Background

Scaleups in the North East are supported across the region by its two combined authorities and local authorities. The region’s growth hub acts as a central point and offers account management and diagnostic services in order to ensure that scaleups receive the right support to drive their growth journey.     

Scaleups face a number of key growth challenges, as identified by the Scaleup Institute, in line with national trends. Access to finance remains the most significant barrier and is experienced more widely this year. Access to talent is also a major barrier to growth for scaleups in the North East. Despite a focus on staff retention and employer value propositions, local scaleup leaders are concerned that higher costs are restricting growth ambitions.

Other regional scaling trends include the need to adapt products and innovate new solutions in response to shifts in consumer attitudes and buying patterns. The past year has also seen an increase in the number of businesses exploring export opportunities, with some notable success evident in the food manufacturing and recruitment sectors. Supply chain restructuring continues and is focused on building resilience and reducing transport costs. These challenges are reflected in the support sought by leaders across the scaleup ecosystem, which is focused on building resilience and confidence. 

ONS data for 2021 shows that there are 675 scaleups in the North East: 250 are classified as scaleups due to rapid growth in their employees, 545 are classified as scaleups due to rapid growth in their turnover and 120 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 -0.84 per 100,000 of population per year.

SCALEUP PROGRAMMES

The second iteration of Scaleup North East, backed by ERDF, came to an end in June 2023, however it will be replaced by a new regionally funded offer which will provide similar support, albeit geographically restricted to the North of Tyne and Gateshead at this stage. This new offering will support 300 businesses over 18 months to overcome barriers to scale, supported by Scaleup Partners who bring extensive, high level private sector expertise. Scaleup Partners also have the knowledge and experience to refer businesses to the most appropriate support post intervention. Businesses will be triaged to ensure that the most ambitious with the potential to scale are supported intensively, while providing others with a curated and bespoke range of activity including workshops, peer groups and specialist sector events. The programme will be focused on businesses in the digital and technology, health and life sciences, low carbon and green growth, creative industries, and advanced manufacturing sectors.  

The Entrepreneurs’ Forum connects scaleups with the largest network of entrepreneurs in the North East. Participants can access more than 70 inspirational events a year and further benefit from access to the Forum’s peer to peer mentoring, learning from the experience of some of the region’s most experienced and successful entrepreneurs. Further scaling advice and insights come through the programme’s quarterly publication, plus participants can also involve their wider team in Forum events. The Entrepreneurs Forum also runs the Scale-up Leaders’ Academy, a dedicated programme for North East-based scaling entrepreneurs. This programme brings together ambitious business owners from across the North East in six month cohorts to inspire, challenge, support and connect with each other.   

The Experience Bank™ is an independent, not-for-profit, social enterprise that gives scaleups access to a carefully curated pool of non-executive and board talent. The bank matches scaleups with one of 245 experienced business people with the right skill-set to help them overcome scaling barriers and drive growth. 

The North East Create Growth Programme focuses on helping founders of creative businesses to become more sustainable, build a growth plan and develop an investment strategy and proposition. The programme includes diagnostic meetings, workshops, peer to peer learning sessions, one to one mentorship and events. The suite of business support initiatives are accessible to founders in the following regions: Newcastle, Gateshead, North Tyneside, Northumberland, Durham, Sunderland and South Tyneside.

The Help to Grow Management course, delivered by leading business schools, gives scaleups access to academic business expertise as well as the support of leading figures from industry and experienced entrepreneurs. Focused on boosting performance, resilience and long-term growth, the 12-week programme is 90% government funded. Key elements include building leadership and strategic expertise, creating a growth plan and innovation. The programme also explores employee engagement, digital adoption and reaching into growth markets. 

There are also a range of public and private programmes in the North East – find out more on the scaleup support finder here.

IMPACT AND RESULTS

By Q4 of 2022, Scaleup North East (SUNE) had supported 227 enterprises with raising £1m in private sector investment and creating 75 new jobs. In addition, 70 enterprises had received grants and 196 were receiving information, diagnostic and brokerage support. Over its period of operation between 2018-2023, SUNE supported over 800 leaders to raise more than £16.5m in investment, create 477 new jobs and win contracts worth £19m.

Since its launch in 2017, the ScaleUp Leaders Academy has supported 59 scaling businesses with 41% being female led. In addition, Experience Bank has supported 62 businesses to date.

By Q1 of 2023, Supply Chain North East had supported 996 enterprises, with 191 successfully receiving grants and £1.63m of private investment being raised to match public support to enterprises (grants).

FUTURE PLANS

Having attended the Driving Economic Growth course this year, key stakeholders in the North East are now working on delivering their long term plan to encourage, enable and empower more companies to grow, including via the successor programme to Scaleup North East. 

In addition to these plans, a key development in scaleup support identified over the past year is the demand for engagement with an experienced coach, mentor, consultant or trusted advisor. Businesses recognise the transformational impact of this type of support and responding to this demand is a priority.

The region will continue to identify shifting scaleup priorities and ensure that support reflects these, as well as ensure that sector specific support is available to address strategic level issues. Engagement with earlier stage businesses will help maintain and improve the scaling pipeline. 

“If our Scaleup North East advisor] didn’t have the answers to any of my questions, with his wealth of connections he was able to put me in touch with someone who was able to guide me in more detail. My business wouldn’t have grown to where it is now without this support.” – Louise Cooper, Founder, U Glow

““If I had not reached out to [our Scaleup North East advisor] we would not be where we are now without a doubt. There’s no judgement, they can come and stand next to you, and you can be very honest and vulnerable, and they can advise you on what they’ve learnt and offer guidance.” – Sam Spoors, Founder, Talentheads

LONGITUDINAL ANALYSIS

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 the North East 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: 4 of the 7 local authorities have an above median density of scaleups measured by employment growth and 5 of the 7 local authorities have a below median density of scaleups measured by turnover growth.

Scaleup Trends Over Time: Good

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 7 local authorities are above the median in terms of improving the density of scaleups by employment in their community and 6 of the 7 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.