Your Call

This week, instead of you reading what we think, we want to read what you think. Regular readers will know that we recently launched our Private Business Commission to investigate why some companies don’t maximise their growth potential within the UK. We aren’t saying the UK isn’t an incredible place to start and grow a business – it clearly is. We’re just saying things could always be better. On 23 April, the Commission’s call for evidence closes, so now is the time to reply.

The call for evidence asks no fewer than 27 questions across four policy areas – access to funding, tax incentives, employee incentives and the state of our capital markets – but don’t let that put you off. We don’t expect you to reply to them all – just those where you have something substantive to add. Perhaps you have experience of applying for government grants and know how that could be improved. Or maybe you have some insights about how the Enterprise Investment Scheme or Venture Capital Trusts could be improved. You might have some experience of employee incentives and ownership schemes in other countries that the UK could learn from. Whatever it might be, we’re keen to listen. 

Responses to the call for evidence won’t just inform our own thinking, but will also be directly quoted – anonymously, or not, if you’re happy to – in the text of the report which the Private Business Commission is ultimately working towards.

I should also stress that while we obviously want to hear from entrepreneurs, we’re also interested in what anyone with something in the entrepreneurial ecosystem has to say too. Maybe you’re a business consultant who has experience supporting scaleups, an accountant with knowledge of how the tax system could be improved, a lawyer with unique insights on how a piece of legislation should be tweaked, a marketing expert who has something to say about how the UK can better position itself internationally, or an investor who has views on where the funding gaps are. 

I could go on, but as promised at the top of the newsletter, this week is about us hearing from you, not the other way around – and I don’t want to distract you from responding to the consultation. 

Engineering Biology

Welcome back. Now that you have responded to that one, Ralph Lucas – or ‘Ralph Matthew Palmer, 12th Baron Lucas and 8th Lord Dingwall’ to his friends – has asked us to share the Science and Technology Committee’s call for evidence on engineering biology. The opening question might be of particular interest to a few of you: “Are there innovative companies, start-ups, or spin-outs that you think are of particular promise or significance using engineering biology in the UK today?” You can respond here.

Further Thoughts

While universities are a great source of entrepreneurs, so too are our Further Education colleges. And like our universities – see our report on spinouts – we think there’s room for improvement. 

That’s why we’re hosting a virtual meeting on this topic with Gatsby. We know we need to work with the world as it is, and appreciate FE staff time and freedom to take the initiative is often limited. The event is on Monday, 29 April from 11:30am – 1:00pm. Drop us an email to register your interest.

Be Our Host

Currently, the largest events we tend to do are on the Terrace of the House of Lords, where we can squeeze in around 150 people. However, we need space for closer to 250 – perhaps more if you have room – for an upcoming event with the nation’s most ambitious founders. Drop me a message if you can host, or know someone who might.

Take AIM

Ali Mortazavi, CEO of e-therapeutics, set a small corner of X ablaze this week with a brutal thread on his intention to delist from London Stock Exchange’s AIM market.

According to Mortazavi: “the UK markets are not just illiquid, they’re completely broken and closed. The situation is worse for small growth companies (in particular biotech) but even sizeable companies such as Shell and many others are saying the same thing.” I would recommend reading the whole thread.

On the same day, City A.M. provocatively asked: Is the London Stock Exchange’s AIM in terminal decline? After all, the market’s total value has fallen by over 50% since its peak in 2021, while the number of firms listed on AIM has shrunk 30% since 2015. As reported, AIM doesn’t come cheap: “An IPO on AIM will cost about £500,000, and fees for RNS announcement, legal costs, and other expenses add around £200,000 a year to that. Given that about 400 companies listed on AIM have a market cap below £50m, that’s a high price to pay for the UK’s small businesses.”

I know some people who read this will be more bullish on AIM. Whether you agree with Mortazavi or not, I hope we can all agree that there is room for improvement.

I don’t want to depress you even more but Mortazavi’s tweet thread highlights another issue that’s holding back British entrepreneurs: With one of his investors now above the 25% threshold, the National Security Investment Act (NSIA), which he describes as a “shocking piece of legislation,” means an extra 45 working days will be added to the process. He says the legislation is “particularly punitive to biotechs, referred to as ‘synthetic biology.’”

With the right policies, we could all be a lot better off (in every meaning of the term). That’s why we set up the Private Business Commission. Whether it’s access to funding, tax incentives, the functioning of capital markets, employee incentives, or anything else you think matters, respond to the Call for Evidence here. The deadline is Tuesday 23 April 2024. Help make the change you want to see in the UK.
 

Message from this Week's Partner

Yesterday, employee relocation platform Jobbatical published a report (which The Entrepreneurs Network was happy to contribute to) exploring an issue that many of you reading will be very passionate about. It looks at the UK’s approach to skilled immigration, what’s going wrong, and what UK businesses need to plug the talent gap. With immigration being a big electoral battleground, the report looks at how those with different voting intentions feel about the impact of current immigration policies on their businesses.

The report is based upon a survey of hundreds of senior business professionals of mid-to-large businesses in the UK. Findings include the fact that a similar proportion of Labour (63%) and Conservative (62%) voters believe that UK businesses need more international workers – but despite this, almost seven in 10 (69%) Labour voters say that the UK government has made it too difficult for businesses to hire international workers (compared to 42% of Conservative voters).

Politics aside, the report also explores the global skills crisis and how different countries are responding to this from an immigration perspective. It raises concerns from business professionals about the cost and complexity of the UK’s immigration system.

You can read the full report here.

As a friend of The Entrepreneurs Network, you’re also invited to Jobbatical’s panel discussion and networking event around this report at Sea Containers London on 18 April, 6pm to 7.30pm followed by networking and drinks. Grab your free ticket here.

Britain's Lost Talent

We just published a letter we’ve written to the Home Secretary alongside our friends at Startup Coalition. It argues that the new salary requirements will cut off international talent to many UK startups.

As covered by UKTN, we think the Government should allow companies to count equity towards the salary requirements for the Skilled Worker Visa. This would enable startups to continue to sponsor foreign workers whose salaries meet the new general salary threshold (£38,700), but not the occupation threshold if they are also compensated through equity stakes in the business.

As the letter states: “Founders frequently tell us that access to talent is a key barrier to scaling their businesses. Startups need staff with the right skills to develop and execute innovative ideas. They often compete with larger, more established companies for talent too – yet these changes could see dynamic startups miss out on the skills they need, while established tech giants will be unencumbered by them. Startups based outside of London, where data shows tech salaries are lower, will be disproportionately impacted by these changes.”

“Equity is a standard form of compensation for many startup employees. Not taking this into account could dramatically underestimate their actual earning potential. Allowing equity to be counted towards salary requirements provides a more accurate reflection of an employee’s total compensation package, and ensures that startups are not unfairly disadvantaged in accessing talent. It would also help to facilitate startups’ ability to access talent from abroad – especially those who are interested in the high earnings potential enabled by equity stakes.”

The threshold hikes are incredibly shortsighted and show a lack of understanding of the UK’s startup scene. Ambitious startups will be hit hardest by the changes as equity compensation is often the only way they can compete with large companies to attract top talent. As ​​Bella Rhodes, Talent Policy Lead at Startup Coalition, says: “UK startups are already struggling to access skilled workers, and the changes that come into force today make it more difficult to fill vacancies.”

I should point out, this isn’t the only policy change we want. We also think the government needs to reduce visa fees, expand the High Potential Individual visa and the Youth Mobility Scheme, and much, much else besides. All are focused on targeting proven and high potential talent.

Whatever is going on in the national debate on immigration, the demand from businesses and returns to the economy for high-skilled immigration is only increasing. There is absolutely no sign of this slowing and every sign that it’s intensifying. 

We won’t rest until the UK has the best visa system in the world for founders (and even then we will need to defend it). To that end, next week I’ll share a link to a Jobbatical report on this topic (sign up for the launch at the Sea Containers in London on 18 April here); later this year with Fragomen we’ll release the next edition of our Job Creators report; we’re working with UK Day One Project on building out some of our policy proposals for the next Government (whoever wins); we’ll continue our MP immigration roundtables with Kingsley Napley; and hopefully one or two more projects. Get in touch with my colleague Derin Kocer if you’re equally passionate about this topic.

Dis Credit 
This week nine startup founders told the Financial Times that HMRC’s failures in administering R&D tax credits has left them exploring moving overseas, scrapping plans to create jobs or rethinking investment decisions.

Matthew Millar, co-founder of Really Clever, said that he was considering moving its operations abroad after his fungal discovery platform was asked to repay £44,000 in relief: “[The process] just pressurises the entire situation the business is in, from a resource perspective, for us having to explain it to investors [and...] our board.” 

