Thoughts on the Annual Scaleup Review: You can't complete the puzzle without all of the pieces
Three years ago serial entrepreneur Sherry Coutu (pictured below) published the Scaleup Report on UK Economic Growth.
Here, Sherry contended that the UK should turn its attention to company growth, in addition to company creation, to allow our economy to truly thrive through the production of a far greater proportion of scaleup companies.
Focussing on scaling companies, said Sherry, would drive an increase an increase in jobs, productivity and prosperity, so much so that even a 1% boost to the scaleup population would create 238,000 jobs and £225bn in GVA.
Last week Sherry and The Scaleup Institute launched the Annual Scaleup Review 2017, a report outlining how far the scaleup movement has come in the last few years as well as looking at what is to be done moving forward.
The work being done to identify, support and ultimately better the already-fastest growing amongst us is especially important as Britain prepares to navigate uncharted waters in the wake of Brexit.
I’d encourage anyone to read the report, the research collected really does provide a compelling nationwide picture. You can read it by clicking here.
| Context: What is a scaleup? | | Before we delve into the latest findings, let’s remind ourselves of exactly what scaleups are. | | Scaleups are enterprises with average annualised growth in employees (or in turnover) greater than 20 per cent a year over a three-year period, and with 10 or more employees at the beginning of the observation period. | | Increasing the number of scale-up businesses in a country boosts job creation and the economy as a whole to a greater extent than increasing the number of startups. | | The scaleup debate really gained momentum in 2014 with the Global Scale Up Declaration, which paved the way for the creation of the Scale Up Institute. | | The Institute is a private sector, not-for-profit company focused on making the UK the best place in the world to scale up a business, keeping scaleups and their issues at the top of the UK political and business agenda.
The government’s role
Attending the Annual Scaleup Conference last week, I was lucky enough to be privy to the report’s debrief first hand, alongside key stakeholder opinion.
There’s a plethora of points which I, alongside the rest of the attendees I’m sure, could talk about in fine detail although such would extend far beyond one article.
What I’m particularly keen to share is insights surrounding the government’s role in helping to propel the UK as a leading scaleup force on the world stage.
Early in the day Minister for Small Business Margot James (pictured below), who acts as the government’s scaleup champion, delivered a keynote speech reaffirming the government’s commitment to the scaleup initiative.
The UK is ranked as third in the world by the Organisation for Economic Cooperation and Development (OECD) for the amount of startups created although sits at thirteenth for scaleups.
The Minister conceded that ‘there is much more to be done’ to narrow the gap between the UK and the world’s leading scaleup countries, with ‘creating the right environment’ for such businesses to flourish a task of paramount important for the government.
Yet, in times of austerity and ever-tightening funds, what role can the government play in adding value to the nation’s scaleup momentum?
The answer, in fact, lies in facilitation over finance. It must help bring about conditions for the wider scaleup ecosystem to flourish and it’s crucial that we must understand this. Allow me to elaborate.
What’s clear is that the Institute has the government’s ear although, by government’s own admission, much more could and should be done to help facilitate the growth of the UK’s scaleup movement.
A good example of this rapport is the fact that the government has assigned Margot Jones, on the Institute’s recommendation, as its dedicated scaleup champion leading the Scaleup Taskforce.
Following the Minister’s speech, Camden Council Leader Georgia Gould (pictured below) shed light on how her borough’s scaleup ecosystem stands as a great example of a locality where collaboration breeds direct business growth. The report, too, emphasises Camden as a scaleup hotspot.
Similar to Margot James’ point, Georgia explained that in her role she acts as a connector and said that her biggest power lies in her ability to ‘be a convener’, making the introductions business’ need to conduct deals conducive to great.
BGF Chief Executive Stephen Welton (pictured below) echoed this sentiment in his keynote. Stephen contended that ‘the government can provide context and environment’, or ‘the boring technical things’ as he put it, to help stimulate scaleup growth. This is especially relevant in helping to identify current scaleups and those firms with the potential for high growth across the country.
Scaleups, like any-size business, face barriers to growth - something which the report analyses in great detail.
While funding is of course a crucial barrier to scaling, this is a problem where a multitude of different investors can provide solutions. Indeed we need to scale the UK’s investment infrastructure to truly flourish as a scaleup nation although this isn’t the area of the debate where the government can have the most effect.
Rather, access to markets, whether domestic or international, can be one of the biggest barriers for scaleups to overcome. This is where the government can come in, ie in opening doors to help create valuable business connections that companies can utilise to grow. Facilitation, not finance.
As the Conference progressed, I’d wondered why the Institute’s first 2017 recommendation (each report presents ten recommendations to overcoming challenges facing scaleups) was the same as last year. See below.
This recommendation, to both my surprise and disappointment, hadn’t been met by the government - hence its repeated inclusion.
With scaleups facing a multitude of barriers to growth, and remember we’re talking about the highest growing companies key to our overall economic success, bodies like the Institute must be armed with the most up to date data to effectively act.
Data holds the key
It’s important to clarify that scaleups remain an unfamiliar term to many, even still, in the business world. It’s imperative that the government grants this requested business classification top raise their profile and to further popularise the effort being made to multiply the nation’s high growth firms.
Along with the government allowing access to its database. the Institute can be more effective than ever before in its engagement with scaleup leaders and bolster its resources with greater effect.
In 2018, the Institute will continue to work with HMRC in utilising datasets to identify scaleups and engage in different strategies with their leaders. Such pilots will demonstrate the role of data in ultimately boosting productivity.
In Sherry’s closing comments at the conference, she provided insight into what next year has to bring. She reiterated that the UK can indeed become a world-revered scaleup nation but unlocking more data is crucial to this.
With the appropriate data, the Institute can create clusters across the country and look at further developing scaleup ecosystems at local levels, supporting the long term development of high growth firms.
‘Without the government unleashing this data we are blinded’ explained Sherry. The entrepreneur revealed that such information will eventually be released although there’s currently an 18 month delay before this comes into effect.
Indeed the government can be the conduit for us to truly become the scaleup nation we desire to be. It’s not expected to be a financier, it should be a facilitator. Releasing data holds the key to this. Only when this happens can we truly begin to close the scaleup gap.
You can’t complete the puzzle without all of the pieces.