Scale up report presentation

THE SCALE-UP REPORT
ON UK ECONOMIC GROWTH
Sherry Coutu CBE
#scaleup
http://www.scaleupreport.com
TCi
An independent report to the government
NOVEMBER 2014

THE SCALE-UP REPORT
Thank-you’s
NOVEMBER 2014

“We want nothing less than to make the UK the technology centre of
Europe. This is the path we need to take to create new jobs, new growth
and new prosperity in every corner of our country.”
George Osborne, Chancellor of the Exchequer
THE SCALE-UP REPORT ON UK ECONOMIC GROWTH Sherry #scaleup Coutu CBE

“First mover advantage doesn’t go to the first company that launches, it
goes to the first company that scales.”
Reid Hoffman, co-founder of Linkedin

“Competitive advantage doesn’t go to the nations that focus on creating
companies, it goes to nations that focus on scaling companies.”

JOHN CRIDLAND,
DIRECTOR-GENERAL
CBI
“This report makes a compelling case for
getting behind the UK’s high growth
‘scale-ups’ and I hope all political parties
seriously consider its recommendations.
These firms are already having a
transformational impact, we just need
more of them to grow.
Helping them access the talent they
need, develop their leadership and
access new markets are the priorities.”
THE SCALE-UP REPORT ON UK ECONOMIC GROWTH Sherry Coutu |CBE
An independent report to the government | www.scaleupreport.org | @scaleup | #scaleup

CHUKA UMUNNA CHUKA
UMUNNA MP SHADOW
SECRETARY FOR BUSINESS,
INNOVATIONS AND SKILLS
"This excellent report from Sherry Coutu makes clear that
to secure the high-wage, high-skill economy that means
people in Britain can succeed, we need to fix the broken
rungs on the ladder that make it harder for ambitious
businesses in Britain to step onto the global stage.
Whether making better use of the information out there
about which are our most promising firms, or
coordinating support at a local level, the report is
packed full of straightforward recommendations that
point not only to how Britain can pay its way in the world
but how it can do so in a way that enables far more
people than now can build the life they want – that is
why Sherry’s insightful report is so important and a real
clarion call for policy makers to act."

LESZEK BORYSIEWICZ,
VICE CHANCELLOR OF
CAMBRIDGE UNIVERSITY
“This report clearly demonstrates the significant benefits
that can be achieved through Government, business and
universities working together to help close the scale-up
gap.
World leading universities such as Cambridge play a
crucial role in creating business through the generation of
innovation, entrepreneurship, and funding opportunities,
but it is the talent and expertise of our students and
academics that will help these businesses grow.”

PETER TUFANO,
DEAN
SAID BUSINESS SCHOOL,
OXFORD
"In all fields, getting started is essential, but not enough.
Races need to be finished, plays need final acts, and for
enterprises, starting-up must be followed by scaling-up.
The Scale-Up Report focuses our attention on this less-well
studied, but critical, element of the process of business
formation and job growth.
By changing the public and private dialogue to celebrate not
just start ups, but scale ups, this Scale-Up report will hopefully
boost the UK economy."

ANYA HINDMARCH
FOUNDER & CEO
“I wholeheartedly support the Scale-Up Report.
Whilst start-ups are so important for this country, it is the scale ups
that deliver the economic reward. It is also really hard to scale up
and so if experience and support can be lent to the scale-up
candidates, then they will have an even greater chance of success.
Support can also quite simply be about unblocking the way and
freeing them up to just get on with it. I think a focus on scale-ups
could deliver real economic benefit.”

MIKE BLACKBURN
CHAIR OF GREATER
MANCHESTER LEP
“Many thanks for sharing the scale up report with
colleagues across Greater Manchester and giving us
the opportunity to input.
As chair of the Greater Manchester Local Enterprise
Partnership, I believe that this provides a powerful
argument for more focused business support services
on firms with high growth potential in a local area.
It is a welcome contribution in the context of Greater
Manchester’s recent devolution deal with Government
and will support us as we look to deliver targeted
business support to our local high growth firms.”

WILL HUTTON,
PRINCIPAL OF HERTFORD
COLLEGE OXFORD AND CHAIR
OF THE BIG INNOVATION
CENTRE
“Britain confronts a Scale-up crisis, and Sherry Coutu is to be
warmly congratulated on opening up an issue that has for
too long gone unexplored and unremedied.
If the country is to capitalise on its strengths and emergent
entrepreneurial culture then it is vital that we construct the
ecosystem in which more start-ups and young firms grow
to maturity.
We need the debate which I hope this report will trigger: but
we also need radical action”.

