Friday 15 May 2026 5:55 am
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Friday 15 May 2026 10:26 am
London wealth managers share prices fell amid political fallout
Repeat Entrepreneur Relief is proposed to strengthen the UK start-up ecosystem by incentivizing successful founders to reinvest their capital and expertise into the next generation of UK businesses, thereby addressing the domestic funding gap and creating a self-sustaining growth environment, says Zuleika SalterWhile the UK has long been recognised for its strength in innovation and start-upcreation, founder-led businesses here have historically found it more difficult toobtain the long-term domestic capital needed to help them scale into globallycompetitive firms. This trend means that companies are too often forced to raiselate-stage capital from US investors, relocate parts of their operations overseas, or betaken over earlier than intended. Yet, the funding gap often emerges much earlier in acompany’s lifecycle, with many UK VCs reluctant to invest before businesses havereached meaningful revenue milestones.It is within this broader debate around the UK’s growth environment that proposals forRepeat Entrepreneur Relief (reducing Capital Gains Tax to 10 per cent) have emerged.Advocates argue that the UK should incentivise founders to reinvest proceeds fromsuccessful exits into the next generation of UK businesses, encouraging more privatecapital to be contained within the domestic ecosystem. In doing so, the policy couldhelp correct one of the UK’s prolonged weaknesses: the failure to retain both capitaland entrepreneurial expertise within its growth economy.The value of such proposals extends beyond capital flowing back into UK start-ups.While these ecosystems would be stifled without investment, the bigger prize lies inencouraging exited founders to become active angel investors. For many start-ups,reaching the first £1 million in revenue can be one of the biggest hurdles, and this iswhere founder-angels can play a particularly valuable role. Having built businessesthemselves, they are often well placed to identify which early-stage companies havegenuine potential and to direct capital towards those most likely to scale. Alongsideproviding investment, they can pass on the hard-won lessons of building a business,helping new founders access commercial networks, break down barriers to growthand avoid common early-stage mistakes.Reinvest cultureThis reinvestment culture is the key factor that differentiates the gold standard ofgrowth economies, Silicon Valley, defined by an extraordinary density of repeatentrepreneurs. It became one of the earliest examples of entrepreneurial recycling,the ‘PayPal Mafia’, which contributed to companies including Tesla, Linkedin andYoutube. In facilitating founder-to-founder reinvestment, the UK could encourage asimilar environment of growth built upon accumulated expertise, shared commercialinsight and operational mentorship, strengthening the UK scale-up pipeline in turn.Cambridge, for example, has become such a hub for life sciences businesses.The introduction of a repeat entrepreneur relief is still subject to much conjectureand debate among investors and policymakers, with critics asserting that the UK’sstructural weaknesses, including shallow late-stage capital markets, regulatorybarriers and lower public market valuations compared to the US, cannot be solvedthrough targeted tax relief alone. Many are concerned that founder-led investmentcycles risk becoming insular, concentrating opportunities within existing well-established circles, instead of being accessible to the wider economy.However, it is critical not to understate the broader value that experienced founderscan contribute to stimulating innovation. The world’s most successful start-upeconomies have flourished not because of abundant capital in isolation, but becauseentrepreneurial success has continuously trickled down into the next generation offounders, mentors and investors. It is through this process that growth ecosystemsbecome self-sustaining.Ultimately, if the UK is serious about improving the growth environment for founder-led businesses, policy must stretch beyond attracting capital and towards retainingentrepreneurial experience within the domestic economy. Measures such as RepeatEntrepreneur Relief offer a practical example of how this can be achieved, byencouraging successful founders to reinvest both capital and expertise into the nextgeneration of businesses. Creating a culture of founder-to-founder reinvestmentcould play a significant role in ensuring that the British economy continuouslygenerates the next generation of scale up success stories.Zuleika Salter is partner at Cavendish
