Annual Scaleup Review 2018

Foreword

Sherry Coutu
Chair, ScaleUp Institute

As the UK faces an increasingly competitive and uncertain economic outlook, the need for communities to be able to drive their economic growth remains mission-critical. There has never been a more important time to focus on scaling businesses.

As this 2018 Review demonstrates, the evidence is clear – for the UK economy, scaling companies are the engine of growth: creating high quality jobs and new tax receipts; leading business investment and innovation; and providing an important answer to the UK’s great productivity puzzle. Scaleups have the potential to give the UK a competitive advantage for generations to come. And it will be scaleups that lead any export drive; they are already twice as likely to be international, hungry to expand further overseas and expecting to grow in the next 12 months by expanding into new markets.

Just four years ago I kicked off the debate in the Scaleup Report on UK Economic Growth, using evidence from several different sources. This showed that a one per cent boost to the UK scaleup population would create an additional 238,000 jobs and £38bn in Gross Value Added (GVA), and over time generate an additional £225bn in (net) GVA. In the intervening years, the ScaleUp Institute has become the foundation for a growing body of evidence and proposed solutions to the challenges that scaling companies face.

Year on year – thanks to the work of the Institute, our ambassadors, partners and collaborators – more and more private, education, and public sector organisations have mobilised to focus on scaleups and to realise the potential of these ‘growth heroes’.

This 2018 Review demonstrates that we are making good progress, but that there is still much more to be achieved.

Scaleup leaders may be global in their ambitions, but they want solutions and programmes delivered locally, in the communities in which they are based. To this end, I was delighted that earlier this year the Institute convened its third executive education course at Leeds University on ‘Driving Economic Growth through Scaleup Ecosystems’ (DEG) – involving Babson College and supported by Goldman Sachs 10,000 Small Businesses UK, Innovate UK and the British Business Bank. The course brought together over 60 local leaders, including scaleup businesses, from around the country to understand the ingredients that can foster a world class scaleup environment in their locality. This means that over the past two years we have trained over 200 ecosystem leaders, covering many localities of the country and we are excited by the progress the first three cohorts are making and the learnings being exchanged with each other.

If delivery is local, we must also be able to assess our progress through a local lens. To truly become a Scaleup Nation, senior leaders from every scaling business in every part of the UK should have the tools and support they require.

This year with our direct access to detailed datasets from the Office for National Statistics (ONS) we are able to further analyse in depth the diversity of scaleup growth across the country; we can see where communities are forging ahead in scaleup development and where scaleup ‘cold spots,’ remain.

In Chapter 1, we analyse the developing landscape right down to local authority level. Looking at our map on page 33, we aspire to work together to achieve the dark green colour throughout, yet there are some cold spots where urgent action needs to be taken. Some areas, such as the West of England, Cornwall and Enterprise M3, are doing terrifically well. Other areas are lagging, but introducing initiatives, such as in the Tees Valley where Teesside University launched its LEAP 50 this year to tackle their local scaleup challenge.

The development of thematic programmes to address scaleup barriers is covered in Chapter 2. I am very excited that we are now able to make available an enormous body of evidence which can be used by all stakeholders in the UK about ‘what works’ that to respond to the common barriers that prevent companies from scaling in their communities. In Chapter 3 we highlight new local initiatives, emerging from the Institute’s education activity, such as ScaleUp Ashford, ScaleUp Berkshire, ScaleUp North East, CanDo Scale Scotland, Scaleup Enablers and Generator Initiatives such as these give me cause for optimism. We are on the right path to close the scaleup gap even if it is clear from the data that much more can be done.

Government policy – at national, regional and local levels – has also shifted. Scaleup companies are increasingly being included as specific components of local and national strategies. In 2018, we have seen ‘scaling up’ embedded into the Government’s Industrial Strategy and Export Strategy, into the Patient Capital, LEP and Productivity Reviews, and into the recent 2018 Budget announcements.

I have no doubt that the creation of a Ministerial Champion for Scaleups has helped coordinate this national policy direction and ensure the needs of scaleups are fully considered in the UK’s economic and industrial agendas. The first Ministerial Champion, Margot James MP, has subsequently taken her enthusiasm for scaleups to her new role as Minister of State for Digital and the Creative Industries. Kelly Tolhurst MP, Minister for Small Business, has eagerly taken up the mantle and is driving forward the agenda working closely with the Scaleup Taskforce, co-led by my fellow serial entrepreneur and Board member, Sahar Hashemi.

The ScaleUp Institute will continue to monitor the impact of policy decisions and other stakeholder interventions, to ensure that they deliver practical, on the ground solutions for scaleup needs at a local level.

We have always said that the first obstacle to supporting scaleups, and high potential companies, is identifying them. The pursuit of an open ‘scaleup register’ remains a primary goal which will be extremely powerful in unlocking our full scaleup potential and I am pleased that we are making inroads on this.

The ScaleUp Institute has forged valuable partnerships with ONS and HMRC and over the past year has engaged in cross-Government work to help develop innovative ways of using data to segment businesses. The current ScaleUp Institute / HMRC pilots aligning scaleup identification to bespoke scaleup services is very exciting. I look forward to the outcomes of these pilots culminating in a solution that can work across all areas of the country, and public and private sectors. With this data we can fast track scaleup actions and engagement to greatest effect, unlocking new talent, markets and finance.

As part of this Review the ScaleUp Institute continues its role in putting scaleups on the map with the 2018 Scaleup Index including AIM companies for the first time and the inaugural Visible ScaleUp Public Procurement Index. My thanks go to Beauhurst and Tussell for their collaboration on this.

The UK continues to be an attractive place to start a new company. As I said in the original ScaleUp Report, we also have the talent and basic foundations to become the best place in the world to scale up a company. It is undoubtedly true that over the past four years we have seen more people, more initiatives, more political will, and critically more money, focused on making that happen. This is evidenced by having seen the growth rate of scaleups overall across the UK increase, to 4 additional scaleups per 100,000 population per annum with the latest ONS data, compared to 3 as reported in our 2017 Annual Review.

In the coming months and years, as Brexit unfolds, there will be many new and some unforeseen pressures on the UK economy. And, of course, there will also be opportunities.

At the ScaleUp Institute our focus will continue to be on identifying, praising and promoting what works; helping to ensure that impactful initiatives and programmes continue to be funded and good practice reaches every company, sector and region. We will continue to ensure that the needs of scaleups remain high on the political agenda, and we will work with larger corporates to help them understand the benefits of working and collaborating with fast- growing companies. And, of course, we will relentlessly pursue the release of more data.

That said, this Review has more new datasets, more information and more analysis than ever before. It is a testament to a vibrant and growing ecosystem of public and private sector organisations who themselves have recognised the power of the UK’s scaleup companies. We are our on our journey to be the best place on the planet to scale a business – let’s make sure this becomes a reality. Do make good use of the 2018 Review and its findings to guide actions into 2019.

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