The document discusses a report focused on equity access and use in early-stage ventures, detailing the process of identifying and surveying entrepreneurs seeking equity financing, their characteristics, and the challenges they face. It highlights the high percentage of firms that do not apply for equity finance, the failures during due diligence, and the growing gap in innovation activity between large firms and SMEs, along with implications for future R&D investments. Additionally, it examines workplace mental health issues, their impact on productivity, and the necessity for mental health initiatives in organizations.

1. Understanding equity access and use in
early-stage ventures
A report for Innovate UK and the Department of Business and Trade
Stephen Roper and Robyn Owen
Available at:
https://www.enterpriseresearch.ac.uk/publications/understanding-equity-access-and-use-in-ear
ly-stage-ventures/

2. Questions….
 Who seeks early-stage equity finance? What are the characteristics of these firms/entrepreneurs? What
age/sector/size are firms seeking equity? Where are they located?
 What is the attitude of early-stage entrepreneurs towards using equity? How does this vary relative to other
financing sources? How is this influencing their demand for early-stage equity? How does this differ across
regions and sectors?
 Are firms investment-ready? Do they have competencies in corporate finance or have they sought external
advice in fund-raising? How easily available is high-quality advice? Is this different in different regions/sectors?
 Do firms seeking equity get the finance they are seeking? How does this differ between potential sources of
equity funding and locations? Where are the equity ‘gaps’ in terms of investment size, sector, stage of
development and location? Are these uniform or specific to sub-groups of companies?
 Where early-stage entrepreneurs do encounter equity gaps how is this influencing the financing and growth of
their businesses?
 How does the customer journey towards equity funding work? Are there specific barriers or challenges? Where
equity is not obtained where did the process fall down? Why did the process collapse in the firm’s view?

3. Data – targeting early-stage
ventures
• The business survey reported here aimed to collect data on a group of early-stage entrepreneurs both before and after
starting trading, hereafter ‘ventures’.
• Standard approaches to constructing sampling frames based on business registers or Companies House data would
potentially miss pre-trading or nascent businesses. So here we adopt a different two-stage approach to the identification of
potential respondents:
 Stage 1: Identifying potentially relevant ventures – we sought information from a range of accelerators,
incubators and equity providers across the UK on their client companies (both successful and unsuccessful). In
addition. we established a data-sharing agreement with IUK relating to the companies which had either applied to or
participated in their Pitchfest event or received grant support for R&D or innovation. This generated a list of around
12,000 company names with some duplicated entries and very variable quality or no contact details for individuals.
•
 Stage 2: Screening for equity-relevant ventures - where possible – depending on contact details - we then sought
to conduct telephone interviews with firms. Two screening questions were then used to identify ventures which
completed the main survey. These were as follows:
– (1) Have you ever thought or considered that equity finance might be appropriate for your idea, project or
the business you run?
– (2) Which of the following statements describe your reasons for being in business? …. (4) I hope to
develop a product or service that will change my industry, society and/or make the world a better place.
• Only ventures which responded positively to (1) and selected option (4) in question (2) were subsequently
interviewed in full. Finally led to around 750 respondents (2023)

4. ‘Pre-trading’ and ‘early-stage
trading’ ventures
Pre-trading – length of development
period (N=297)
ES trading – date of starting trading (N=
429)

5. The search for equity: How many
potential funders did you approach?

6. Were these new, existing funders or
both?

7. What type of providers did you
approach?

8. Successful getting equity?

9. When did equity process fail

10. Implications of not getting equity
…

11. Implications and next steps
• Even among our rather ‘special’ sample of firms more than half had not
applied for equity for some reason
• Where firms did apply they approached multiple providers (often 5+) and
together around a quarter got all of the equity they were seeking; another
quarter got some of the finance they wanted.
• Where deals did not work out most failed at the due diligence stage –
reasons given varied however
• Phase 2 of the project is now underway seeking to enhance the overall
sample size, get more regional spread in the coverage of the responses
and move away from a sample dominated by Innovate UK contacts

