BACKGROUND

The West Midlands Combined Authority (WMCA) Plan for Growth identifies eight high-growth clusters where the West Midlands has a distinct comparative advantage.  Located across the region, they include: electrical light vehicles and associated battery storage devices; health tech and med tech; aerospace including manufacturing alternative fuels; logistics and distribution; manufacturing of future housing; modern and low carbon utilities; and, creative content production and gaming. The region also has a strong professional and financial services and supply chain cluster. 

Growth support focused on the ecosystem of these clusters is seen as the most effective route to returning the region’s productivity, which is currently lower than the national average, to previous high performance, high growth levels. The region is aiming to expand collaboration across the innovation ecosystem, for example in Coventry & Warwickshire by building stronger relationships with the Innovation Network at the University of Warwick, bringing together academia, business accelerators, Innovate UK, other investment specialists, and CW Growth Hub to help develop a ‘front-door’ approach to local innovation support.  

The WMCA region is also home to a number of disruptive nascent clusters including Very Light Rail (VLR), 5G adoption, eCommerce and space technology. These receive targeted growth support including early-stage support for scale-ups, provision of patient capital, supply chain support and creating opportunities for collaboration and community connectivity.

Following the integration of LEPs into the West Midlands Combined Authority, there has been a transformation in delivery of business support in the region. This includes the launch of Business Growth West Midlands (BGVM).  A collaboration between WMCA and its seven local authorities, BGWM will target 6,000 scaleup and potential scaleup businesses with transformational, growth-focused support. This includes a new website as a single point of contact for scaleups along with a new marketing function and CRM system, all managed by WMCA. Contact is then made at local level via a team of specialist advisers to connect scaling businesses with a suite of interventions designed to drive growth. These include events and programmes focused on key clusters and target scaleup and potential scaleup businesses. BGWM will reach its full operational capacity in terms of front-line advisers over coming months and these new interventions will come onstream in 2023-24.

To further enable local ambitions and learn from peers across the UK, the region hosted the ScaleUp Institute’s fourth Driving Economic Growth through Scaleup Ecosystems course in June 2023 at the Coventry University Technology Park.

ONS data for 2021 shows that there are 925 scaleups in the West Midlands Combined Authority: 340 are classified as scaleups due to rapid growth in their employees, 760 are classified as scaleups due to rapid growth in their turnover and 175 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 -1.88 per 100,000 of population per year.

SCALEUP PROGRAMMES

To help drive productivity and growth across the region, WMCA has expanded the direct support it offers scaleups. 

The Aston Programme for Small Business Growth is an intensive 20-week programme that uses the latest evidence and research to help ambitious businesses increase their turnover and create jobs by scaleups identifying and overcoming  barriers to growth. Combining a blend of peer learning, one to one mentoring support and practical tools and exercise, the programme equips cohorts of 15-20 scaleup leaders with the skills, tools and confidence needed to maximise growth. Core themes covered in 2023 include strategy and business models, opportunities and innovation and marketing strategies along with leadership, culture, operations and business processes and participants create growth action plans. Support is delivered by academics and expert speakers and through shared experience and a series of expert led workshops tackle barriers to growth. 

During Birmingham Tech Week 2023, a new collaboration was announced with the aim of helping the region’s high-growth tech companies to achieve their global ambitions. The new partnership between the West Midlands Growth Company (WMGC) and Grow London Global, will see the SUI Endorsed export programme extended beyond London for the first time, with 10 high-growth tech companies from the West Midlands offered exclusive spaces.

Launched in March this year, the West Midlands Co-Investment Fund is a £25m equity fund designed to high-growth potential companies and supercharge the region’s economy. The fund provides innovative businesses with up to £1m match funding, helping them to scale and grow the region’s industries of the future. The programme supports scaleups across a range of sectors including green technology, advanced manufacturing, life sciences and creative and digital. Local authorities across WMCA each run their own SME grant programme, offering scaleups grants of up to £100k for revenue and capital expenditure for growth projects. 

Additional financial support is 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.  

The Innovation Accelerator programme, led by Innovate UK on behalf of UK Research and Innovation and the Department for Science and Innovation (DSIT), is investing £100 million in 26 transformative research and development projects to accelerate the growth of three high-potential innovation clusters: Glasgow City Region, Greater Manchester and West Midlands. The West Midlands Health Tech Innovation Accelerator is one of these projects and is based at the University of Birmingham.  Launched in May, the accelerator is worth £33m and offers a portfolio of support and funding to innovative growth-focused SMEs. It aims to enable development of new products, processes and services that have the potential to spark commercial growth and investment. The Accelerator will have a particular focus on health and med tech, clean tech, and a range of other sector specialisms.

The Investment Readiness programme is targeted at early-stage and scaling businesses and offers workshops and in-depth one to one support to help them improve their chances of raising external finance, covering topics such as debt and asset finance, equity and finding and applying for grant funding as well as creating forecasts, business planning documents and pitch decks. The programme combines business engagement and advice with mentoring support. Delivery starts in October 2023.

Lack of digitisation and digital strategies was a recognised issue amongst manufacturers. Through CW Growth Hub collaboration with the local Catapults (WMG at the University of Warwick, and MTC (the Manufacturing Technology Centre)) funding is provided  through the national Made Smarter programme, to create a digital roadmap for business across the West Midlands region. Overall, the three-year programme has secured £6.9m funding to be deployed by March 2025. Lack of digitisation and digital strategies was a recognised issue amongst manufacturers.

The BGWM also works closely with national programmes such as Help to Grow, and local accelerators, including NatWest and Barclays Eagle Labs to ensure that clients benefit from the best private sector scaleup support.There are also a range of more public and private programmes across the West Midlands region – find out more on the scaleup support finder here. 

IMPACT AND RESULTS

Since the programme’s inception in 2015, 282 scaleups have completed the Aston Small Business Growth programme. Phase two evaluation data shows that 94% of participants reported an increase in revenue and as a direct result of the programme and  a £6.7 million increase in GVA after 1 year of support. By March 2024 participants have created more than 350 new jobs. Additionally, the programme’s 2023 Impact Report showed that all respondents felt more confident in business planning and strategy, with 97% reporting that they are now more comfortable making business decisions and 93% feel more comfortable about taking risks. They are now more equipped in delivering business growth, with 97% feeling they are now more able to use financial data to make decisions, and 93% reporting an improved ability to respond to new opportunities.

FUTURE PLANS

Having participated in the Driving Economic Growth course earlier this year, key stakeholders from the region are now working together to implement new support offers, insights and events locally, including roundtables for high-growth and scale-up businesses. Alongside this they are also working more directly with strategic stakeholders to highlight, share, and address challenges, and influence key decision makers to continue building a scaleup culture and strengthen the local ecosystem.

In addition, the West Midlands Combined Authority has secured funding to commission a High Growth Accelerator Programme to start in 2024. This will provide intensive and tailored one to one support to a cohort of established high-growth companies in the West Midlands and aims to continue or accelerate their growth trajectories.  

A new Strategic Productivity Partnership between WMCA, DBT, DLUHC and DCMS will focus on creating a more cohesive business support landscape in the West Midlands through closer integration of national, regional and local products. This includes an ambition to further support collaboration with national scaleup support programmes such as Help to Grow: Management and improve targeting of and engagement with scaleups.

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.

West Midlands is also one of the six recently added regions due to deliver the Create Growth programme. 

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 West Midlands area 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 Combined Authority stand compared to the rest of the UK: 5 of the 7 local authorities have a below 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.