The UK remains a great place to start and grow a business. According to the Industrial Strategy White Paper, a new business starts up every 75 seconds. But at the same time, everyone knows that improvements could be made. As the Government admits: “We have some of the most productive businesses, people and places in the world…but if the long tail of lower productivity persists, it will hold back UK growth, wages and living standards.”
Some things money can’t buy
I would argue there’s already a good level of intelligent capital available for businesses at every stage of their life cycle, from early-stage through to late-stage. However, in many instances what’s missing is the knowledge and experience to use that money sustainably.
Many, if not all, entrepreneurs show up with passion and a deep knowledge of their sector. But when it comes to the basics of running and scaling a business, areas such as recruitment, strategy and the ‘business 101s’ can be lacking. Without these basics, even great businesses can very quickly find themselves running aground.
“The British business environment is one of the most admired globally as one of the best places to start, locate and grow a business.”
Industrial Strategy White Paper, HM Government
Regional divergence often plays a part
There are thriving communities of incubators and accelerators in many parts of the country. Grass-roots entrepreneurs find there is help available for developing skills like coding as well as opportunities for networking through meet-ups and seminars.
London is big on this of course, especially in areas such as Women-in-tech–type initiatives. Social enterprise is engaging with people from deprived social backgrounds in many cities around the UK: with an MBA costing around £100,000, any help is a lot better than nothing.
Not every small business wants to scale up
Venture capital is often seen as the main source of funding for high growth small businesses, but in some cases, it may not be appropriate. Venture capital is often high-risk, high-return, so there’s a pressure to scale and ambitions are high. This may not fit with the founder’s vision. It’s therefore worth remembering that – for many of the UK’s brightest entrepreneurs – small can still be beautiful.
So, what should the UK Government be doing that it isn’t already? In the past, Government schemes have run into trouble for the simple reason that many seed businesses fail. Harsh realities account for this, and finance backgrounds in start-ups are the exception rather than the rule.
Pushing for a more targeted approach
Put simply, bad businesses create bad debt and well-meaning Government funding can yield poor results in the longer term. Here at Octopus Ventures, we know tax policy is an area with real influence. For example, tax incentives that encourage investment in Venture Capital Trusts are making the difference. Tech startups, on the whole are well-served by the private sector, so other sectors could use more help.
Operations such as Virgin Unite provide relatively small-scale funding for businesses in a diverse range of sectors. Likewise, there are numerous Government initiatives to help small businesses, with start-up loans and guidance at grass-roots level. But it’s important to differentiate between the UK’s small business sector and fast-growing, innovative start-ups that rapidly scale to really affect change at the macroeconomic level.
“Anyone with a good idea and the entrepreneurial ambition to make it a reality should see the UK as the best place to do business.”
Industrial Strategy White Paper, HM Government
At Octopus Ventures we’re aware that it is the value-add, hands-on, support that makes success for these businesses more likely, which is why we offer companies more than just access to capital. For high growth small businesses, the challenges of scaling, recruiting and ‘going international’ need skilled attention just as much as the finances.