12. Innovation in smaller firms –
recent evidence from the ISNS
Stephen Roper and Ully Yanita Nafizah
August 2024

13. Innovation survey data
• Data from the UK Innovation Survey
(UKIS) provides a robust long-term
picture of innovation trends
• But … the most recent UKIS data relates
to 2020-22 and provides little timely
information on firms’ innovation activity
or intentions.
• ISNS is a smaller, annual survey (c, 2000
firms) designed to provide this timely
innovation information to inform policy
thinking and development
• ISNS also includes micro-businesses for
the first time with 5-9 employees
https://www.enterpriseresearch.ac.uk/wp-content/uploads/2024/04/ERC-Report-Innovation-State-of-the-Nation-
2023-Roper-Nana-Cheraa-Stanfield.pdf

14. Innovation in the rear-view mirror -
UKIS
.. UKIS data suggests a falling proportion of UK firms are innovation active – the
most recent data relates to the 2020-22 period…

15. And a growing gap between large
firms and SMEs
… and the gap between the percentage of innovation-active large firms and SMEs
remains at all-time high levels (again, note 2020-22)...

16. About the ISNS data
• Sampling frames were obtained from commercial list brokers. Firms were
included in the survey if they had more than five employees and were not
part of the public sector or a not-for-profit company.
• ISNS data for each firm was provided by a management team member
responsible for product or service development aspects.
• ISNS 2023 covered 2,018 firms, and data was collected between 14
November 2022 and 28 February 2023 (c 1200 interviews, 800 on-line).
• ISNS 2024 survey covered 2,001 firms and was undertaken between 1st
February 2024 and 22nd
May 2024 (c 1200 interviews, 800 on-line).
• In the analysis, observations are weighted by size and sector to provide
representative coverage of the UK, sectors and sizebands.

17. Proportion of Firms Making Product
or Service Changes
• Levels of innovation activity
continued to fall between 2023
and 2024
• In 2024, 56% of UK businesses
reported product or service
changes in the ISNS. This is a
fall from 61% in 2023.
• Innovation rates fell most in
small and micro firms between
2023 and 2024. A 6.2%
decrease in small businesses'
rate of innovation activity,
compared to just 0.4% among
large firms
• Falls in innovation activity are
linked primarily to falls in
product innovation, service
innovation is stronger (see also
LSBS)

18. Proportion of Firms undertaking
R&D and innovation investment
• Overall, 39% of UK
businesses reported
engaging in some form of
R&D activity in 2023, which
remains the same in 2024
• This overall pattern
highlights some significant
movements with large
firms holding steady, some
small increases in activity
in small and medium firms
and a drop in micro-
businesses

19. Funding innovation
• The proportion of firms that used internal funding also increased from 66% in 2023
to 69% in 2024 and was notably higher among small businesses and frontier firms.
• Micro firms are most likely to self-fund innovation activity with more diverse funding
sources among larger firms

20. Collaboration for innovation
(% of innovators)
• Overall, the proportion of
innovating firms
collaborating with external
partners decreased from
40% in 2023 to 38% in 2024
• This overall picture hides
contrasting trends:
• Collaboration activities
decreased by around 3%
among non-frontier and
smaller firms in 2024.
• There was an increase in
collaboration activities by
around 3-4% among
frontier firms and large
firms with more than 250
employees.