There are many more such cases and it’s not a new phenomenon. As regular readers will know, esteemed organisations like the Chartered Institute of Taxation (CIOT) have been highlighting the dysfunction for a while now. All the way back in July 2023, the CIOT was pointing out that HMRC is rejecting legitimate claims and stone-walling other genuine claimants with a bureaucratic system driving them to give up on their claims. For additional reading, check out their 12-page letter to HMRC and the efforts of Lord Leigh and others in Parliament.

There is a way out of this mess. As well as giving insights on the latest R&D in key sectors like tech and life science, the Spring Budget 2024 document promised that a new panel would “help review guidance to ensure HMRC and its directives remain up to date, while also giving clarity to claimants.” The CIOT recommended that this panel should help with the training of caseworkers at HMRC to ensure that the rules are applied consistently and address some of the issues that we have seen in the compliance approach. It’s time that some feet were held to a metaphorical fire.

Talk of becoming a ‘Science Superpower’ is dirt cheap when the government isn’t even getting the basics right.

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Open Letter to the Home Secretary

Together with Startup Coalition, we have written an open letter to the Home Secretary calling on the Government to rethink changes to individual occupation going rates for the Skilled Worker Visa, based on the negative impact they will have on startups’ hiring international talent.

Dear Home Secretary, 

SUBJECT: An open letter from the UK’s startup ecosystem on the changes to individual occupation going rates for the Skilled Worker Visa and its impact on startups.

Britain’s tech sector is the largest in Europe, and is now worth over $1 trillion. From East London to clusters in cities such as Manchester and Edinburgh, British tech is not just leading the charge – it’s setting the standard for the world to follow. Our ability to attract talent from around the world has been critical to our success. In 2023, The Entrepreneurs Network found 39% of the UK’s fastest-growing startups have at least one immigrant co-founder – down from 49% in 2019. Prime Minister Rishi Sunak has repeatedly cited this statistic to demonstrate the contributions migrants make to the economy. 

So far, our immigration policy has been designed with this in mind. The points-based immigration system targets the skills most needed by employers while remaining flexible to labour market changes. The Government has introduced the Graduate and High Potential Individual Visas to encourage recent graduates to work in the UK and contribute to our economy. The Scale-Up Worker Visa has also helped ease talent challenges for startups, and the Global Talent Visa has brought tech innovators from around the world to the UK. 

Today, the Government announced its Future Technology Research & Innovation visa scheme to bring more AI researchers to the UK. More high quality visa access is of course welcome, but the simultaneous changes to the Skilled Worker Visa – which is the most utilised and well-known visa route – mean this is one step forwards, and two steps back.

Among the recent changes include an increase in the going rates – or minimum salary requirements – for specific occupations to qualify for the Skilled Worker Visa. Salaries had previously been set at the 25th percentile for Annual Survey of Hours and Earnings (ASHE) data, but with the new changes these rates have now been increased to the 50th percentile. In practice, this means startups hiring software engineers will now be required to pay them a minimum salary of £51,000 if they want to employ a foreign worker. 

The ability to meet these new salary requirements may not be feasible for early stage startups, who cannot always pay their workers high wages at the outset. Instead, these startups often offer early stage employees equity stakes in their businesses as part of their compensation packages. This grants them a portion of ownership in the company, entitling them to a share of the company’s value and potential future profits and giving them an incentive to grow the company to its full potential. However, the new salary requirements will mean many startups who compensate their employees through a mixture of wages and equity shares will be unable to employ foreign workers using the Skilled Worker Visa. 

Founders frequently tell us that access to talent is a key barrier to scaling their businesses. Startups need staff with the right skills to develop and execute innovative ideas. They often compete with larger, more established companies for talent too – yet these changes could see dynamic startups miss out on the skills they need, while established tech giants will be unencumbered by them. Startups based outside of London, where data shows tech salaries are lower, will be disproportionately impacted by these changes. 

It is also important that startups are able to demonstrate to funders that they have built the right team with the right skills to get the job done. In an already tight investment climate, access to the brightest and best from around the world is more important than ever. If startups are unable to access this source of talent from abroad, we risk stifling innovation and undoing the progress that has been made in the past decade. 

We believe that there are small changes the Government can make that would mitigate the unintended impacts on startups. We would like the Home Office to allow companies to count equity towards the salary requirements for the Skilled Worker Visa. This would enable startups to continue to sponsor foreign workers whose salaries meet the new general salary threshold, which will be going up to £38,700, but not the occupation threshold if they are also compensated through equity stakes in the business. 

Equity is a standard form of compensation for many startup employees. Not taking this into account could dramatically underestimate their actual earning potential. Allowing equity to be counted towards salary requirements provides a more accurate reflection of an employee’s total compensation package, and ensures that startups are not unfairly disadvantaged in accessing talent. It would also help to facilitate startups’ ability to access talent from abroad – especially those who are interested in the high earnings potential enabled by equity stakes. 

More broadly, allowing the use of equity stakes to be counted towards salary requirements for the Skilled Worker Visa will help the UK compete with our global peers in the race for talent – ultimately contributing to job creation, innovation, and economic growth here in the UK.

We the undersigned look forward to hearing from you on this matter.

The Entrepreneurs Network

Startup Coalition

Britain's Superpower

Seven days from today, new immigration rules will come into force that will dent entrepreneurship in the UK, deterring foreign-born founders from starting and growing their business in the UK, while making it harder for domestic startups to hire the talent they need.

The headline is that there will be a significant increase in the overall minimum salary threshold from £26,200 to £38,700, but in many cases the 'going rate' for a job will be the key concern. This will mean many startups won’t be able to hire from abroad, with some having to let go current employees if they can’t justify the pay rise. At this point, you’re probably asking: what’s the ‘going rate’ they’re using to calculate if people get to stay? Well, it depends on the sector. To pick one almost at random, the minimum salary requirement for electrical engineers will jump from £31,440 to £53,500. And as Nick Rollason from Kingsley Napley told me: “Tech startups wanting to hire foreign software developers, programmers and developers will now need to pay them £49,900 (up from £34,000), an increase of 46%.”

Ambitious startups will be hit particularly hard. They often use equity as a form of compensation for early employees because they can’t always afford to pay them a competitive wage right away. But this alternative form of compensation isn’t factored into the system. Not always being cash rich, equity compensation is often the only way startups can compete with large companies to attract top talent, while aligning interests so they help scale the business over the long term.

To go from bad to worse, the changes will impact the entrepreneurs starting these companies. As Rollason informs us, “foreign founders who are being sponsored with Skilled Worker visas as directors of UK companies will need to be paid £84,100 (as opposed to the current £59,300).” Yet it’s very unusual for startup founders to pay themselves such high wages – especially not in the first few years. This is not just unreasonable. It is short-sighted. As our research has shown, 39% of the fastest growing companies in the UK have a foreign-born founder or co-founder. These include companies such as Oddbox, Zapp, Synthesia, Kroo, and Zilch. And remember, we no longer have a devoted entrepreneur visa, due to the poor design and implementation of previous attempts. So how is the UK supposed to maintain its competitive edge in innovation and entrepreneurship?

It gets worse. Rollason adds: “accessing the talent pipeline of foreign graduates coming out of UK universities will also be made much more difficult. Startups trying to sponsor these graduates have benefitted from a ‘new entrant’ discount on salaries paid to recent graduates. But again, with the increase in the ‘going rates’, the salaries to be paid to these new entrants are going up to £30,900. This compares to the current £23,800 pa for programmer and software developer roles.”
 
Some people think that going into an election there is a political inevitability to all this. After all, immigration ranks as the third most important issue for Conservative voters according to British Future’s latest Attitudes Checker. 

Yet, despite Brexit, successive Conservative governments didn’t then close the door to talent (quite the opposite). Boris brought back the vital post-study work visa (admittedly it was Theresa May’s Government that got rid of it). And it was Sunak himself who brought in the innovative (if limited) High Potential Individual visa. There’s no denying that there are strong anti-immigration voices in the Conservative Party, but there is an equally strong cohort of growth-minded fiscally prudent business types who are aware that even when you account for the need for greater spending on public services, the evidence adds up to immigration being hugely beneficial to the UK.

As for Labour, it has vowed to review new foreign worker visa rules if the party wins the general election. But the party has already confirmed they won’t reverse the ban on foreign students bringing dependents to the UK and there are risks that some in Labour believe restricting labour supply is a way to boost wages. You don’t need to understand basic economics to know why this would be a terrible idea (but it helps). Nevertheless, the issue is only the twelfth most important issue for those planning to vote Labour, with most content with current levels of immigration. And given the state of public finances and demographic challenges, businesses will make the case for why they need talent to thrive (as will universities which appear to suffering from a massive drop in international students).

The election will be won from the messy middle, between the polar ends of ideology, but what constitutes the middling orthodoxy is up for grabs. For our part, we know whose side we’re on: Britain’s entrepreneurs. As The Economist argued on its cover: immigration is Britain’s real superpower. 

