Posted on 17th January, 2017

by James Codling
Co-Founder & MD

2017: The Year of the UK Scale-Up

As today’s speech by Theresa May confirmed, there is a growing focus from the Government on growing the UK economy as we become a “Global Britain”. Part of this will be further establishing the UK as a global business leader, with the multi-national business giants of tomorrow founded and headquartered in the UK.

We already have an established start-up scene in the UK, but if we are to successfully fulfil the Prime Minister’s vision for the future of our economy, more needs to be done to support our companies that are entering the next phase of their growth: scale-ups.

So what makes a scale-up different from a start-up? I’ve heard the two terms used interchangeably and it’s vitally important that these two very different phases in a business' growth are not confused.

Most people are familiar with the term start-up. This is a young company – sometimes still at the concept stage – and usually with the bare minimum number of employees, working to bring a new business from an initial idea to market.

All scale-ups start as a start-up, but they have managed to successfully establish themselves, they are growing their talent pool and, vitally, have gained market traction.

Renowned business leader, Sherry Coutu CBE, defines a scale-up as, “An enterprise with average annualised growth in employees or turnover greater than 20 per cent per annum over a three year period, and with more than 10 employees at the beginning of the observation period” in The Scale-Up Report On UK Economic Growth’.

Looking at Sherry’s definition, it is clear to see that investment in this exclusive group of emerging businesses should be key in working towards growing the UK’s reputation for producing global businesses.

So why has "scale-up" only just started to become a buzz term? Unfortunately, possibly due to a heavy focus from the Government on schemes designed to nurture start-ups, scale-ups have been largely left to fend for themselves.

There has been a lack of support in helping these business leaders develop the very different skillset needed to take their business to the next level. This, coupled with the need for a cash injection to put growth plans into action – but a lack of access to investment on home soil – means a lot of UK businesses on the brink of scaling up have been turning to M&A offers from large overseas businesses, keen to snap up their exciting IP. A perfect storm has been created that has meant a lot of potentially unicorn-level UK businesses have not had any opportunity to scale and become a leader in their own right.

It will be interesting to see how the next few months play out. As the UK negotiates with all major global markets on how we do business together, I hope it also considers what it can do on a local level to help scale-ups thrive in the UK.

If it addresses the needs of scale-ups, there is a great opportunity for the Government to pave the way for a greater push on exporting some of our finest assets – our tech and innovation – and I hope this will be a top priority for 2017.

 


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