21. Recruitment for innovation…
• 32 per cent of UK businesses indicated that
recruitment issues restricted their innovation
activities in 2024, a decrease compared to
2023. True across all sizebands.
• Among those firms experiencing recruitment
difficulties, it was issues recruiting
technicians (27%), graduate-level
technicians (22%), and engineering staff
(21%), which were more common both in
2023 and 2024

22. Future R&D investment and support
needs (% firms)
• Overall, 47% of UK firms plan to
invest in R&D over the next 12
months, a decreased proportion
compared to 53% in 2023
• This declining trend was
particularly significant in smaller
firms and non-frontier firms.
• Where firms plan to engage in
R&D there is an increasing need
for innovation support over the
next 12 months.
• The proportion of firms seeking
innovation loans will increase from
17% in 2023 to 29% in 2024.
• Similarly, there is more than a
20% increase in the need for
support through R&D grants, R&D
tax credits, IP support,
marketing/export support, strategy
advice, and finding innovation
partners in 2024

23. Final thoughts
• ISNS 2023 and 2024 suggest a continuation of the longer-term trends
indicated by UKIS
– An overall reduction in innovation activity (mostly product related)
– Larger falls in activity – and therefore a growing ‘gap’ between larger and smaller
firms
• Future R&D intentions are relatively weak suggesting a continuation of
pressure on innovation activity.
• ISNS 2023 and 2024 both suggest the strong association between innovation
and business growth. Innovators grow 2-3 times faster in both years.
• Declining levels of innovation activity are not helping with the growth
mission

24. ISNS publications
• ISNS 2023
• Innovation state of the Nation Survey 2023
• Innovation in Micro-Businesses: Evidence from the Innovation State of the
Nation 2023
• Missing Links. Assessing the innovation implications of smaller firms’ limite
d collaboration for innovation.
• How Well Do Barriers and Enablers Predict Regional Innovation? Evidence fr
om the Innovation State of the Nation 2023
• ISNS 2023 and 2024 – report coming soon!

25. Workplace mental health &
wellbeing and productivity
Maria Wishart, Stephen Roper, Vicki Belt

26. Workplace mental health in
the UK
• 18.5 million working days lost due to MH sickness absence (ONS,
2023)
• 300,000 people leave their jobs each year because of a MH issue
(Stevenson & Farmer, 2017)
• Firm-level impacts:
• Absenteeism (the time workers spend off work due to ill-health)
• Presenteeism (workers being at work but not performing as expected because
of ill-health, or working beyond contracted hours)
• Staff turnover (the need to replace workers who leave employment due to ill-
health)
• Costs of mental health issues to UK business estimated at £56bn/yr
(Deloitte, 2022)
• Calls to put psychological safety on the same footing as physical
safety (BITC, 2023)

27. Mental health and well-being
practices, outcomes and
productivity: A causal analysis
Background:
• 3-year ESRC-funded interdisciplinary study
• University College Cork and the University of
Nottingham
Research foci:
• (RQ1) The causal influences on firms’ adoption
and implementation of Mental Health & Wellbeing
(MH&W) practices.
• (RQ2) The MH&W practices which deliver the
strongest payoffs in terms of employee mental
health and well-being.
• (RQ3) The causal links between employee mental
health and well-being and productivity
Aug
24

28. Insight 1: International
comparisons (2023)

29. Estimated direct and indirect costs
related to mental health problems %
of GDP
Total costs Direct costs Indirect costs
On health systems On social benefits On the labour
market
in million
EUR
% of
GDP
in
million
EUR
% of
GDP
in
million
EUR
% of
GDP
in
million
EUR
% of
GDP
EU28 607 074 4.10% 194 139 1.31% 169 939 1.15% 242 995 1.64%
Ireland 8 299 3.17% 2 232 0.85% 1 891 0.72% 4 176 1.59%
Sweden 21 677 4.83% 5 696 1.27% 7 558 1.68% 8 423 1.88%
UK 106 024 4.07% 36 353 1.40% 22 704 0.87% 46 967 1.80%

30. Data set
• Computer Assisted Telephone Interview (CATI) survey, for-profit and voluntary sector
firms operating for at least 3 years, with minimum 10 employees
 Ireland: Sep-Dec 2022: 1,501 firms
 England: Jan-May 2023: 1,902 firms
 Sweden: Sep-Dec 2023: 1,000 firms
• Business and employee characteristics
• General sickness and Mental health sickness absence measurement & practices
• Mental health initiatives and outcomes
• Presenteeism