On the topic of immigration, our friends at Jobbatical have an event on rethinking skilled immigration for UK business on Thursday, 18 April. Find out more and register for a place here. At the event you’ll here more about a report that I have been involved in.

Evidence in Session
Earlier this month, we launched our Private Business Commission, which is looking at the idea of whether Britain’s scaleups are able to hit their full potential. Chaired by Steve Rigby and supported by a team of expert Commissioners, it will be one of our biggest research projects to date. 

As such, we’re looking to crowdsource facts and opinions on various questions relevant to the topic at hand. You might be an entrepreneur who’s faced challenges when scaling, or a researcher who’s close to the policy detail. Either way, we’re keen to hear from you. Learn more about the Call for Evidence by clicking here. 

Back to Basics

Another week, another report. This time on the small matter of securing Britain’s entrepreneurial future.

Going into a general election, it’s tradition for think tanks and business groups to produce their own manifestos with the aim of influencing political parties’ policy teams. It’s something we have done in the past and will no doubt do again. This time, however, we decided to go back to basics (don't worry – not à la John Major), setting out how the next government can empower entrepreneurs to solve our productivity puzzle.

This is far from an exhaustive list of everything we think is needed. Instead, it covers the fundamentals that any political party serious about economic growth must get right.

Building Blocks focuses on four areas. First, our chronic under-agglomeration. In other words we need bigger, better connected cities. Second, we need to get on top of our looming fiscal headaches. That means a more rational tax system, and a smarter approach to procuring from startups. Third, we need to clear the obstacles to innovation. That means differentiating ourselves in terms of regulation – not necessarily less, but always clear, quick and proactive. And finally, we need to ensure we’re fully harnessing both domestic and international talent.

As the report concludes (spoiler alert): “Discussions of entrepreneurship policy over the last ten years have all too often focused at the margin. Small schemes and niche issues have a tendency to occupy more attention than they should, and often end up becoming sources of sclerosis – something which might seem a headline-grabbing initiative for a month or two ends up acting as a constant drag for several decades. When it comes to delivering an economy that fires on all cylinders, we cannot afford to forget the fundamentals.”

We launched the report at our tenth anniversary on Wednesday in the House of Lords, bringing together some of our close friends and supporters and listening to some great speeches from Chris Hulatt (Octopus), Seema Malhotra MP (Shadow Skills Minister), Gareth Davies (Exchequer Secretary to the Treasury), and Emma Jones CBE (Enterprise Nation).

Calling all VCs
Over the last year we’ve been building an Investor Forum with FieldHouse Associates. This is proving invaluable for getting insights on policy changes where expertise from investors is critical. If you’re an investor, sign up here. There is no cost to this. Next month we’re hosting a dinner at Arbuthnot Latham for VCs, so you may well get an invite.

Tour de Force
The Department of Business and Trade has announced a new Invest in Women Taskforce to continue the Government’s work to promote and grow the opportunities presented by female entrepreneurship. The new taskforce is backed by the Department for Business and Trade and industry led, under the stewardship of multi-exit entrepreneur Debbie Wosskow OBE and Barclay’s Hannah Bernard OBE. Small Business Minister, Kevin Hollinrake MP, will represent the government.

The taskforce has committed to launch a funding pot totalling £250m for female founders; increase angel investment for female-led businesses; encourage more women to become Angel investors; and boost micro-funding to increase access to finance for women.

As regular readers will be aware, we’ve worked closely with Barclays on our Female Founders Forum for many years, so it’s great to see Hannah co-leading it. Debbie is a member of the Forum, and has proven time and time again how capable she is at building things.

On the topic of funding for female entrepreneurs, Sam Smith, Tamara Lohan, Hailey Eustace, Emma Sinclair, and other female founder friends of ours are backing a new campaign to review the current investment practices and to ensure that taxpayer money is being channelled more equitably. It’s called #notwithmymoney, and you can check it out here.

Finally, National Women’s Enterprise Week 2024 will return from 17 to 21 June. It was created by our Adviser Alison Cork MBE and includes a competition to win one of ten places on the Women’s Launch Lab programme, a three-day incubator for female-led startup and scaleup businesses. Find out more here.

Bright Spark
We have a new Adviser (and few more to announce in the coming weeks). Patricia Ypma is the Founder of Spark Legal and Policy Consulting. She brings a wealth of experience, having authored publications, reports, and studies on EU law and policy issues. Patricia is bullish on the UK: “It is very easy to set up a business in the UK and, especially in London, where the climate is international, innovative and open minded.”

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TEN More Years

First off, on Wednesday we’ll celebrate our ten-year anniversary in style with an afternoon tea reception on the Terrace of the House of Lords, kindly supported by Octopus Group. If you’re a Patron, Adviser, Supporter (sign up here) or someone who has been closely involved in our work request a place here. It’s not just a party – we’ll be releasing a new report that sets out the fundamental building blocks that go into making sure the next ten years are the entrepreneurs’ decade.

That eye on the future is why – as reported in the Sunday Times (paywall) – we’ve launched the Private Business Commission to investigate why some companies appear to struggle to maximise their growth potential within the UK, and to advocate for policies to better ensure they are able to do so. The Commission is chaired by our Patron Steve Rigby, co-CEO of Rigby Group, one of Europe’s largest technology businesses and investors, and expert Commissioners from the worlds of business, finance, and politics. This includes Chris Hulatt, co-founder of Octopus Group, Irene Graham OBE, CEO and a board director of the ScaleUp Institute, and Janine Hirt, CEO of Innovate Finance.

The Commission will consider things like access to funding, tax incentives, capital markets, and employee incentives, but we will be led by the evidence that is submitted into the call for evidence (watch this space). The UK is home to just 4% of the world’s largest companies, a drop from 20% only two decades ago. With the rise of China and India some relative decline is to be expected, but some things are clearly not working properly.

Just today, the Evening Standard reported that money is flowing out of the London stock market at a record pace – faster than all but four European countries. We’ve been warning about this for longer than I care to remember. The best time to fix it was a decade or more ago – the next best time is now.

Neurodiverse Nuances
As you may have already seen, we put out a report with Barclays Eagle Labs on Neurodiverse Founders this week. It was based on an extensive survey and the results reveal a lot. Steph Bailey did a great job in Sifted of explaining the nuances, so did Robert Scammell for UKTN, and I had a go for Forbes. For the time poor, the report's author Eamonn Ives has a useful thread covering the main findings. 

On the negative side, only 4% of neurodiverse founders surveyed report never experiencing discrimination because of their neurodiversity, while 48% report ‘regularly’ or ‘always’ experiencing discrimination. No doubt as a result, 78% agree they have ‘hidden’ their neurodiversity in business situations, compared to just 7% who do not. 

On the ‘mixed bag’ side of the findings, 48% of neurodiverse founders surveyed believe there is an adequate level of understanding of neurodiversity in the business community, versus 35% who do not. While 42% think neurodiversity is accurately portrayed in the media, compared to 38% who do not. And 47% agree there are enough role models for neurodiverse people in business, versus 35% who do not.

On the positive side, 67% of neurodiverse founders surveyed say their neurodiversity makes them a better business person, compared to just 7% who think the opposite. And encouragingly, 61% believe that it has become easier for people with neurodiversity to succeed in business compared to when they first became a founder. Indeed, the likelihood that a respondent agrees it has become easier to succeed increases among entrepreneurs who launched their business further in the past. Nearly seven in ten founders of businesses started seven or more years ago agreed this to be the case.

However, it’s also clear from our survey that for many neurodiverse people entrepreneurship isn’t their first choice. We found that 66% agree that they struggled to find employment prior to setting up their own companies due to their neurodiversity, compared to 16% who do not. And as many as 64% agree that their neurodiversity meant that setting up a company of their own was the only way they could earn a living, compared to 17% who do not.

This reflects badly on conventional business practices. As much as we think entrepreneurship is great, we don’t think people should be forced into it. We’ll feed this research into the work of the Lilac Review.

A Degree of Uncertainty

For many years, going to university has been a given for ambitious individuals from all backgrounds, providing knowledge, soft skills, and perhaps most crucially a key to the corporate world in the form of a certificate. But, as the value of a degree decreases and in a world which threatens to be upended by new technologies such as artificial intelligence, it begs the question: is university now outdated?

Practical degrees such as medicine are certainly valuable – you wouldn’t want your heart surgeon to have completed only half of their degree because they found the anterior cruciate ligament particularly boring. But for many, obtaining a university degree is about signalling: a proof of  pre-existing competency rather than a signifier of new skills. 

Recent changes to university tuition fees mean that, with recent changes, it is now hugely expensive for the individual students. Forecasts suggest the average student in 2023/24 will have to stomach over £50,000 of debt, despite only 36% of graduates report finding their degree relevant to their current role. Many describe university debt as a ‘graduate tax’, but with the number of UK students expected to pay back their loans in full doubling to 52%, as well as the increasing cost of living, students are facing unprecedented financial pressure. 

