Marcus Austin of techradar, quoting PwC:

“The perception divide between entrepreneurs and VCs has only widened in recent years. Many VCs argue that little has changed, apart from greater competition for funding. The right combination of a compelling idea, sustainable and scalable business model and a strong management team will still win investment. The more savvy entrepreneurs who we spoke to, readily accept that what can look like risk aversion on the part of UK-based investors is actually just sensible risk assessment.”

There is some truth in this statement, of course, but not enough to make it stand up to scrutiny. Silicon Valley VCs and angels do routinely invest in startups that would fail to raise any interest in the UK. Very few UK business angels would invest large amounts of money in silly startups.

Let’s take a concrete example: Instagram.

Instagram launched in October 2010. In March that year, with zero traction and no product. At the time, it was called Burbn and had grand ambitions to be an HTML5 version of foursquare.

Can you imagine this startup getting funded in the UK? Of course not. UK angels, whatever they may claim when talking to PwC, simply don’t have the stomach for these kinds of high-risk bets. As for UK VCs (since Burbn was seed-funded by VCs rather than angels), most of them pay only the most cursory of lip services to the idea of funding seed stage companies. They want to provide growth funding to companies with a proven product and traction, not fund hare-brained ideas like “an HTML5 version of Foursquare”.

It’s no surprise, then, that the UK doesn’t see a whole lot of $1bn exits. Are UK investors scared of investing? Compared to US investors, there’s little doubt that that’s the case.