TONY CLAYTON,
CHIEF ECONOMIST
IPO
"Not only does this report pull together the
evidence on economic gains from effective
scaling up of knowledge based business based in
the UK in a comprehensive way, it also sets out
the ways in which resources can be mobilised,
skills improved and successes identified.
It's not about 'picking winners' but about making
sure firms that win early can go on to use their IP
and innovative ideas to win internationally.
It's another chapter in turning UK ideas into
growth on a global scale”

ANDREW MILLER,
CEO
GUARDIAN MEDIA GROUP
At the Guardian we have used the many advantages
technology gives us to scale up and transform our
organisation into one of the world's leading quality
news brands.
Sherry Coutu's comprehensive and insightful report
identifies the many challenges we all face if we are to
unlock, harness and sustain the extraordinary
opportunities that now confront us.
I hope that it encourages political, business and
technology leaders to come together and deliver the
strategies, skills and structures that British businesses of
all shapes and sizes need if they are to continue
succeeding on the world stage.

THE SCALE-UP REPORT
Background
#scaleup
NOVEMBER 2014

1987
Became a Computer
Programmer
ENTREPRENEURSHIP
Sherry Coutu CBE < 2000
1986
Came to the UK to attend the
London School of Economics
2000
Floated second Start-up
1991
Studied Business at Harvard
1994
Joined my first
‘start-up’
1995
Founded second Start-up
1997
first ‘startup’ sold
THE SCALE-UP REPORT ON UK ECONOMIC GROWTH #scaleup
Sherry Coutu |CBE

THE SCALE-UP REPORT
Definition
NOVEMBER 2014

A ‘scale-up’ is an enterprise with average annual 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 period

Methodology
8,923

SCALE-UPS ARE THROUGHOUT THE COUNTRY
Scale-ups are found in each of the 39
LEP areas in England and 6,659 (75 per
cent) of the total 8,923 scale-ups are
located outside of London.
On average a LEP will have
approximately 228 scale-ups in their area.
These in turn can be grouped into the
Number of scale-ups companies that
employ between
• 10 and 49 employees,
• 50 and 250 employees,
• >250 employees
Sherry Coutu |CBE

|SCALE-UPS ARE MORE THAN DIGITAL
SCIENCE ONES GREW 92% LAST YEAR…..
“The Science 50”
Royal Society’s list Illustrates the
extent to which science-based scale-ups
are a nationwide phenomenon.
36 (72 per cent) of the top 50 fastest
growing science-based companies
are located outside of London.
These 50 science-based companies
increased their revenues by an
average of 92 % between 2012 and
2013, achieving a combined annual
turnover of more than £1.3 billion.
Adding more than £600 million to
national output last year.
http://www.svc2uk.com/the-royal-society-science-50-index/
Sherry Coutu CBE

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/254552/13-92-business-population-estimates-2013-stats-release-4.pdf
Sherry Coutu |CBE

JOB CREATION IS LINKED TO COMPANIES THAT ARE HIGH GROWTH (2014)
1%
36 %
Sherry Coutu |CBE

STARTUPS DO NOT CONTRIBUTE TO NATIONAL OUTPUT
Research by the academic David Storey has found that the
median annual sales of a six-year-old firm in the UK are less than £23,000
This research also found that only a small group of start-ups achieve
significant growth in revenues – just one per cent have sales of more than £1 million
six years after they star
1 %
It also found that the average new firm, despite the hype that surrounds
startups, made a negligible contribution to British productivity growth.
Sherry Coutu |CBE

STARTUPS DO NOT CONTRIBUTE TO NATIONAL OUTPUT
Related to this is the fact that larger businesses tend to be more
productive than smaller businesses.
BIS data show that in the UK average turnover per employee is:
• £170,000 for firms with 250 plus employees
• £164,000 for firms with 50 to 249 employees
• £134,000 for firms with between 10 and 49 employees39
The average new firm, despite the hype that surrounds startups, made a
negligible contribution to British productivity growth.