Tuition fees have risen without an obvious improvement in the quality of education. Students in England reportedly receive fewer contact hours than universities in other countries, per a recent survey by the Higher Education Policy Institute. For those attending many private universities in the US, the situation is worse by an order of magnitude, with undergraduates often paying $80,000 per year for tuition, without anywhere near the same levels of state support.

In reality, employers still prioritise degrees from prestigious institutions irrespective of what was taught. With 75% of new jobs requiring a degree, ‘signalling’ culture clearly dominates modern hiring. The process of completing a degree is supposed to demonstrate dedication and intelligence, yet there is a compelling argument that  it is often an arbitrary screening method used by employers. Although companies want evidence of determination, an undergraduate degree spanning three to four years seems an excessively costly method of assessing it. 

Recent attempts have been made to experiment with different forms of higher education, but none have yet scaled to seriously compete with universities. For example, there are accelerated degrees spanning two years, but due to their perceived lower quality of education and value to employers, they have thus far failed to garner popularity. The recently founded London Interdisciplinary School, for example, allows students to explore topics without the boundaries of subjects, but with the institution still in its infancy, and its effectiveness remains to be seen. 

Meanwhile, the pace of AI innovation is changing everything. The question of what subject to study in such a rapidly evolving world is a source of major uncertainty. There is a very real possibility that much of the content within many degrees (e.g. engineering, architecture, law) could quickly be made redundant by AI and other future technologies. The prospect of spending vast quantities of money on the ‘university experience’, just to graduate into a career with waning needs for human expertise or intervention, would be a shocking waste of human capital. 

Just as the dawn of the internet allowed developers to create their own software startups from their garages or bedrooms, so too is AI further democratising the ability of individuals to create their own businesses. A US study found that 61% of Americans have a viable business idea, but lack the skills or confidence to bring their dream to fruition. Many argue that as AI models improve and become more specialised, the pipeline from the ideation stage to the final product will accelerate, allowing less technical and perhaps more creative founders to be successful. 

Entrepreneurship should also be encouraged as a realistic alternative for ambitious students. Despite the idolisation of edge-case teenage drop-out successes such as Mark Zuckerburg and Steve Jobs, forming a startup is still considered extremely risky. Yet never before has becoming an entrepreneur been so easy, thanks to the platform provided by the internet and the support of accelerators. For example, in its 19-year lifetime, Y combinator has incubated companies whose combined value exceeds a staggering $600bn. The success of Y combinator will pave the way for other accelerators, producing more opportunities for budding entrepreneurs.  

University is so deeply entrenched within society that many disregard the hiking costs and the unproductive nature of many degrees, while ignoring alternatives. The negative signalling around passing up on university must change, if we are to tempt young talent away from years of low-impact corporate climbing, and into entrepreneurship. Because in the words of Paul Graham, “for the most ambitious young people, the corporate ladder is obsolete”.

Two Pennies' Worth

We can’t have it both ways. We’ve all complained about governments too readily chopping and changing policies, and then a rather boring Budget comes along and suddenly we’re all asking: is that it? Nevertheless, it wasn’t without consequence.

First and foremost, it was great to see the Government reinstate the lower eligibility criteria to qualify as a high-net-worth or sophisticated investor. This will make sure thousands of angel investors, many of whom come from underrepresented groups, can continue to back startups across the country. In an ideal world, u-turns would be celebrated in politics as nine times out of ten they’re the right thing to do because they are a result of things going wrong in an unexpected way. For those of you who signed the petition we helped coordinate and shared here: pat yourselves on your back. Ultimately, it was the collective voice of thousands of entrepreneurs and investors that convinced the Government to change tack.

Also, we broadly support the Public Sector Productivity Plan. However, as our Researcher Derin Kocer argued in the New Statesman: “Public sector productivity gains can only happen with the adoption of new technologies, and the planned investments to achieve this should therefore be welcomed. However, we must not lose sight of the fact that for genuine transformation in delivery, our most innovative start-ups need a fair shot at supplying these new technologies, making reforms to public procurement all the more important. Many of Britain’s start-ups want to work with the state for the benefit of the country – the government should open its doors to them.”

We have produced Procurement and Innovation and Access All Areas: Government (with Enterprise Nation) on this, some of which was reflected in the recent Procurement Act, and recently held a roundtable with MDRx which made it clear there is still a lot more to do. Watch this space.

As detailed last week, the balance of power between academic founders and universities is out of whack. Therefore, as our Head of Research Eamonn Ives said: “It’s pleasing to see the Government put a timeline on when universities have to report their spinout policies by, but this should not be seen as the end of the matter. If academics remain under-empowered to launch investable spinouts, we will continue to fail to maximise the groundbreaking innovation necessary to deal with climate change, fight diseases, and tackle other looming problems. Delivering a better settlement for entrepreneurial academics who want to commercialise their research to build innovative startups cannot come soon enough.”

Separately,  Eamonn was quoted on the fact that the government wanted changes to National Insurance to be the headline announcement. And it goes without saying that the 2p cut to Employee NICs will be welcomed by workers who’ve seen earnings squeezed, but because the incidence of NICs – i.e. who ultimately bears the burden – can fall in part on business owners too (the IFS explains this well here), entrepreneurs may well benefit too.

Another policy area where economic insights are important is around the VAT threshold. Derin was also quoted in The Times on it. “Britain’s VAT registration threshold, which was already extremely high by international standards, incentivises small businesses to stay small. This threshold instantly burdens any business that only just breaches it with a significant marginal cost. As a result, we see a bunching of businesses that turn over slightly less than the threshold, as many businesses deliberately stop working when they approach it. This move is superficially appealing, but will not help Britain grow in any radical way.”

Derin was in good company, with Michelle Ovens of Small Business Britain and the influential Dan Neidle of Tax Policy Associates agreeing. We appreciate this is a policy area that a few small business champions feel differently about. But our position is true to our core aim of supporting entrepreneurs not as an end in itself, but because they are key to making everyone richer, healthier, happier and all the other good things in life.

If you’re looking for a more entertaining (and brutal) response to the Budget, check out Air Street Capital’s diagnosis that unseriousness lies at the heart of UK policy-making around technology.

Happy IWD!
It would be remiss if I didn’t mention International Women’s Day. I’m buzzing from a great event with Debbie Wosskow OBE and Hannah Bernard OBE at Barclays celebrating female entrepreneurship. Regular readers will know we’ve worked for years with Barclays on our Female Founders Forum project. 

We’re busy putting together our plans for our next piece of work, so watch this space. In the meantime, our friends at Enterprise Nation have put together a practical guide that shines a light on resources that can help build an entrepreneurial nation of female founders. It quotes Beauhurst’s statistic from our last report that just 3.5% of equity investment went to female-founded start-ups in the first half of 2023. Much to do.

Cool Evidence
You can now submit evidence to the Lilac Review, the government-backed independent review, aiming to tackle the inequality faced by disabled-led businesses and level-up entrepreneurial opportunities across the UK. I sit on the Steering Board, so if you want to run anything past me before sending it just let me know.

Take Back Control

It’s not rocket science, but we get more innovation when researchers have more control over their work.

As Stuart Buck from The Good Science Project argues for the US, and we argued in Academic to Entrepreneur for the UK, numerous empirical studies show that we should give direct rights to patent and exploit discoveries and inventions to the researchers and inventors responsible, rather than handing these rights over to the universities that employ them.

Take recent Nobel winner Katalin Karikó. She was driven out of academia over a decade ago due to the unpopularity of her work on mRNA – the same discoveries that allowed us to weather the pandemic. Nevertheless, the University of Pennsylvania, which repeatedly demoted her and eventually drove her out, is now making $1.2 billion in royalties from patents on her work – significantly more royalties than any other university in the world.

Buck runs through a lot of the evidence that we also cited in our report. To some extent, the Government-commissioned independent review into spinouts listened to us and others making the case that things aren’t working for spinout founders. But while we expected to be outliers in wanting a return to Professors’ Privilege – which gives academics ownership of the intellectual property they create – until we see evidence to the contrary, we’ll keep making the case for a return to a system that gives power back to innovators.

Growth Boards
The Government’s Women-Led High-Growth Enterprise Taskforce has released its final report. It’s 18 months in the making and covers a lot of ground, but one practical new policy stands out. The idea is to “roll out Female Founder Growth Boards across the regions of England.”

Zandra Moore, co-founder and CEO of Panintelligence and Taskforce member spearheaded a pilot in Leeds to level up local ecosystems for women with high-growth potential with support from the likes of Data City. “These Growth Boards bring together groups of local public and private sector stakeholders to deliver change in the ecosystem, a process kept on track by the Female Founders Dashboards. The dashboards monitor the supporting data, identifying gaps that may negatively impact female entrepreneurs and the progress of their high-growth ventures.”

