Chris Wade is an Adviser at Octopus Ventures. He’s also a veteran entrepreneur and is a co-founder and partner at Isomer Capital. We asked him to tell us what the Government should be doing to help boost productivity and growth across the UK economy.
In its latest Industrial Strategy White Paper, the UK Government announced its plans to support UK smaller businesses in their efforts to access international markets. I welcome their proposals, as I’ve got some experience in this area.
Broadcasting British success
In 2012, the trade minister, Lord Greene, asked me to set up the Venture Capital Unit at the UK Trade & Investment (UKTI) department. Its remit was, broadly speaking, to help start-up companies gain investment from overseas.
One of the many tasks involved was to gather together the great success stories of UK startups, within technology, but also in other sectors too, and to help them form the relationships that would catapult UK innovators through that crucial, secondary developmental stage.
“We will pilot intensive export growth support for potential scale-ups and particularly ambitious medium-sized businesses… We will attract investments [from abroad] and make the most of the opportunity…to drive up skills, increase investment in R&D and stimulate new technologies and ways of working.”
Industrial Strategy White Paper, HM Government
Governments should be good facilitators, helping to turn innovative UK-focused companies into exporters. A weighty economic briefing paper from a far eastern embassy, for example, is very helpful, but UK entrepreneurs also need active introductions, backed by status-holding politicians and civil servants known on the international stage.
In my view, today’s representatives from UK Government departments should be talking as much about the UK’s ten best startups as they do our much-larger ‘crown jewel’ companies when they tour abroad.
Look east for opportunities
There’s a view among many early-stage companies that the US is the best export market, and the one most worth pursuing. This ignores the simple weight of the world’s population, which of course lies to the east. Seeking growth eastwards can seem more daunting to a small company than the seemingly more familiar west.
The Department for International Trade can help dispel this myth by facilitating introductions between, for example, automotive tech innovators here and the car giants of the east. (Having said that, it’s true that not every startup is right for expansion either west or east - domestic success may be its rightful ambition.)
Yes, a lot of later stage investment comes from the US, but you only have to look at the scale of Softbank’s Vision Fund investments on our shores to recognise the potential for more connection eastwards.
Finding new sources of finance
When it comes to unlocking new financing options, the British Business Bank has a role to play too. Owned by the Department for Business, Energy and Industrial Strategy, its aim is to increase the supply of venture capital, credit and business advice to small and medium-sized businesses.
It is headquartered in Sheffield, and there are plans to open branches in Edinburgh, Manchester, Birmingham, Cambridge, Newport and Bristol post-Brexit. Given the clear findings in the 2018 High Growth Small Business Report, which revealed three out of every five high growth small businesses are located outside London and the South East, this is welcome news.
The message is clear: London is only part of the picture. So, the Government is on the right track in various ways, and venture capital firms all over the world are by nature innovative and proactive. Greater scope and vision at the Government level, particularly in terms of improving trading links with the east, will help forge better connections and help to propel the UK high growth small businesses community firmly in the right direction.