31. Mental health related sickness
absence
250 plus
50-249
20-49
10-19
All firms
0% 10% 20% 30% 40% 50% 60% 70% 80%
41%
36%
17%
11%
17%
47%
46%
29%
17%
27%
69%
50%
31%
18%
32%
Sweden England Ireland
Proportion of firms reporting MH sickness absence in the preceding 12 months
Sweden 1,000 firms, England 1,878 firms, Ireland 1,484 firms

32. Mental health related sickness
absence
Ireland
England
Sweden
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
32%
47%
40%
Proportion of firms with long-term MH absence Proportion of firms with repeated MH absence
Ireland
England
Sweden
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
44%
38%
88%
Sweden 400 firms, England 471 firms, Ireland 291 firms

33. Impact of MH absence
Proportion of firms reporting MH absence impacted on their
operations in the preceding 12 months
Sweden 400 firms, England 471 firms, Ireland 291 firms
Ireland
England
Sweden
0% 10% 20% 30% 40% 50% 60% 70%
46%
58%
43%

34. Engagement in Mental Health
initiatives
250 plus
50-249
20-49
10-19
All firms
0% 10% 20% 30% 40% 50% 60% 70% 80% 90%100%
85%
70%
46%
36%
46%
86%
64%
58%
42%
52%
90%
82%
77%
74%
78%
Sweden England Ireland
Proportion of firms offering MH initiatives, by country & size
Sweden 1,000 firms, England 1,902 firms, Ireland 1,501 firms

35. Insight 2: Workplace well-being in the UK
2024

36. A longitudinal dataset
• Computer Assisted Telephone Interview (CATI) survey
• For-profit and voluntary sector firms (not govt. or public sector) operating for at least 3
years, with a minimum 10 employees, in East & West Midlands
• Wave 1: Jan-March 2020 (Pre-Covid): 1,899 firms
• Wave 2: Jan-April 2021: 1,551 firms
• Wave 3: Jan-April 2022: 1,904 firms
• Wave 4: Jan-May 2023: 1,902 firms
• Wave 5: Jan-April 2025: 1,901 firms

37. Mental health sickness absence
2024
2023
2022
2021
2020
0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0%
27.5%
26.6%
26.4%
24.5%
30.5%
2024
2023
2022
2021
2020
0.0% 10.0% 20.0% 30.0% 40.0% 50.0%
47.2%
38.0%
39.5%
43.2%
36.9%
38.6%
34.3%
34.8%
34.1%
41.2%
Long term general sickness absence
Long term Mental Health absence
Proportion of firms reporting some level of MH absence Proportion of firms reporting long-term general & long-term
MH absence
1899 firms in 2020, 1551 in 2021, 1904 in 2022, 1902 in 2023,
1901 in 2024
General: 1899 firms in 2020, 1551 in 2021, 1904 in 2022, 1902 in
2023, 1901 in 2024. MH: 556 firms in 2020, 338 in 2021, 480 in
2022, 471 in 2023, 482 in 2024

38. Presenteeism
2024
2023
2022
2021
2020
37.2%
36.6%
20.9%
16.6%
33.4%
Working when they are unwell
Working beyond contracted
hours
67.4%
73.8%
59.8%
78.7%
54.6%
70.6%
33.2%
72.5%
61.8%
69.0%
2020 2021 2022 2023 2024
1899 firms in 2020, 1551 in 2021, 1904 in 2022, 1902 in 2023,
1901 in 2024
654 firms in 2020, 265 in 2021, 394 in 2022, 692 in 2023, 707 in
2024
Type of presenteeism reported
Proportion of firms reporting some level of
presenteeism