We also learned from the report that a piece of research we put out back in 2017 has gone on to have a very welcome unintended consequence:

“Research by The Entrepreneurs Network suggests that only 57% of MPs had heard of EIS (and 39% had heard of SEIS) in 2017. This figure has not increased in recent years, which implies MPs could still do more to champion EIS and SEIS in their constituencies. The Taskforce worked with Government to prepare a letter sent to all MPs raising awareness of the schemes amongst MPs and calling to action their local advocacy to female founders. This letter was signed by the Minister for Women, Maria Caulfield; Parliamentary Under Secretary of State for Enterprise and Markets, Kevin Hollinrake; and Victoria Atkins, then Financial Secretary to the Treasury.”

It would be good to run this MP survey after the next election. If anyone wants to partner on this with us, do get in touch.

Actual Rocket Science
On the back of my report on Space Startups and Scaleups, UKSEDS – the UK’s National Student Space charity – has got in touch to ask us to share details of a new initiative that they are piloting that aims to challenge the established notion in the student community that space entrepreneurship is only for rocket scientists or STEM majors.

The project seeks to make starting a new space business a more accessible dream – empowering students and young professionals by teaching them about the space industry and entrepreneurship, through a combination of online learning and an in-person event running over March 22-24th in Edinburgh.

They’re looking for anything from sponsorship, training or mentoring support. Drop them an email if you’re keen to help.

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Need for Speed

This week our friends at Form Ventures released Fix The Regulators, a policy report which delivers exactly what its title suggests. As it argues: “Creaking regulatory capacity is constraining economic and startup growth, slowing innovation in the sectors that matter most to people’s lives, and becoming a rate limiter on UK startup and tech progress.”

It comes – as nearly every report from now until the election will – with a manifesto. (Guilty: We are planning something along these lines for our 10-year anniversary). I’ll focus on the first of its four manifesto points today: that the UK should set an ambition to have the fastest regulatory approval timelines in the world.

To achieve this, the report recommends introducing a ‘pay for speed’ option and expanding international recognition procedures. A ‘pay for speed’ option would ensure a quick decision with guaranteed fee refunds for the failure of the regulator to meet the deadline. This makes complete sense. We already have fees for speed in other parts of government such as the immigration system, whereby individuals and companies that require a prompt decision can get priority service. After all, it’s not just the uncertainty of the outcome of regulatory approval that deters entrepreneurs and spooks investors, it's the uncertainty around the time the whole process will take. Time, as they say, is money.

The report also calls for the expansion of international recognition procedures, whereby novel and frontier technologies that have already been internationally authorised in other trusted jurisdictions (such as the US, Europe, and Singapore) would be automatically – or at least more quickly – authorised here. Again, this is something we and other countries and trading blocks already do, for example in pharma. The key thing is that we need to do it with novel technologies too – such as Singapore’s approach to cell-cultivated foods and South Korea’s small nuclear reactors – where other country’s regulators are already ahead of the curve.

I recommend reading the report in full (it's exactly the right length).

Labour of Love 
When you ask, we deliver. This week we hosted an event on the question I probably get asked the most by entrepreneurs and those supporting them: “What would a Labour Government mean for entrepreneurs?”

We brought together a stellar team of insiders, includingTom Adeyoola who co-wrote Labour’s Start-Up, Scale-Up report; Rajesh Agrawal, Former Deputy Mayor of London for Business and Labour candidate for Leicester East; Lulu Freemont, Secretary of Labour Digital and a Director at Milltown Partners; techUK’s Neil Ross (one of the brains behind UK Labour's tech policy); and some final words from Seema Malhotra MP, Shadow Minister for Skills and Chair of the All-Party Parliamentary Group for Entrepreneurship.

We already knew that most entrepreneurs are more optimistic – or at least less pessimistic – about a Labour victory than the other options. Our Risk Readiness Report with Mishcon de Reya was the first to ask founders what they thought. When it comes to trusting political parties in understanding what their businesses need to succeed: +17% for the Labour Party, +5% for Liberal Democrats, +2% for the Conservative Party and the Green Party, and -3% for the SNP.

As Derin Kocer writes on the event: “Political turmoil dominated the past decade, whether it’s the shock of Brexit or the fact that Britain changed as many Prime Ministers as Italy. Adeyoola described the upcoming election as 'an opportunity to redefine Britain for the rest of the world.'

“The UK’s strengths must play a central role in this: we are attracting the best and the brightest to build here; we lead Europe in science and technology; and British universities are world-beating. Britain is one of the few places in the world where inventors, innovators and entrepreneurs can act in harmony to build the future.” 

Lest we be accused of political bias, I should add that this week we also took a group of 20 fantastic entrepreneurs into No10 to discuss the issues they faced when growing their businesses, and hosted an Entrepreneurs’ Dinner at Arbuthnot Latham with Business Minister Kevin Hollinrake.

The Magic Number
Next month will be our 10-year anniversary. Patrons, Advisers and Supporters can RSVP here to an afternoon tea reception in the House of Lords, which is being kindly supported by our first and longest-term corporate partner: Octopus Group. I’ll be able to share more details closer to the date, but if you would like to help us in the next 10 years, join us today. You’ll be in very good company.

Sign up to my Friday newsletter here.

What Would a Labour Government Mean for Entrepreneurs?

On Wednesday 21 February, we hosted a panel discussion in the House of Lords on the subject of what a Labour Government could mean for entrepreneurs. Our Policy Researcher Derin Kocer gives the run down of what was said.

To be the party of change, Labour had to show that it was a changed party. After years of dissonance against business under its former leader, Keir Starmer’s party has embraced a new identity – the party of entrepreneurs. 

At least, that was the main message shared by all of the panellists at our event in the House of Lords this week, imaginatively entitled “What Would a Labour Government Mean for Entrepreneurs?” There are few people better placed to speak on this matter than our guests on the day.

As an entrepreneur himself, Tom Adeyoola co-wrote Labour’s recent policy paper on startups, “Start-Up, Scale-Up”. Having served as a Deputy Mayor of London for Business and Chairman of Landon and Partners, Rajesh Agrawal is now a Labour candidate for Leicester East. Lulu Freemont is the Secretary of Labour Digital and a Director at Milltown Partners – a native of technology policy. Neil Ross, the chair of the panel, is the Associate Director of Policy at techUK, a membership organisation for technology businesses, who is also described by Sifted as one of the brains behind Labour thinking on technology. And to cap things off, concluding remarks were kindly provided by Seema Malhotra MP, Shadow Minister for Skills and Chair of the All-Party Parliamentary Group for Entrepreneurship. 

It’s difficult to debate specific policies until Labour publishes its manifesto, of course. However, what we heard from people influencing that manifesto was all the right intentions. Mainly, it was the promise of a government that would see entrepreneurs and growing companies as an engine for growth – an engine that can deliver wealth creation, innovation, and better public services for all. 

Political turmoil dominated the past decade, whether it’s the shock of Brexit or the fact that Britain changed as many Prime Ministers as Italy. Adeyoola described the upcoming election as “an opportunity to redefine Britain for the rest of the world.” 

The UK’s strengths must play a central role in this: we are attracting the best and the brightest to build here; we lead Europe in science and technology; and British universities are world-beating. Britain is one of the few places in the world where inventors, innovators and entrepreneurs can act in harmony to build the future. As Agrawal said, the UK has many things we should be proud of and they will be championed by Labour. 

This is a progressive, optimistic, and new message from a changed Labour Party. It’s also a message that is being heard by entrepreneurs. Previous polling we conducted with Mischon de Reya, for instance, found that entrepreneurs comfortably view Labour as the party which best understands their needs. 

Unsurprisingly, Freemont revealed that many businesses were now engaging with Labour as frequently as possible. That’s a big leap forward for the party which used to hold ‘business policy’ meetings with just a few policy advisers and friendly industry faces prior to Starmer taking over as leader. Adeyoola was one of those friendly faces back then; and he is happier about the state of affairs now. Of course, looking like a government-in-waiting naturally nudges businesses to get closer to Labour.  

However, the issues raised by our audience showed that the party still needs to provide clarity on a number of issues. 

First, accessing talent is getting increasingly difficult for startups. The new immigration rules introduced by the current government raised the salary threshold above the median pay. Most growing companies can’t afford to pay this to recent graduates. Also, especially for novel technologies like artificial intelligence, talent is almost everything. As I argued in Passport to Progress last year, there are few brains out there in the world that can build the next big thing and every country is going after them. Finding ways to attract and retain top talent must be a priority for a Labour government given that migrants found around 40% of our fastest-growing companies.

