OECD cites the emergence of two types of high growth firms: Gorillas - defined as high growth organisations that are less than 10 years old, with a physical presence in at least 3 countries and employing over 500 employees in total. Gazelles - defined as young, and usually small, high growth enterprises which are up to five years old.
Between 2002 and 2008 just over 50 per cent of all new jobs in the UK came from just 6 per cent of firms employing 10 or more people at the start of the period - NESTA (2009) The Vital Six Percent , London: NESTA
Of the 2310 directors appointed in the past year in Croydon, 10% were under the age of 25, compared to a UK average of only 6%. Managing Director of Duport.co.uk, Peter Valaitis said: “Clearly Croydon is a hot spot for young entrepreneurs. There are many schemes and initiatives in place to support aspiring business people in this area, and this is an attitude the rest of the UK can benefit from. The data about the evolving profile of company directors in this area will be very welcome news for those working hard on these projects”. A total of 230 directors under the age of 25 were appointed in Croydon over the past year, and the area has the highest proportion of young entrepreneurs in the UK.
% is expressed as a % of the total business population in Croydon: Source FAME
Gazelles and Gorillas in Croydon
Gazelles and Gorillas inCroydonWhy high growth and innovation is vital for Croydon’seconomic growthJon Rouse CEO Croydon CouncilJune 2012
The Importance of high growth firms andinnovation• High growth firms are job creators• High growth firms drive productivity• High growth firms are responsible for substantial proportion of economic growth• Innovation lends itself to high growth potential• High growth firms accelerate the regeneration of areas
So why the need for high growth firms inCroydon?• Highly qualified skills base (above national average NVQ level 4 qualified)• High levels of youth unemployment:18-24 years (above national average) – However Croydon is high performing area for young entrepreneurship (10% Croydon vs 6% UK average)• Stagnant business growth rate (less than 1% in this quarter)• High public sector employment dependency
High growth in Croydon:Sectoral Share Some of our largest sectors are classified as high growth and / or exhibit innovation – Information and communication (7%) – Professional scientific and technical activities (9%) – Administration and support service activities (14%) – Wholesale and retail trade (8%)
Supporting high growth SMEs in Croydon• Competitive rents outside central London• Proximity to London and established clusters (Silicon roundabout in Old Street)• Excellent transport connections• New innovation centre and business support package - £5m – Rate relief for SMEs new to Croydon – Enabling new ways of working (assimilating new / flexible work spaces)• Investment in infrastructure and public realm - £18m• Proactive Chamber of Commerce
National support available to high growthSMEs – Access to finance and capital • UK Innovation and Investment Fund • Angel Co-Fund (£50m) • Tax Schemes - tax breaks for angel investing (EIS, SEIS); R&D tax credits; Patent Box - reduced 10 per cent rate of corporation tax for profits arising from patents is being introduced from 1 April 2013 – Business Development • Growth Accelerator – £200m business development programme for SMEs nationally • National Mentoring Programme for SMEs – Skills • Employer Ownership of Skills Pilot (£250m) • Increase in adult apprenticeships
Business Innovation Centre• Funded under the Mayors Regeneration Fund• Innovation Centre concept currently under development• Potential to embed in HE offer in partnership with Sussex University and Croydon College• Potential take-up of graduate apprenticeships in high growth firms• Potential funding mechanism under consideration (innovation loan fund / vouchers etc.)• Enable cross sectoral innovation
How will Croydon benefit?• High growth firms will kick-start Croydon’s and C2C LEP area’s economic recovery• Competitive local labour market → increase in employment opportunities• Increased take up of business premises → buoyant office market• Agglomeration impact → spill over of established clusters into Croydon• Economic growth and regeneration → increase in productivity, income and Gross Value Added.• Entrepreneurial culture → more home grown gazelles !