Background

During the Driving Economic Growth course earlier this year, colleagues from the D2N2 and Leicester & Leicestershire areas came together to form the East Midlands team, reflecting progress of the proposed East Midlands Combined County Authority which is currently subject for approval from the Government. With a whole ecosystem focus local representatives were joined by wider stakeholders and academics from universities within the region.

The East Midlands has a low percentage of scaleups compared to the national average and is focused on identifying, building and monitoring its scaling pipeline. Demand for support across the region remains strong with many businesses seeking to access the Government’s Help to Grow: Management programme. However despite this demand support is fragmented.

As a result the East Midlands is focused on developing a sector specific, tailored support offer to drive scaleup growth. A key focus will be developing aspiration and growth mindset among local businesses with high potential as well as supporting existing scaleups to move into new markets, both nationally and internationally.

Moving forward, the region aims to retain a sharp scaleup focus rather than developing more generic growth support. This includes building ongoing relationships with scaleups and developing a comprehensive suite of support rather than isolated or sporadic engagement. Support will be managed in house working with key delivery partners and will actively support scaleups through growth stages.

There are a number of key sectors in the region. These include a strong engineering and manufacturing base spanning advanced manufacturing, textile manufacturing, transport and equipment manufacturing, and food and drink manufacturing. The region also supports strong life sciences, creative and digital, low carbon and visitor economy sectors.

Economic plans focus on developing a cross-sector delivery strategy to boost productivity. This includes a shift in focus from start up to scaleup. Additionally, Leicester and Leicestershire are also focusing on how to ensure they engage with more scaleup businesses and are developing an innovation plan focused on scaleups with the aim to achieve a boost of 5% increase of the area’s productivity above the national average

Looking at the 2 localities of Leicester & Leicestershire and D2N2, we observe the following:

Derby, Derbyshire, Nottingham and Nottinghamshire

ONS data for 2021 shows that there are 795 scaleups in Derby, Derbyshire, Nottingham and Nottinghamshire: 295 are classified as scaleups due to rapid growth in their employees, 660 are classified as scaleups due to rapid growth in their turnover and 160 are scaleups that are increasing both employment and turnover simultaneously.

The ONS data reflects that across the four-year period from 2018 to 2021 the density of scaleups has decreased by -2.17 per 100,000 of population per year.

Leicester and Leicestershire

ONS data for 2021 shows that there are 460 scaleups in Leicester and Leicestershire: 165 are classified as scaleups due to rapid growth in their employees, 390 are classified as scaleups due to rapid growth in their turnover and 95 are scaleups that are increasing both employment and turnover simultaneously.

The ONS data reflects that across the four-year period from 2018 to 2021 the density of scaleups has decreased by -2.55 per 100,000 of population per year.

SCALEUP PROGRAMMES

The Create Growth programme is available to companies across the East Midlands with ambitions to scale. Fully funded by DCMS, the programme will run from 2023 to 20125 and aims to make businesses investment ready and give them the opportunity to meet investors where appropriate. Each business will attend 6 workshops whilst also receiving bespoke mentoring. Targeted support prepares East Midlands creative scaleups as they apply for funding and participants can aim to tap into £7m funding managed by Innovate UK as well as introductions to local and national investors. The programme is open to creative early-stage and scaling businesses based in Leicestershire, Derbyshire, Rutland and Lincolnshire.

The £3m Made Smarter programme helps early-stage and scaling businesses in the manufacturing sector in using technology to streamline their processes. It will provide digital transformation road mapping (delivered by Oxford Innovation), leadership development, grant funding and access to industrial digital technology expertise until 31st March 2025. The East Midlands Made Smarter Programme is delivered through a collaboration between Greater Lincolnshire, D2N2 and Leicester & Leicestershire Local Enterprise Partnerships and the Department for Business, Energy and Industrial Strategy.

The Pioneer Group offers East Midlands early stage and scaling pipeline businesses operating in the life sciences sector access to flexible lab space and offices through the BioCity Nottingham and MediCity Nottingham hubs. Members benefit from Pioneer’s  additional support including invitation-only pitching competitions, investment opportunity roundups and collaborations and trade visits.

