Explore the ScaleUp Annual Review 2020

Select a section to expand and explore this year's review..

Delivering Policy To Foster And Sustain UK Scaleups

In 2019 the ScaleUp Institute, in our policy summary, made the statement that:

A maturing scaleup ecosystem must remain robust and agile in the face of such uncertainty. It is our duty as a nation to be prepared for all eventualities and limit long term impacts.”

At that time we were reflecting on the challenges that scaleups perceived lay ahead with Brexit and more general global uncertainty including China / US trade relationships. We knew heading into this decade there would be the need for our scaleups to adapt – but we could not foresee that there would be a global pandemic affecting every area of the country, every sector and every part of the world. 

The UK and global economy is now facing a deeply challenging period. The existential threat of Covid-19 represents an ongoing and significant domestic challenge for businesses, amidst the wider global downturn it has precipitated. This is reflected in unprecedented levels of government intervention globally to stabilise economies. Ongoing Brexit uncertainty also remains a factor. 

As part of the economic response, the maturing scaleup ecosystem has in 2020 evidenced its agility and collaborative nature. It has worked closely together across Government, local areas and the private sector to address the emerging issues facing our scaleups as the pandemic unfolded, and it has robustly continued to provide, through existing initiatives, vital resources and support for scaling businesses. 

As a path forward is charted, fundamentals of scaleup growth must also be recognised as the fundamentals of a sound recovery. Continuing to address the needs of our scaleup economy and enabling scaleups to flourish is the best way to create a fertile ground for local economies to return to growth. 

This means ensuring that, as the Industrial Strategy is refreshed, the Spending Review and Business Support Reviews are undertaken, and a UK Shared Prosperity Fund is considered, it will be imperative for Government policy objectives and incentives to be aligned towards scaleups to ensure they are each pulling in the same direction making the best use of our national resources. 

This is not about new initiatives, it is about better use and alignment between existing programmes with proven impact.

In 2020 we have observed the crystallisation of prior work within the ScaleUp Taskforce and ongoing results from the ScaleUp Institute Driving Economic Growth through Scaleups education programme. As a consequence we are seeing a positive closing of the gap in the leadership demands of our scaling businesses, but as evidenced in our 2020 scaleup survey – as well as analysis of ONS, local drivers, procurement and growth capital – in other areas the scaleup gap is resolutely persistent and in some widening.

As we lay out our policy imperatives for 2021, we must: 

  • leverage and build on what works to create, at scale, long term sustainable interventions, deployed at regional level, taking lessons from countries ahead of us in scaleup growth;
  • align people and funding resources to our scaleup and growth sectors championing their case;
  • and build clusters and hubs – at a local level – connecting our scaleup communities to the talent, finance and markets that they need to propel their growth.

Underpinning all of this remains the ongoing need, whether in the public or private sector, to: segment efficiently; tailor solutions and use data ever more effectively to pinpoint our scaling businesses; to relationship manage and nurture them through their scaleup journeys, linking them much more easily to the private and public resources that are available to support their growth.

If we are to grow our way out of this crisis and past the headwinds and uncertainty of Brexit, a segmented approach to the delivery of programmes tuned to support scaleups will be crucial. This includes needing to ensure those backed by ERDF funding, such as the British Library which the ScaleUp Institute has endorsed for its impact, gets the equivalent backing from UK sources rather than reinventing the wheel. 

Charting a path to recovery

We know from our ongoing work throughout this year, that scaleups continue to be resilient and ambitious businesses, and will be a key tool for driving a long term, sustainable recovery.

They contributed £1 trillion to the UK economy in 2018, accounting for 50% of the total contribution by all SMEs and are 54% more productive than their peers. Further, at the height of the Covid-19 emergency our research showed that almost half those questioned still planned to grow at home and abroad in the coming year. We also know that the top two reasons for scaleups raising money during the Covid-19 lockdown were innovation and job creation – ahead of working capital – making them linchpins of economic activity.

However, whilst the challenges of scaling a business in this country predate the Covid-19 crisis they have undoubtedly been intensified by it. For this reason it is vital that we redouble our work to support these drivers of economic recovery by dialling up what is working today and replicating good practice where we can.

Since the ScaleUp Institute began working on its mission in 2015 we have seen positive and increasing evidence that scaleups are now forming a clear part of national and local policy. 

The collective and collaborative work that has been catalysed means scaleups are now being recognised ever more as a vital and distinct part of the UK economy and critical to ensuring the UK is internationally competitive. The word ‘scaleup’ has become part and parcel of business and economic language. Policy makers have recognised the role ambitious fast-growing businesses intrinsically play in the generation of economic value. An effective ecosystem to support their needs and overcome their challenges has been fast evolving. Last year we highlighted that this ecosystem had begun to mature, this year we are seeing it stress tested as businesses learn to cope, to innovate, and to pivot in the face of significant economic challenge.

The ecosystem that now exists is a collective effort, with good work from across the public and private sector laying some key foundations. 

However, complacency is not an option. Our analysis of the most recent official data available showed that even before Covid-19 the total number of scaleups fell slightly in 2018, driven by an 11% drop in the number scaling by turnover. With Covid-19 creating a cliff edge of consumer demand in Q2 2020 UK businesses will have been tested further. The headwinds from Brexit also remain a concern for scaleup businesses with three-fifths thinking that Brexit will have a negative impact on their business. Yet, in a challenging business environment, firms that have already scaled continue to be robust and lead the pack in terms of growth confidence. Policies aimed at encouraging a growth mindset have never been more important.