Second, the party needs to be clear on how it will regulate emerging technologies. The European Union went in tough and early (too tough and too early, in my opinion) on AI and the Biden Administration wants to follow suit. With a smart and light approach, the UK can build the right environment for startups and compete with the rest of the world. 

Last, but importantly, Labour needs to get the basics right. From housing to childcare, the cost of basics is so high that Britain’s potential remains difficult to unleash. The British government buys from international conglomerates while challenger brands in Britain fail to procure and the self-inflicted wound of Brexit is taking time to heal. 

It’s by no means a coincidence that Seema Malhotra echoed Starmer’s call for “a decade of national renewal” in her concluding remarks. Building the future has never been an easy task, but, if our panellists are anything to go by, Labour is asking the right questions. 

To see all of events please click here, and sign up to our newsletter here to be the first to find out about ones in the future.

The Columnist's Dilemma

Last Sunday, Phillip Inman wrote a piece for The Observer with the headline The hard truth is that Britain’s entrepreneurs simply don’t innovate. While he may not have signed off on the headline, the rest of the article isn’t much better.

I don’t recommend reading it. It throws around lots of half baked ideas in an attempt to make the case against what he calls “the neoliberal narrative that has dominated politics for the past 40 years.” Nevertheless, it is a useful springboard for articulating why he is wrong.

The central claim of Inman’s article is that the academic evidence shows that entrepreneurs aren’t innovative, but big businesses are. This is just plain wrong. Study after academic study shows that larger firms produce fewer inventions per R&D pound spent, and that larger firms introduce fewer and less innovative new products than smaller firms.

And critically, innovation in larger firms is more likely to be incremental, focusing on upgrading existing business processes rather than developing novel products. Both types of innovation are important – but it’s new businesses that are remaking the world.

If you’ve built a company on the idea that people will pop down to their local video store to rent movies, you’re unlikely to think that the future of entertainment is streaming online. And even if you can spot the trend, good luck reorienting your large company towards a new goal. What’s true for innovations in entertainment is just as true for innovations to tackle diseases and combat climate change.

It’s common sense. It’s also academic orthodoxy: The Innovator’s Dilemma.

To steel man his article, Inman is right to call for more robust evidence as to what really works when it comes to tax breaks and other interventions. However, the starting point has to be a much fuller understanding of the academic evidence around entrepreneurship than is presented in this article.

(We’ve been working with others on a letter in response to the Observer article, so keep an eye out for it.)

What You Really Really Want
We want to get to know you better. Perhaps you’re a Manchester-based tech founder who is really interested in local events on AI policy. Or maybe you work for a large company that is passionate about ensuring the education system equips the next generation with the skill they need. Or perhaps you’re an academic intent on closing the equity funding gap between male and female founders. 

If you tell us more about you, we can direct relevant events, research, letter signing and case study opportunities in your direction.

Here is the link to our survey. (I'm also open to advice on how to improve it!)

Sign up to my Friday newsletter here.

Entrepreneurs Unwrapped

Britain backs entrepreneurs. That’s the headline finding of Entrepreneurs Unwrapped, which we put out this week with American Express.

The vast majority, nearly 9 in 10, of the public who haven’t started a business think that entrepreneurs make an important contribution to the UK economy. They also think entrepreneurs’ efforts are more down to hard work than luck – even more so than entrepreneurs themselves, on net. Perhaps because of this, 61% of the public think founders deserve the money they make – against a mere 4% who do not.

Despite the overwhelming support on show for entrepreneurs, many think we don’t appreciate them enough. Nearly four times as many people think entrepreneurs don’t get the recognition they deserve as those who think they do. Honours for Innovators anyone?

Our survey also laid bare a number of myths around entrepreneurship, with two standing out in particular. People massively overestimate how much it costs to start a business. Something that Charlotte Alt focused on in The Times, quoting our Adviser Dana Denis-Smith who founded Obelisk Support with just £500.

We also found that the public thinks entrepreneurship is a young(ish) person’s game – saying 30 is the best age at which to launch a business. As you’ll all know from reading this newsletter, academic research indicates it might be closer to 45.

Our Head of Research and the report’s co-author, Eamonn Ives wrote about it for City A.M. As he puts it:

“Entrepreneurship isn’t for everyone, and nor should it be. Productive economies, after all, are those which are built upon a healthy division of labour – where workers do what they’re comparatively best at relative to everyone else in society. But at the same time, it’s a fact that startups are engines of innovation and wealth creation. If we’re to continue to harness the unique advantages they confer, myths such as those above must be dispelled.”

(City A.M. also reported on it, and we were pleased to see Business Minister Kevin Hollinrake sharing it enthusiastically on his LinkedIn. We will be equally pleased if you were to do the same!)

Growing Pains?
The Department for Business and Trade has got in touch to ask us to share their upgraded Help to Grow hub. The aim is to provide a ‘one-stop shop’ of support and advice for small firms. If you have any feedback let us know and we can pass it on.

One Day
Inspired by the Federation of American Scientists, UK Day One was recently launched to help advance the UK’s science and tech policy landscape. Specifically, they want to develop a portfolio of proposals that can be implemented by the new government – whoever that is – within the first 100 days. 

We’re partnering with them on a salon focused on policies to attract the best and brightest scientists and technologists (we already have a fair few ideas). I’ll share more details in the next couple of weeks, but let me know if you’re keen to be involved. We’ll be looking for people with a deep knowledge of policy in this area, as the paper will be written off the back of the salon.

Into Labour
On the subject of the next government. Given the current polling, I think it’s fair for us to ask: what would a Labour Government mean for entrepreneurs? It’s the question we’re most often asked, so we’re putting on an event where you can garner more insights.

Sign up to my Friday newsletter here.

The Lilac Review

It can be tricky to write about disabilities. As Small Business Britain’s excellent Disability and Entrepreneurship report acknowledged in its introduction: “There is no single consensus on how to talk about disability. The word disability covers a wide range of conditions, manifests in an array of differing lived experiences, and is understood in different ways.” But we shouldn’t let this hold us back. 

That’s why I’m delighted to share that I’m joining the Steering Committee of The Lilac Review, a government-backed independent review, aiming to tackle the inequality faced by disabled-led businesses and level-up entrepreneurial opportunity across the UK.

It will be chaired by the Department for Business and Trade, the Department for Work and Pensions and Victoria Jenkins, CEO and founder of Unhidden. I’ll be working with a topnotch group of entrepreneurs with disabilities, including Sarah Berthon, founder of Excel Against The Odds; Dr Mark Esho MBE, founder of Easy Internet Solutions; Joseph Williams, CEO and co-founder of Clu; and Martyn Sibley, co-founder of Purple Goat Agency. 

Disability and entrepreneurship is an under-researched topic, but we’ve held a few events over the years that have shown the need for more. Our webinar Disability in the Time of Coronavirus taught me a lot. For example, while the impact of the pandemic clearly had a negative impact on many disabled people, for some the realisation that people can work and build businesses from home opened up new opportunities.

That webinar featured Liz Johnson, gold-medal winning Paralympian and co-founder of The Ability People, who shared how the sporting industry had changed in its approach to disabled athletes and suggested that we can transfer this into every aspect of our society:

“Authentic inclusion and normalising people’s differences is what’s going to make the world move forward and what’s going to support people with disabilities to use their entrepreneurial skills and opportunities [...] We have to push and work with people to constantly make sure that accessibility is the underlying factor to everything and people are included in consultation at every level because you can’t be expected to fix things for people. If you don’t know what’s wrong with them.”

Entrepreneur Kush Kanodia argued that the ‘fear’ of losing benefits is the single biggest barrier to disabled entrepreneurship: “We need to focus and enable an environment where disabled entrepreneurs feel confident and not afraid to take the additional risks that are associated with starting a new business.”

The Lilac Review was spearheaded by Michelle Ovens CBE of Small Business Britain, so I know it’s sure to be two things: laser-focused on practical change and shot through with positivity. Get in touch with me if you want to chat about this review.

Final Call
We’re deep into a piece of research on neurodiversity and entrepreneurship. To help bring our report to life, we’re looking for neurodiverse founders of tech (or tech-enabled) startups to feature as case studies. There’s still a little bit of time left to get in touch with Eamonn to learn more. 

AI-volution
There aren’t enough hours in the day to keep up with the latest developments in AI. While some people reading this will have a solid handle on how the world is being turned upside down, many more will feel perplexed. For those wanting to understand the past five years, you could do no better than carving out an hour to read Nathan Benaich’s The State of State of AI Report. 

Advisers’ Meetup
After a great evening at OakNorth, this month we’ll be hosted by Ben Greenstone, Partner of Milltown Partners. Ben is an entrepreneur, having founded Taso Advisory, which was acquired by Milltown Partners last year. The attendees will be a mix of entrepreneurs, policy people and corporates. While we need to give priority to our Advisers, please request a place and we’ll let you know early next week if there is space.