SCALE-UPS HAVE HIGH QUALITY JOBS
Of the employees surveyed in these high-growth companies who had joined the
company from another employer, 80 per cent stated that they were ‘satisfied’ or
‘very satisfied’ with their current job compared to 46 per cent when asked about
their previous job
THE SCALE-UP REPORT ON UK ECONOMIC GROWTH Sherry Coutu CBE
Sherry Coutu |CBE

Scale-ups are not start-ups
CONCLUSION
And we should focus our attention and policies on scale-ups
Sherry Coutu |CBE

“to nurture and raise a single child into a successful human being takes
much longer and is a more complex and arduous process for society
than to introduce an additional child into the world”

THERE IS A SCALE-UP GAP
The UK has a lower share of large businesses
than the US.
Large firms with more than 250 employees
account for 0.5 per cent of firms in the UK but
0.7 per cent in the US.
Sherry Coutu |CBE

THERE IS A SCALE-UP GAP
 Many European economies,
including UK are as
effective as US in creating
new businesses
 Not enough of them grow –
displacing older firms
 This lack of ‘scale up’
means the economy as a
whole loses on productivity
and growth.
Nesta (2011). A Look at Business Growth and Contraction in Europe
THE SCALE-UP REPORT ON UK ECONOMIC GROWTH # s c a l e u p Sherry Coutu |CBE

The 3 year gross impact of moving 1% of businesses to HGF mode
(244% over 3 years)
As a simple illustration of the potential impact of
high-growth firms, RBS undertook an analysis to
determine the economy wide impact of one per
cent of all businesses with over 10 employees
shifting from a stable growth state into high-growth
mode.
This would see the total population of HGFs in
the UK increase from 10,200 (4.6 per cent of
total business population with 10 or more
employees) to 12,440 (5.6 per cent of total
business population with 10 or more employees).
At the end of year three this would result in 2,240
businesses making this shift and the creation of
238,000 jobs and almost £39 billion in additional
turnover.
39 * 20 years = 780 billion before you take
into account productivity effects
Source: RBS Working Paper: Oct 2014 High Growth Firms and the Economy
£ 780 billion
+
£ 768 billion

We know how to help companies scale-up….
The Endeavor Programme, which assists companies around the world to grow, has
helped companies to achieve 5.4 times the rate of growth in employment of
comparable firms in their own countries.
THE SCALE-UP REPORT ON UK ECONOMIC GROWTH Sherry Coutu CBE
Sherry Coutu |CBE

Highly effective programmes in 20 other countries

AND ARE BEING TRACKED LOCALLY… http://www.scaleupreport.com

Key Messages
What makes any portfolio of
initiatives work in this context is the
joint efforts of a mixed group of
stakeholders:
Successful entrepreneurs,
government, large corporates,
investors and educators
(universities and schools).
Joint initiatives, joint leadership,
joint funding, joint accountability.
This mixed representation and
cross-stakeholder working is what
creates a true entrepreneurial
ecosystem.
http://issuu.com/endeavorglobal1/docs/what_do_the_best_entrepreneurs_want

Collaboration is key
The Endeavor programme has cost an average
of £405 for every job created in emerging
conomies, and this has been
financed largely without public funding (see case
study below).
Furthermore, the Endeavor programme is
financed in most cases without any public
support, relying on private sector donations of
funding and time, with a volunteer network of
more than 1,000 global and local business
leaders.
Similarly, Mass Challenge and VentureFest have
created more than 4,000 jobs between April
2010 and September 2013 at a cost of £1,285
per job, with just four per cent of funding coming
from the public sector.
Sherry Coutu |CBE

Collaboration is key
THE SCALE-UP REPORT ON UK ECONOMIC GROWTH # s c a l e u p Sherry Coutu |CBE

Key Findings
Achieving additional
economic growth
does
not
require
significant
additional
funds
If coordinated by
local leaders
who
Collaborate
with
business and universities

THE SCALE-UP REPORT
Recommendations
#scaleup
NOVEMBER 2014

KEY RECOMMENDATIONS
#scaleup

KEY RECOMMENDATIONS
Recommendation 1:
RELEASE the names of scale-ups
 you already hold the information
so that local public and private organisations
can identify, target and evaluate their support
to scale-up companies, and evaluate their
impact on UK economic growth.
Case Study: Cambridge Cluster Map
Sherry Coutu |CBE