Our 2020 ScaleUp Business Survey which captured responses across September and October 2020 shows that 8 out of 10 expect to grow next year (7 in 10 by turnover and 2 in 3 employment). Of these 5 out of 10 expect to grow their turnover at more than 20% and 1 in 10 beyond 50%.

We also know that, despite the fact that three-fifths felt Covid-19 would have a negative impact on their business, scaleups have kept adapting, innovating, pivoting, and evolving with 70% making some permanent changes to their business model.

The survey also emphasises the crucial importance of Markets Access to businesses with a growth mindset. This is now seen as the number one issue for scaleups, followed by access to talent. This has been a growing trend over a number of years, which has been exacerbated through the cyclical challenges of the Covid-19 crisis, but which also has fundamental structural issues as explored in our Future of Growth Capital report.1

Indeed, alongside these results of the survey, we have recently published pre-Covid-19 research of detailed regression analysis looking at the key drivers of local growth. This found that access to high quality talent, the existence of well curated clusters or hubs, and the availability of appropriate growth capital (equity, rather than traditional debt) are the most important drivers of growth in a local area.

Ensuring that these are front and centre of the UK’s plan for recovery will be critical if the seeds for future sustainable growth are to be planted now.

Our maturing scaleup ecosystem must remain robust and agile in the face of such challenges. This must involve maintaining and building on existing programmes as well as continuing to drive the development of new programmes to meet the needs of scaling and scaleup businesses where gaps remain.

We have many of the tools and institutions in place but coordination, renewed focus, and the alignment of wider policy toward growth – in a way that makes sense for scaleups themselves – is necessary if these efforts are to be fully realised. 

To forge a clear path forward, maintaining scaleup confidence and making the most of the growth opportunities that the UK has domestically and on the international stage, will be key. 

Throughout this chapter we reflect upon current developments and the steps necessary to achieve meaningful policy advancement for scaleup businesses in relation to the core scaleup challenges of Talent, Market Access, Leadership, Finance and Infrastructure.

As we assess the next steps on this journey, it is clear that:

  • Market access is now the most urgent issue that scaleup businesses need resolved. Covid-19 has caused notable uncertainty including significant instability within supply chains. We already know that there are a smaller number of support programmes geared to market access. Solving this issue to enable scaleup businesses to access markets at home and abroad is vital, and will be central to recovery efforts. This means the development of better, more connected support programmes for scaleup firms, and simplified procedures so that they can collaborate and sell to corporates as well as access Government Procurement contracts more consistently. Unleashing Government data as part of a coordinated procurement effort will further increase impact for scaleup businesses. Full implementation of stated intents, such as with the R&D roadmap, export initiatives, and better implementation of procurement initiatives in the public sector – such as the SBRI and Social Value Act – must happen now. International programmes such as the London and Manchester Mayoral programmes have continued to make excellent strides in fostering new overseas market opportunities for scaleups. This momentum should be replicated elsewhere.

  • Talent remains vital for scaleups: Government interventions as a result of Covid-19, such as Kickstart and the National Skills Guarantee, are positive but must link up with wider initiatives to have maximum impact. A range of programmes, including the CEC and Founders4Schools looking to improve the level of business engagement and work experience for students. However, there is a broader talent challenge for business, and it is vital to ensure we build both a robust UK skills pipeline, and enable scaleup businesses to access the talent they need internationally in a timely manner. This should include the development of a fast track Scaleup Visa, to fill any emerging skills gaps at a local level.

  • Leadership is a foundational element of scaleup growth. There are now more Leadership programmes for scaleup businesses than there have ever been, including at a local level. However, there is still more to be done. Scaleup businesses continue to recognise Leadership capacity development as fundamental, but with 1 in 3 programmes currently funded through ERDF it is important for there to be a stable suite of ongoing initiatives able to meet this demand as we enter the next decade. Making it easier for scaleups to connect both to relevant non-executive directors and the pipeline of tomorrow – in schools and graduates – must remain priorities, alongside a continued focus on peer networks and leadership programmes.

  • The Growth Capital gap that was starting to close has widened as a consequence of the cyclical Covid-19 effect. This has exposed our long term regional and structural ‘insufficiencies’ as examined in our 2020 joint report on the Future of Growth Capital and in recent work with BGF. Concerted action is needed now – to unleash institutional funds – to close this gap which is now estimated to be £15 bn per year. This will need a combination of regulatory and legislative measures; at the same time as evolving offerings within our existing Development Banks and Agencies (BBB, IUK, SIB, DB), and maintaining effective tax policies, listing rules, to match to our international counterparts, will support at scale follow on funding and the launch of a Taskforce to review these is welcomed. Overall our key aim must be to enable the private sector to step up and work better with scaleup firms, and enable scaling businesses to access equity more easily.

  • The right Infrastructure with linked programmes can be a game changer. Scaleup businesses will always need space in which to grow. As more and more scaleup focused programmes are developed to meet the scaleup challenge that the UK faces – the role of Hubs is becoming ever clearer. Creating a physical location where scaleups can have easy access to flexible office / lab space and to programmes linked to wider challenges is having a real impact. As greater numbers of these are developed, it is important to build upon what works and ensure that programmes with impact and players with proven understanding of what is needed for scaleups are leveraged up to ensure that quality is maintained.


In 2020 the world has faced an unprecedented challenge. The Covid-19 emergency has posed an immense threat to all countries’ health, wellbeing and economies. The danger is that the ecosystem that has matured to support scaling businesses is put under massive pressure and business support starts to pivot to all regardless of growth potential. As the UK starts on the path of post-lockdown recovery a focus on growth is not a luxury, it is a necessity. Uncertainty, both national and global, must not cause us to deviate from this path towards becoming the best place in the world to grow a business.

Previous Worcestershire
Next Scaleup Identification – Data