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Trumping the USA

Once bitten hasn’t made enough Americans shy. It’s looking possible, if not likely, that Donald Trump will be back in the White House. But even if Trump wins a majority, there will be a sizable number of entrepreneurial people who look at their homeland and wonder if it’s where they want to build a life. I can’t be alone in looking at the States and concluding that despite its weather and success it’s not the place I would like to live.

Hot off the press, my colleague Eamonn Ives writes for the i on why the UK should be ready to poach America’s entrepreneurial class. But we can’t sit back and wait for them to come to us. We will need proactive, laser focused policies. Here’s one of a couple that Eamonn mentions:

“We should grant eligible American citizens access to the long-standing Youth Mobility Visa. This visa entitles people aged between 18 and 35 to live in the UK for up to 24 months, gain employment, or set up a company of their own. Holders cannot access public funds, or use it to bring family members or dependents across with them. They have to pay an annual £470 healthcare surcharge when they apply, plus a £298 application fee, and prove they have enough personal savings to support themselves properly when they’re here. Already, we offer this visa to people from anglophone countries such as Canada, Australia, and New Zealand. It’s time to open it up to our friends across the pond.”

I recommend reading his article in full.

Round Two
Alongside Startup Coalition, UKBAA, Alma, Extend Ventures, Enterprise Alumni, Angel Academe, Angel Investing School and EISA – and backed by thousands of entrepreneurs – we’ve sent a letter to the Chancellor to call for the reversal of the upcoming changes to the definition of High Net Worth Individual Investor. 

You can read last week’s newsletter for more context, although friend of The Entrepreneurs Network and angel investor Hailey Eustace explains why this matters more broadly and succinctly in this LinkedIn post: “Since they were first mooted, the investment market has changed. The changes were first proposed in 2021 when angel investing and VC investment spiked. Since then, first-cheque investing figures have fallen off a cliff, with the number of first-round seed-stage deals in 2023 down 28% year on year and at a ten-year low at 1,025. This is down from 1,973 in 2021, when this measure was consulted on.”

And: “Female and underrepresented founders will be hit hardest. Underrepresented founders already have a harder time accessing capital. As female-led angel groups and others have warned, the changes will squeeze out more women and ethnic minority angels. We know these investors are more likely to back companies overlooked by others. This means female entrepreneurs, diverse founders and companies outside London will find it even harder to raise the funding they need.”

As Dom Hallas at the Startup Coalition updated today: “there is no legislative mechanism now available to the Government to change the rules ahead of their implementation at the end of the month. The changes are ‘affirmative’ secondary legislation - meaning they require a debate in Parliament in order to reverse. This isn’t going to be possible before next Wednesday.”

But this doesn’t mean the fight is over. As Dom writes, there are people in government who are trying to fix things. And you can still exert pressure by signing this letter.

Till You Make it
Technological innovation isn’t always and everywhere an unalloyed good. As techUK’s latest Policy Pulse argues, one of the big stories of this year will be the potential impact of synthetic media, particularly deepfake images, audio, and videos, on democratic elections.

The policy landscape has yet to catch up. As always, the key challenge here will be threading the needle between stopping the bad stuff (which is a lot wider than influencing elections) without limiting all the good stuff that comes with this technology. It’s hard for governments and regulators to do this because they aren’t at the coalface of innovation, which is where we and other organisations must step in.

But we rely on your expertise. So let me know if this is your area of business and I’ll let you know if and when we need to tap into your brains.

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Side of the Angels

In 2019, the entrepreneur, investor, influencer, and podcaster Grace Beverley nearly crashed our website. It didn’t take much – Grace just posted a link on Instagram to her 1 million followers directing them to a report she was featured in as a case study. We had more traffic that day than at any other time in our 10 years. I was reminded of that this week as I got sent her LinkedIn post by multiple people highlighting new legislation threatening female investors and entrepreneurs.

As Grace writes: “On 31st January, new legislation will come into place that is going to impact the barriers to entry for women becoming angel investors immeasurably: As it stands, investors on angel investing platforms have to earn over 100k. New government legislation will see this raised to £170k. This will disproportionately impact the pool of female investors in the UK. In fact, there are some areas of the UK with NO women who earn over 170k.”

This isn’t the first time this issue has been raised, but this is the first time the stats have made the picture so clear. The chart, which is based on research carried out by Marla Shapiro of HERmesa Angel Syndicate and Roxane Sanguinetti of Alma Angels, is shocking. Based on 2020/21 earnings, this would mean huge declines in eligibility for investors across the board, but in some regions – namely the North West and Northern Ireland – no women at all would qualify as ‘sophisticated investors’.

Investors calling for wider tax breaks isn’t much of a story. But no women in entire regions of the UK being able to access investment reliefs is a very big deal. Clearly, it should rise with earnings inflation, but such a large amount in one go is a hammer blow to female entrepreneurs and investors alike.

Homophily is real: people invest in people like them. If this goes through, fewer female investors will mean fewer female scaleups. There’s clearly a balance to be struck between protecting investors and unlocking investors. But this isn’t balanced. Drop me an email if you want to be kept updated on this issue.

Fix Everything
On Monday, I went to Here East in the Olympic Park to see the Secretary of State for Science, Innovation and Technology deliver her #ScaleUpUK speech. In it, she announced the creation of a scaleup forum, pitching and investment opportunities, and a regulatory support service.

Alongside the speech, the Regulatory Horizons Council released a report on The Role of Regulation in Supporting Scaling-up, which echos some of the recommendations that our friends at Form Ventures have been making in their efforts to ‘fix the regulators’.

The announcements haven’t gone without criticism though. Jonny Clark went in with both feet in an article on UKTN. While I don’t agree with it all, I think he has a paragraph that should be taken seriously: “The main problems facing startups in the UK right now are education, tax, immigration, regulation, housing and transport-related. These are all exacerbated by sudden swings and changes in direction every couple of years to mask the inertia, overregulation and stagnation that permeates an increasing number of our civic institutions.”

Obviously none of this is in the power of Michelle Donelan MP to fix on her own, and we can still broadly welcome the announcements she made. But it can’t distract from the wider problems: we need to fix a whole lot more than just the regulators. Let’s hope Donelan uses her chair at the Cabinet table to get her colleagues focusing on all of those other issues Jonny mentions too.

Neurodiversity
We are busy writing a paper on neurodiversity and entrepreneurship and are looking for some case studies from people who have been diagnosed as such. Get in touch with Eamonn Ives if you would like to be considered.

New Year
I’m delighted to announce we have three new Advisers: Ilda de Sousa, Partner, Immigration at Kingsley Napley; Rodolfo Rosini, Co-Founder & CEO of Vaire Computing, and Daniel Astaire, Managing Partner at Grosvenor Law. 

We’ve been drawing on Ilda’s deep expertise on immigration policy for years, so getting her involved is long overdue. Rodolfo is an incredibly smart serial entrepreneur who thinks big and will help keep us focused on the things that really matter. Daniel sat as a cabinet member on Westminster City Council from 2001-18, so, among other things, will bring that experience and interest in local government to the table.

Our Advisers are an integral part of the work we do. Drop me an email if you’re keen to get involved.

Sign up to my Friday Newsletter here.

All Mine

Mark Twain famously quipped that he didn’t have time to write a short letter, so wrote a long one instead. The modern twist is the observation that most books should be articles, most articles blogs, and most blog posts tweets. (I’m not sure what most newsletters should be.)

Taking this advice to heart, this year we’re launching a new way to publish research. ‘Explainers’ allow us to really hone in on policy issues impacting entrepreneurs without the rigmarole of writing a full report.

Our first explainer came out today. Dr Anton Howes, our Head of Innovation Research, has written an easily digestible 1,300 words on how UK copyright is impacting the way founders train AI. Anton is reporting from the coalface, having been involved in countless meetings and negotiations on the topic with the government, regulators, AI companies and rightsholders.

As his thread on X (Twitter) explains (likes and shares are always appreciated): “It’s become a fraught issue lately. In 2022 the UK government announced it would implement an exception from copyright for all copying of material made for the purposes of text-and-data mining. But this provoked a backlash from the creative industries, and in 2023 the government dropped its proposals. Since then, it has been trying to host negotiations for a voluntary code of conduct for AI companies and copyright owners.”

The ongoing lack of clarity has been disastrous for AI startups working in this space, and confusing for creatives who don’t know where they stand.

It’s a prickly policy area, but Anton turns to other countries for inspiration. As far back as 2018, Japan created a broad exception for text-and-data mining of lawfully accessed material, on the condition that copies made are read only by machines, and not humans.

In Singapore, reforms enacted in 2021 created a blanket exception for text-and-data mining of lawfully accessed material, with a similar proviso that the copies must be made only to be read by computers, not humans. While in Israel, the Ministry of Justice has attempted to clarify things by issuing an opinion that copyright law does not prevent the mining of lawfully accessed copyrighted material.