KEY RECOMMENDATIONS
Recommendation 2
Publicly funded organisations such as
Local Enterprise Partnerships and
cities
seeking public funding
should review and report on the extent
to which the top 50 scale-ups in their
areas are increasing their turnover and
job growth from year to year with the
objective of increasing the proportion
of scale-ups with more than 250
employees by three per cent by 2025.
Case Studies: Future Fifty and
National Cluster Alliance Programme
Sherry Coutu |CBE

KEY RECOMMENDATIONS
Recommendation 3
50 % of public funding and promotion
currently reserved for ‘entrepreneurship’
should
be
directed towards
collaborative initiatives
based on track-record
Case Studies: VentureFest Network &
SVC2UK
Sherry Coutu |CBE

KEY RECOMMENDATIONS
Recommendation 4
A Minister should be made responsible
for reversing the scale-up gap by 2025
with
cross-departmental resources allocated
independent bodies named (to monitor)
and
a task-force appointed to deliver
a scale-up report to the
Prime Minister every November for the
next five years.
Case Studies: Manziales-Mas, Columbia, Scale-up Milwaukee, Endeavor, Singapore
Sherry Coutu |CBE

KEY RECOMMENDATIONS
Draw attention to scale-up companies
and their leaders so that it is easier for
them to act as role models to others
and to find customers, partners and
investors, both at home and overseas.
Sherry Coutu |CBE
Case Studies: Elite, Mentorsme, Venturefest, SVC2UK

Closing The Scale-Up Gap:
Local Government
• Celebrate scale-up growth events in your city with the media
• Invite scale-up leaders to share their experience with students
• Celebrate new customer wins and help create new ones
• Encourage local universities to offer courses to scale-up leaders
• Meet with a selection of scale-up leaders every month (3 hours)
• Persuade real-estate leaders to offer scale-up friendly terms
Sherry Coutu |CBE

Media
Shine a light on our most successful scale-up leaders and their
companies rather than only start-ups.
Sherry Coutu |CBE

Media
Profiling successful scale-up entrepreneurs at key mile-stones
to inspire others (especially the next generation)
Sherry Coutu |CBE

Media
Reviewing and holding to account initiatives and policies in
entrepreneurship:
• Are they about starting or growing businesses?
• Are they actually providing evidence to support their claims?
• What is the cost per job created?
• Are they collaborative?
Sherry Coutu |CBE

Human Capital - Schools
• Entrepreneurship in curriculum?
• Entrepreneurs on board of Governors?
• Local Scale-up leaders in the class-room as role-models?
• Proportion of Local Scale-up companies featured in careers fairs?
• Proportion of work experience features local scale-up companies?
• Extra-curricular student entrepreneurship activities / clubs?
• Proportion of students visiting scale-ups on ‘open days’?
Sherry Coutu |CBE

Human Capital - Universities
• Include entrepreneurship in curriculum?
• Entrepreneurs on board of Governors?
• Business Schools offering local courses to scale-up leaders?
• Local Scale-up leaders in the class-room as role-models?
• Local Scale-up companies featured in careers fairs?
• What proportion of work experience features scale-up companies?
• Ecosystem coordinators trained in what works and what doesn’t?
• Extra-curricular activities around entrepreneurship encouraged?
Sherry Coutu |CBE

Supports:
• Identify mentors with experience and find effective ways to
share their knowledge
• Publish the the amount you procure from scale-ups
• Offer infrastructure / co-working spaces:
Sherry Coutu |CBE

Large Corporates
Long-term:
• Support existing initiatives that help teachers and schools
develop future entrepreneurial talent
Sherry Coutu |CBE

Large Corporates
Med-term
• Identify & Sponsor infrastructure for product dev’t and
testing
• Support formal skill-building programmes for local scale-up
leaders
• Support informal skill-building programmes for local scale-ups
Sherry Coutu |CBE

THE SCALE-UP REPORT
Impact
NOVEMBER 2014

Key Findings
Achieving additional
economic growth
should
not
require
significant
additional
funds
from central government,
if
data is released
as a platform from which local
leaders can draw upon
collaborate with business and
universities.
Sherry Coutu |CBE

THE SCALE-UP REPORT
Making it happen….
NOVEMBER 2014

Let us start today:
We can Reverse The Scale-up Gap
2014 2020 2034
Sherry Coutu |CBE

THE SCALE-UP REPORT
Let’s do it together!
An independent report to the government | www.scaleupreport.org | @scaleupUK | #scaleup
NOVEMBER 2014

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