British technology start-ups and smaller businesses have urged the new Prime Minister to tackle gaps in growth funding and avoid regulation that they say could favour larger competitors.

Members of the Association for Competitive Technology, a trade group representing start-ups, scale-ups and small and medium-sized technology companies, called on the government to make changes across financing, artificial intelligence, competition policy, intellectual property and online safety.

In a letter to Andy Burnham, the companies identified a particular shortage of finance between £350,000 and £1.5mn, which they argued was contributing to promising British technology businesses moving overseas to secure capital and expand.

The group called for greater funding opportunities for technology SMEs and more predictable merger regulation, arguing that uncertainty over potential acquisitions could discourage investors from backing start-ups at an earlier stage.

"For startups, a barrier to exit is a barrier to entry," the letter said, arguing that lengthy or unpredictable merger reviews could reduce investor appetite and leave founders with fewer routes to finance growth.

The companies also urged ministers to take a proportionate approach to artificial intelligence regulation. They said rules should focus on the risks associated with particular uses of AI rather than imposing broad requirements on the underlying technology.

Competition regulation was another concern. ACT members defended the role of curated digital marketplaces, including app stores, which they said provide smaller developers with payments, security, fraud prevention and distribution infrastructure that would otherwise be expensive to reproduce.

The letter warned against rules that automatically require sideloading or alternative marketplaces, arguing that smaller developers could face additional security and compliance costs.

Members also called for clearer rules governing standard-essential patents used in technologies such as Wi-Fi and 5G, with licensing based on fair, reasonable and non-discriminatory terms.

Online safety regulation should meanwhile avoid unnecessarily intrusive age-verification systems and measures that weaken end-to-end encryption, the group argued.

The companies said many of their proposals could be implemented without additional public spending or primary legislation.

They urged the new administration to build on its predecessor's technology policies while creating a regulatory environment in which British start-ups could "innovate, grow their businesses, and succeed right here in the UK".