Record £2.75bn investment in UK’s scaleups but ‘work to do’ on diversity, study shows
New figures have shed light on the rising number of high-growth businesses in the UK – and the billions in investment driving them forward.
In its 2018 index published this week (November 13), the ScaleUp Institute found that there are now 4,420 visible scaleups in the UK, up 15% from 3,856 the year previous.
The Organisation for Economic Co-operation and Development (OECD) defines a scaleup as a business that has shown average annual growth in employees or turnover of 20% or more, per year, over a three-year period. To be classed as a scaleup, a firm must also have more than 10 employees at the beginning of the period.
The ScaleUp Institute’s latest index, produced in partnership with business database Beauhurst, reported a record level of investment in scaleups in 2017, with the total for the year nearly reaching £2.75bn.
Funding provider BGF was found to be the top investor by number, with 72 equity deals for visible scaleups.
Other firms are catching up though, with Crowdcube, Eight Roads Ventures and Livingbridge all entering the rankings of top investors.
Innovation agency Innovate UK was likewise highlighted in the 2018 index as a leading supporter of scaleups, having handed out 345 grants totalling £74m.
Businesses that have operated for 10 to 15 years were the most likely to be growing at the fastest rate, and while the tech and digital sectors are those most often associated with high-growth enterprises, the majority of scaleups were discovered to be in non-tech sectors, such as leisure and entertainment, professional services and industrials.
Geographically, Leeds, Manchester, London and the wider South East were named as the top locations for fast-growth businesses.
Irene Graham, chief exec of the ScaleUp Institute, said: “The 2018 Scaleup Index reflects the diversity of our scaleups in sectors, leaders and geographies.
“It shines a spotlight on a particular segment of the UK’s landscape which is adding billions of pounds to the economy and is responsible for hundreds of thousands of jobs. At the ScaleUp Institute we believe the ecosystem can only effectively support these companies if we put them on the map.”
She continued: “We must know who they are, where they are, and what they do. These are the nation’s growth heroes. They are vital to the strength of the UK economy. We should celebrate them, buy from them and invest in them.”
The report also offered an insight into diversity in the scaleup community. While nearly half (four in 10) have a woman in their ‘c-suite’ team, just 4% have a female founder.
Sam Smith, founder and CEO of investment bank finnCap, said in the report: “There is a lot of work to do to improve the number of female founders of scaling businesses and getting the right access to finance is critical to this.
“At finnCap our female leaders programme aims to make the investment landscape easier to understand and provide stories of ambition to help encourage others to scale.”
She continued: “We need to make those stories as visible as possible to unlock the realms of options and possibilities to our fellow female founders. I am immensely proud that finnCap continues to achieve our scaleup aims and I am determined we help others do the same.”
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