Financial support is also available to scaleups through the Midlands Engine Investment Fund which provides commercially focused finance through Small Business Loans, Debt Finance, Proof of concept and Equity Finance funds. 

Support is also available through accelerator programmes including Barclays Eagle Labs and the NatWest Entrepreneur Accelerator, both endorsed by SUI. 

Barclays Eagle Labs connects, educates and accelerates businesses and entrepreneurs through business incubators and industry experts. It also offers a suite of virtual support. Its programmes encompass growth support, access to experts, events and other tailored learning. 

The NatWest Accelerator supports and empowers UK entrepreneurs to scale their businesses to the next level. Delivered both in person and digitally, the Accelerator offers participating business leaders networking events, workshops and one-to-one and one-to-many expert coaching sessions to help them scale their business. Participants also gain access to a network of like-minded peers, supported by the Accelerator’s Ecosystem Managers and have use of co-working space, giving them exposure to ecosystem partners and customers.

Other national programmes supporting East Midlands scaleups include Help to Grow: Management. 

A range of additional public and private programmes operate in the East Midlands– find out more on the scaleup support finder here.

LESSONS LEARNED

Across the East Midlands there is recognition that the support landscape for scaleups is fragmented, a key opportunity for the proposed Combined County Authority will be to engage more with other stakeholders to learn from how they work with and support scaling businesses, as well as raising awareness of support on offer and building opportunities for collaboration.

FUTURE PLANS

During the Driving Economic Growth course, the area prepared a plan focusing on an ambition to build and enhance the talent pipeline in the region. It will focus on retaining graduates from regional universities through aligning opportunities with scaleups with graduate talent and skills. Suggested stakeholders to fulfil the project included local universities, LLEP, D2N2, Leicester City Council, Derby City Council, MAKE UK, Innovate UK, FSB and the East Midlands Chamber.

The new Midlands Engine Investment Fund II, a £400m investment fund, will offer a range of commercial finance options with small loans from £25,000 and equity investment up to £5m. The new fund will cover the entire East Midlands, South East Midlands and West Midlands regions

LONGITUDINAL ANALYSIS

Derby, Derbyshire, Nottingham and Nottinghamshire

According to ScaleUp Institute analysis of data received directly from ONS for years 2018-2021, the following picture emerges on the local environment.

Local Authorities located within Derby, Derbyshire, Nottingham and Nottinghamshire have a low density of scaleups, and the trend between 2018 and 2021 reveals the following:

Scaleups by Density: Needs Improvement

The vertical axis of this matrix shows where local authorities located in this locality stand compared to the rest of the UK: 11 of the 17 local authorities have a below median density of scaleups measured by employment growth and 12 of the 17 local authorities have a below median density of scaleups measured by turnover growth.

Scaleup Trends Over Time: Moderate

The horizontal axis of this matrix shows whether the density of scaleups has increased or decreased over time relative to the rest of the UK: 9 of the 17 local authorities are below the median in terms of improving the density of scaleups by employment in their community and 11 of the 17 local authorities are above the median for scaleups by turnover.

The ScaleUp Institute will continue to monitor this closely in the coming years to track whether local initiatives move the dial in the right direction for increasing the density of scaleups.

Leicester and Leicestershire

According to ScaleUp Institute analysis of data received directly from ONS for years 2018-2021, the following picture emerges on the local environment.

Local Authorities located within Leicester and Leicestershire have a moderate-high density of scaleups, and the trend between 2018 and 2021 reveals the following:

Scaleups by Density: Excellent

The vertical axis of this matrix shows where local authorities located in this locality stand compared to the rest of the UK: 6 of the 8 local authorities have an above median density of scaleups measured by employment growth and 7 of the 8 local authorities have an above median density of scaleups measured by turnover growth.

Scaleup Trends Over Time: Mixed

The horizontal axis of this matrix shows whether the density of scaleups has increased or decreased over time relative to the rest of the UK: 5 of the 8 local authorities are below the median in terms of improving the density of scaleups by employment in their community and 5 of the 8 local authorities are above the median for scaleups by turnover.

The ScaleUp Institute will continue to monitor this closely in the coming years to track whether local initiatives move the dial in the right direction for increasing the density of scaleups.