The UK has always prided itself on its startup credentials. London’s tech ecosystem helped 17 companies surpass the $1 billion “Unicorn” status since 2010 – over double the amount of other major tech cities such as Berlin and Paris – while hubs such as Edinburgh and Manchester have also nurtured tremendously strong startup communities.
A major factor in the UK’s startup success is the wealth of support and investment opportunities available to fledgeling businesses. Accelerators have boomed in popularity over the past few years, with programmes such as TechStars pairing new entrepreneurs with expertise and routes to funding.
When it comes to growing businesses, the national focus is often on the newer end of the market – think back to how many articles you’ve seen in the past week providing advice to founders who are either considering launching a startup or are in their first two years of operation. There’s a wide range of guidance in crucial early-stage matters such as developing a business plan or bringing a product to market.
But where is the next level of support for those firms which have grown beyond startup stage? There is a big black hole for scale-ups – businesses with between 10 to 15 staff who are on the cusp of rapid growth.
OECD research highlights that the UK scores high as a supportive location for launching a business and ranks third as the country of choice for startups. However, the country has slipped to thirteenth place for scale-ups – we’re taking the training wheels away from companies once they move past the startup phase, but we’re not replacing them with the next phase of support.
These scaleups are our future unicorns – let how can they possible transition to a £1bn valuation if they’re not receiving the support needed to make it into the middle section of the SME bracket?
Just one in ten UK start-ups that receive seed funding manage to progress to later stage, fourth round investment compared to one in four US firms. But investment is only half of the challenge. Once a business is off the ground, their needs are more complex. It’s no longer one-size-fits-all and the support to grow needs to be more specialised to their industry, proposition and unique needs.
While there are some green shoots of scaleup support starting to emerge, it’s clear that much more effort is required – via government initiatives and programmes from the wider business and corporate community – to turn our fledgeling companies into world-dominating firms. However, there are a number of different resources which scale-ups can tap into which may provide the support they need:
- Cross-industry collaboration – rather than isolating your small business in a hidden office or working remotely, basing your scale-up amongst other firms at similar stages across different industries will provide an instant support community and peer network, as well as perspective on your own challenges and how to tackle them.
- Business-academia partnerships – the value of academia working side by side with enterprise is well recognised, but it can also be valuable to approach this the other way around. Forging links with higher education institutions, particularly those with a focus on technical research, can help further refine a scale-up’s R&D. Consider scouring for talent in the university labs, or searching for programmes that invite businesses to mentor post-graduates
- Make use on the dedicated growth programmes that are now emerging – rather than giving yourself over to an accelerator for three months, seek a dedicated growth programmes, such as, The Future 50 Programme, which run alongside your business as you grow.
Despite support for scale-ups not being as readily available, these examples show that there are opportunities out there through which founders can tap into to access peer support.
As an industry facing such uncertainty about our economic future, it’s in our best interest to better support the growth of SMEs. We also need to remember that despite the UK’s impressive track record in producing unicorns, it is still the exception not the rule. Growing a business beyond the initial startup phase takes hard work and collaboration to succeed and can’t be achieved alone.