In order to become a major financial hub, UK has very favorable foreign transaction laws.

A significant amount of British-domiciled capital is foreign originated but only parked in the UK because of strong contracts law and linkages to just about every major investable market.

This is both a boon and a curse, because why would you finance a $1M seed in London when you can deploy that same capital for a similar sized seed in Tel Aviv or New York and get a better return on investment by exiting or funding additional rounds.

There is no innovation ecosystem in the UK, and it's too late to build one because other markets are just too competitive at this point - India, Israel, Czechia, Poland, etc provide very competitive tax incentives and subsidizes for foreign R&D investment and have done so for decades now.

You might assume the answer is to add additional roadblocks, but that makes British financial services extremely non-competitive, and puts 2.5 million jobs (and voters) at risk.

This is the exact same trap that Singapore and Hong Kong has fallen into, and both are trying to minimize it by becoming the goto financial hubs for target startup scenes (China for Hong Kong, India+ASEAN for Singapore) and investing in foreign startups (eg. Temasek Holdings in Singapore).

The UK needs to do something similar - it needs to give up ambitions of being a peer of the "big boys" in innovation, and concentrate on becoming competitive in international dealmaking, maybe by making a public-private international VC fund like Temasek.

Baillie Gifford (HQed in Edinburgh) and Index Ventures (HQed in London) are competitive in Tech Growth Equity globally (and especially in the Bay). There's no reason there can't be more Baillie Giffords or Index Ventures in the UK.