39. MH initiatives: intention-action gap
2024
2023
2022
2021
2020
0% 20% 40% 60% 80% 100%
57%
52%
51%
52%
44%
2024
2023
2022
2021
2020
0% 20% 40% 60% 80% 100%
77%
79%
76%
82%
81%
Proportion of firms that believe they should address
MH
Proportion of firms adopting MH initiatives
Base: 1899 firms in 2020, 1551 in 2021, 1904 in 2022, 1902 in 2023, 1901 in 2024

40. Proportion of firms that offer MH
initiatives
Other services
Hospitality
Construction
0% 20% 40% 60% 80% 100%
72%
58%
54%
46%
45%
48%
20%
26%
21%
28%
26%
29%
7%
15%
24%
25%
28%
23%
Yes currently No but would if needed
No and won't Don't know
250 plus
20-49
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
90%
72%
61%
47%
57%
10%
19%
23%
28%
25%
8%
15%
24%
18%
Yes currently No but would if needed
No and won't Don't know
Proportion of firms offering initiatives by sector Proportion of firms offering initiatives by size
1899 firms in 2020, 1551 in 2021, 1904 in 2022, 1902 in 2023, 1901 in 2024

41. Practice-based vs strategic MH
initiative adoption
Proportion of firms adopting practice-based
initiatives
Proportion of firms adopting strategic initiatives
Encourage open
conversations about mental
health in the workplace
Ensure all staff have a
regular conversation about
their health and wellbeing
with their manager
0% 50% 100%
94%
96%
83%
95%
95%
85%
95%
94%
83%
95%
91%
82%
94%
93%
81%
2020 2021 2022 2023 2024
MH Budget
Mental health plan
Use data to monitor
MH&W
MH lead at board level
0% 50% 100%
22%
36%
45%
47%
18%
32%
42%
45%
17%
31%
43%
43%
14%
27%
42%
42%
14%
22%
40%
36%
2020 2021 2022 2023 2024
1899 firms in 2020, 1551 in 2021, 1904 in 2022, 1902 in 2023, 1901
in 2024
833 firms in 2020, 841 in 2021, 952 in 2022, 970 in 2023, 1053 in
2024

42. Line manager training
Proportion of firms that encourage open
conversations about MH
Proportion of firms that train line managers in MH
Other services
Business Services
Hospitality
Wholesale, retail
Construction
Production
250 plus
50-249
20-49
10-19
All firms
0% 10%20%30%40%50%60%70%80%90%
66%
61%
51%
51%
57%
48%
66%
72%
62%
51%
60%
Other services
Business Services
Hospitality
Wholesale, retail
Construction
Production
250 plus
50-249
20-49
10-19
All firms
94%
96%
96%
95%
95%
91%
100%
94%
93%
96%
94%
833 firms in 2020, 841 in 2021, 952 in 2022, 970 in 2023, 1053 in 2024

43. Qualitative insights from
English firms
Line managers’ experiences of managing workplace mental health
issues
• Exploration of the ways in which line managers experience, and cope with, the
management of mental health issues in their staff
• 22 semi-structured interviews with managers from a range of UK private & voluntary
sector organisations, lasting 30 to 45 minutes

44. Need to be caring but
maintain professional
demeanour
Feeling inadequate and
unprepared
Feeling unsupported
…we didn't really
know what we
were doing
…people are
worried about
saying the
wrong thing
...we all just feel
unprepared
… we’re not
feeling that
confident
They heavily rely on
myself to deal with
these situations
…they're pretty
shocking at giving
you any support
It’s further
down the
priority list
I don’t think we really
do have policies and
procedures
…if you’re remote,
you’ve got to be
much more attuned
to how somebody is
It’s a fine line between
being sympathetic and
…your professional job
…we just want to
be able to handle
it professionally
…we’ve got a huge
responsibility to
help people get
through those times
LINE MANAGERS’ EMOTION WORK