The EU’s 2019 Copyright Directive extended the exception to mining for both commercial and non-commercial uses, but it also allows copyright owners to explicitly opt- or contract-out of having their material being used for training AI. As Anton concludes in his thread: “Funnily enough, this is very similar to an option that was floated in the UK before the government made its 2022 announcement that it had to u-turn on!”

This sort of uncertainty impacts investment and jobs. It’s time for clarity.

Got Form
While important for UK economic growth, the odds are high that text-and-data mining isn’t a key issue for you. So what’s your small or big ask? 

If we think what you’re suggesting is a step towards making the UK the best place in the world to start and grow a business, we will amplify your voice. It’s why we exist.

Whether it’s for our explainers or for our upcoming manifesto report now is the time to let us know what you – or the businesses you work with – need to succeed. I put out requests for your ideas quite regularly, but that’s because we always get interesting responses. So here is a Google form to make the whole process easier.

As our Head of Research Eamonn Ives wrote in his latest APPG newsletter: “In an ideal world, the trials and tribulations of government affairs wouldn’t be a concern for business owners – who we would rather were able to focus their energies on improving their products, upskilling their staff and so on. But the truth is, politics does matter. And it matters that entrepreneurs’ voices are heard at the volume they deserve.”

Sign up to my Friday Newsletter here.
 

Making Progress

2024 will be a big year for entrepreneurship policy. There will be manifestos and (almost certainly) a General Election. The Prime Minister has done us all a huge favour by nixing the dullest question in politics: when do you think the election will be? Sunak’s answer: the second half of the year.

For our part, we’ll be celebrating our 10-year anniversary. Alongside a party to thank everyone who has supported us, we’ll be launching our own manifesto that all the major parties are welcome to steal ideas from. (Equally, if you have any policy ideas you think we should steal from you, share them with Eamonn Ives.)

A lot has changed in ten years. First and foremost, the Great Stagnation is over. Entrepreneurs are driving forward ever more mind blowing innovations. Whether in artificial intelligence, quantum, CRISPR, or renewables, UK companies have been integral to the progress we’ve seen.

Despite this, outside of my bubble of wonder – where literally every day something incredible is happening – things seem bleaker. Over a longer period than 10 years, and using Ngram data, John Burn-Murdoch argues in the FT that we’ve begun to shift away from a culture of progress, and towards one of caution, worry and risk-aversion. Crucially, his argument isn’t just that progress changes people’s minds, but that there is growing evidence it also works the other way – that people’s changed minds cause economic progress. It’s something that we have been banging on about for a while, and it’s a truism for entrepreneurs who are quite literally waking up each day and remaking the world in their image.

If, as a country, we were to make a collective New Year’s Resolution, it should be to eulogise more about the incredible progress that is being made in the world. This isn’t about being panglossian – quite the opposite. It’s because we know we aren’t living in the best of all possible worlds that we aspire to make it so.

Order, Order
Back in 2021 our Head of Innovation Policy Anton Howes and Ned Donovan called for the creation of a new order of chivalry – an Elizabethan Order – to raise the status of innovators, entrepreneurs, engineers, and scientists. Part of the reason was that the Order of the British Empire failed to do this, with on average only 6.7% of the awards being given for those activities. Instead, it largely goes to philanthropists, civil servants, or people who are already famous for sports, acting, and music. 

With the 2024 New Years Honours, we had hoped for some improvement, but this year it’s actually fallen again, for the second year running. Last year it fell to 6.2%, in the Birthday Honours in July it fell again to 6.1%, and in this year’s New Years Honours it’s just 5.95%. Once again, it shows the need for a new and dedicated order.

Still, that 5.95% contains some incredible people. For example, our Adviser Andrew Dixon (now Andrew Dixon OBE) received recognition for his work for services to prisoners and ex-offenders, to property tax reform and to entrepreneurship.

As per our collective New Year’s Resolution, here are Andrew’s thoughts on why the UK is such an attractive place to grow a business: “The UK has an amazing combination of incredible entrepreneurial talent with some of the world’s best academic research institutions. This combination makes for a very powerful mix: not only do we have people who are able to see ahead of the curve and anticipate the rapidly changing needs of customers, but we also have the technology to do just that in new and more efficient ways.”

You Say Hello
We have two events this month that may be of interest. First, if you’re considering becoming an Adviser, we might be able to squeeze you into our inaugural monthly Advisers' Meetup. Second, we have an event in the House of Lords on how entrepreneurs can support the next generation. We will need to prioritise Patrons, Advisers and Supporters, but we will try our best to accept as many of you as the room allows.

Sign up for the newsletter here.

Year Out

There was a time when my end-of-year roundup would be a chronological overview of everything we’ve done and achieved. We’re quite a lot bigger now, so doing so would be tiring to write, and, more importantly, tiresome to read. I’ll try to keep it brief (and there is always this Twitter thread if you want to keep it even briefer).

What We Believe
Perhaps the biggest undertaking of 2023 was our April essay collection Operation Innovation, which had the unenviable task of living up to its unsubtle subtitle “How to Make Society Richer, Healthier and Happier.” Driven and edited by our Head of Research Eamonn Ives, it manages to both lift you up in showing the incredible future which entrepreneurs are building, but also wake you up to policy failure modes holding them back from realising their ambitions.

If you read nothing else, the opening essay (which I had little hand in writing) does a sterling job of explaining what we believe in fewer than 1,000 words.

In October, we released another wide-ranging report with Mishcon de Reya: our inaugural Risk Readiness Report 2023, which set out to better understand entrepreneurs’ broad attitudes to risk – as well as the ones keeping them up right now. Among other things, we revealed that entrepreneurs don’t think they are natural risk takers, but because risk-taking is important to business growth their risk tolerance increases as businesses grow older. (You’ll also need to click through if you haven’t yet read the juicy stats on what entrepreneurs think about the various risks associated with a Labour versus Conservative win next year.)

Culture Club
Our ambitions are big – we want to build an institution that impacts our very culture. That is why in May we released Blueprint for a New Great Exhibition, which pretty much does exactly what it says on the tin. This isn’t a theoretical paper – it’s a call to arms and description from our Head of Innovation Research Dr Anton Howes detailing how to hold a twenty-first-century Great Exhibition.

Anton’s long-term, practical vision also came through in January’s What Applied Learning Really Looks Like, kindly supported by Young Enterprise, and recently championed by the former secretary of state for education Justine Greening. We turned our attention to a very different part of the education system in Academic to Entrepreneur in July, making the specific case for Professor’s Privilege to ensure academic founders are able to more easily spin their companies out or universities, and broader recommendations that fed into the Government’s recent Spinouts Review.

Greatness From Anywhere
Immigration has always been a critical issue for the most ambitious founders in our network. Not least, because so many of them are themselves immigrants. August’s Job Creators 2023 landed big, with many asking the question: “​​Is the UK losing some of its pull for foreign founders?”

For anyone who really wants to understand the international dynamics driving the dearth and demand for talent, our new Researcher Derin Kocer wrote a cracking report in September with kind support from ABE: Passport to Progress. It highlights best practices from around the world – including from the UK. (Though this could be offset depending on how the Government’s 'evolving' immigration changes land.)

We also continued our long-running work with Barclays on our Female Founders Forum. In Accelerate to Excel, Margaret Mitchell took stock of the data – particularly the stubborn equity funding gap – and our many previous reports, concluding that there’s lots to be encouraged by, lots more to do; and every reason to work harder. A view echoed by The Times.

Taxing & Access
In March, through the All-Party Parliamentary Group for Entrepreneurship, we released Funding to Flourish, alongside a letter to the Telegraph letter signed by many of you, which made the case for why the Enterprise Investment Schemes and Venture Capital Trusts have been integral to supporting UK entrepreneurship and innovation. The recommendation were adopted in the Spring Budget.

In October, in partnership with Enterprise Nation and Intuit we released Making Tax Simple, which looked at how digital technology from both the private and public sector could drive productivity gains. We also partnered with Enterprise Nation on three Access All Areas briefing papers, looking at access to markets in March, access to space in June and access to entrepreneurialism for older workers in September.

TEN More Years
Next year we’ll be celebrating our ten-year anniversary. I hope our commitment to the cause and successes are clear, but we’re only too aware that with better policies entrepreneurs would be able to make many more people in the UK richer, healthier and happier. 

Now is the time to join us on our journey. As an individual, you can become an Adviser or Supporter online in a few minutes, while if you run or work for an organisation aligned to our goals, you can partner with us on research or events – book a time in my calendar here for a chat.

And a huge thanks to all our Patrons, Advisers, Supporters, and Partners. It's may be a truism, but it is still true: none of this is possible without your support.

You can read the whole newsletter here, and sign up for the newsletter here.