of growth and invention' if given the right conditions to succeed.

Eamonn Ives warned that the UK risked being overtaken by faster-moving rivals, saying 'the strength of Britain's economic future hinges on its ability to allow young founders to flourish'.

He added that Britain already 'gets a lot of the hard stuff right' when it comes to nurturing entrepreneurship, but cautioned that 'with other nations quickly catching up, we cannot afford to get complacent'.