45. Line managers’ emotion work
• Expectations from others and themselves, about how they ought to
behave
• Seem to control their emotional displays in line with these often-
unspoken expectations, or ‘feeling rules’ that they perceive
• Participants appear resigned to absence of organisational support:
feelings of alienation?
• Their assertions that they are ‘getting on with it’ suggests that while
emotion work can contribute to emotional burden, it can also be ‘a
major source of coping and finding strength and self-meaning’
(Hochwald, 2022, p. 1155)

46. Moving forward …
• Ongoing survey research with UK employers: wave 6 due in early 2025
• Econometric analysis will continue to draw on longitudinal UK data to
identify how mental health issues influence firm-level productivity, and
which practices offer the best outcomes for mental health & wellbeing
• Employer case studies will explore the barriers and enablers to
adoption of practices and initiatives as well as the impacts of mental
health on team working
• Employee survey and interviews will deliver insight into workplace
psychological safety climate, and the role of leaders in shaping it

48. Smaller firms and net zero
innovation
Anastasia Ri, Effie Kesidou, Halima Jibril, Kevin Mole, Stephen
Roper

49. Background
• Research on ’green innovation’ in SMEs remains unusual
still with many studies focusing on either larger firms or
start-ups
• Key questions focus on the twin transition – digital and net
zero – and whether smaller firms can cope with its
demands
• Recent ERC studies suggest some key results relating to the
drivers and enablers of the net zero journey in SMEs…

50. Evaluating the Trade-offs Between Digitalization
and Net Zero Innovation in SMEs
• Understanding the link between digital
technologies and net zero innovations is crucial
for combating climate change
• Is there a positive or a negative trade-off
however?
• Our study demonstrates that digitally advanced
SMEs are more likely to be advanced adopters
of net zero innovations.
• Our results offer crucial implications for SMEs,
indicating that despite the constraints that
SMEs face, digitalisation allows them to
introduce innovations that reduce carbon
emissions.
• Thus, supporting SMEs in their dual transitions
is vital.
Distribution of net zero
technologies adopted
Source: Kesidou, E Ri, A and Roper, S (2024) Balancing Act
or Two Roads to Travel: Evaluating the Trade-offs Between
Digitalization and Net Zero Innovation in SMEs, Available
on request.

51. Understanding the Drivers of Eco-
innovation Intensity in SMEs
• What determines why SMEs start out on the net
zero journey, and what explains how they sustain
and deepen their engagement? In this paper we
examine the notion of eco-innovation intensity in
SMEs.
• SMEs initial engagement in eco-innovation
practices is driven by aspects of the regulatory
environment - government grants and subsidies
and the availability of external finance – along with
organisational cost saving and reputational
motives, and demand pull, prove critical in
motivating firms to initially engage in eco-
innovation.
• Sustained engagement depends on other eco-
system capabilities – most notably business owner-
managers environmental attitudes and internal
digital capability.
• Our results shed light on the distinct factors that
drive eco-innovation intensity compared to the
initial decision to engage with eco-innovation,
thereby allowing us to understand how SMEs can
accelerate their transition to net zero.
Work in progress! Draft available on request.

52. Sustainability goals and innovation
– micro-businesses
• Micro-businesses tend to prioritize social and
environmental goals but are also more likely to
confront resource constraints that can restrict their
capability to innovate.
• Are micro-businesses that prioritise sustainability
goals more likely to innovate? What enables this
innovation?
•
Our results suggest that owner-managers prioritising
sustainability goals are significantly more likely to
generate new product and process innovations.
• This effect is stronger when micro-businesses adopt
digital technologies.
• Digital technologies enhance micro-businesses'
capabilities, strengthening the connection between
sustainability goals and product and process
innovation.
Jibril, H Kesidou, E and Roper, S (2024) ‘Do Digital
Technologies Enable Firms that Prioritize Sustainability
Goals to Innovate? Empirical Evidence from Established UK
Micro-businesses’, British Journal of Management

53. ERC resources on sustainability and
net zero