250 British entrepreneurs back Startup Manifesto in open letter

250 British entrepreneurs, including the founders of Transferwise, Mumsnet, YO! Sushi, Bloom and Wild, Zopa and LendInvest have signed an open letter endorsing the policies in The Startup Manifesto, which we co-wrote with The Coalition for a Digital Economy (Coadec).

“As founders of some of the UK’s most successful businesses, we call on the parties seeking to form our next government to prioritise the needs of Britain’s startups and scale-ups.

Despite Brexit uncertainty, the nation’s entrepreneurial spirit is undimmed. Since 2010, the number of people engaged in early-stage entrepreneurial activity has increased by a third. Total venture capital investment in UK tech topped £6bn in 2018, more than any other European country. And all this growth has meant hundreds of thousands of new jobs.

Entrepreneurship is essential to the British economy. That’s why we support the Startup Manifesto by The Coalition for a Digital Economy (Coadec) & The Entrepreneurs Network.

What startups need from government to build world-beating companies is simple. Access to top talent from both here in the UK and abroad; the right tax incentives to foster and grow early-stage businesses then access to the capital needed to scale them; and a clear, simple set of rules and regulations flexible enough to encourage new and innovative startup business models.

This means reforming the visa system so startups can attract the best and brightest without needless bureaucracy, streamlining tax reliefs so we can get timely investments in ambitious businesses, and reforming pension regulations to attract more funding into early-stage businesses.

These policies would be good for startups, but more importantly, they would be good for the UK. When you support Britain’s entrepreneurs you support the whole economy. We urge all the political parties in this election to bear that in mind and develop a startup and scale-up friendly approach for the years to come.”

List of signatories:

• Carlos Silva – Co-founder, Seedrs

• Aron Gelbard – Co-founder & CEO, Bloom & Wild

• Christian Nentwich – CEO, Duco

• Emma Jones – Founder, Enterprise Nation

• Sarah Wood – Co-founder, Unruly

• James Lohan – Founder, Mr & Mrs Smith

• Mats Stigzelius – Founder and Chairman, Takumi

• Mike Lawton – Founder, Oxford Space Systems

• Shaun Azam – CFO, Sweatcoin

• Stephen Rapoport – Founder, Pact Coffee

• Simon Rogerson – CEO, Octopus Group

• Edwina Dunn – CEO, Starcount (Founder, dunnhumby)

• Virginie Charles-Dear – Founder & CEO, toucanBox

• Giles Andrews – Co-founder, Zopa

• Tom Carrell – CEO, Cydar Medical

• Jonathan Sattin – Founder, triyoga

• Simon Woodroffe – Founder of YO! Sushi & YOTEL

• Dom Hallas – Executive Director, The Coalition for a Digital Economy

• Daniel Korski – CEO and Co-founder, PUBLIC

• Kris Naudts – Founder, Culture Trip

• Doug Monro – Co-Founder & CEO, Adzuna

• Celia Francis – CEO, Rated People

• Christian Faes – CEO & Co-Founder, LendInvest

• Merlie Calvert – Founder and CEO, Farillio Limited

• Tugce Bulut – CEO and Co-founder, Streetbees

• Alex Stephany – Founder & CEO, Beam

• Cecile Reinaud – Founder and President of Seraphine ltd

• John Spindler – CEO, Capital Enterprise

• Jeff Lynn – Executive Chairman & Co-Founder, Seedrs

• Rajeeb Dey MBE – Founder & CEO, Learnerbly

• Andrew Webster – Co-Founder, DesignMyNight

• Husayn Kassai – CEO & CoFounder, Onfido

• Justine Roberts – Founder, Mumsnet & Gransnet

• Vincent Fraux – Co-Founder, Oxford Space Systems

• John Fingleton – Founder and CEO, Fingleton

• David Dunn – CEO, Sunderland Software City, Chairperson, UK Tech Cluster Group

• Philip Salter – Founder, The Entrepreneurs Network

• Thish Nadesan – COO, Cleo

• Tania Boler – Founder and CEO, Elvie

• Taavet Hinrikus – Co-Founder and Chairman, Transferwise

• Anna Lane – CEO, The Wisdom Council

• Adrian Gregory – CEO, DataIQ

• Ana Andres – Co-founder, TidyChoice

• Bryony Simpson – Founder, Engineers for Pioneers

• Iglika Ghouse – Founder & CEO, USPAAH

• Guy Tolhurst – Group CEO, Indagate Group

• Ian Drew – Chairman, Foundries.io

• James Dean – CEO, Sensat

• Iona Smith – Founder, New Life Classes Ltd

• David Murray-Hundley – Chairman, E-Fundamentals

• Elizabetta Camilleri – CEO, indiluup

• Hannah Cox – Founder, betternotstop

• James Clews – CEO, Venture

• Ana Andres – Director, TidyChoice

• Irina Pafomova – Co-Founder, Engelworks

• Janice Gordon – Founding Director, Problem Solving Company

• Andrew Dixon – Founder, ARC InterCapital Ltd

• Anne-Laure Le Cunff – Founder, Ness Labs

• Dana Denis-Smith – Obelisk Support, CEO

• Geeta Sidhu-Robb – CEO, Nosh Detox Delivery Ltd

• David Regler – Founder, Maine Associates Ltd

• Cordelia Meacher – Managing Director & Founder, FieldHouse Associates

• Emma Joy Obanye – CEO, Mindful

• James Lemon – CEO, The Growth Works

• Ben Fletcher – Founder, Lead Bullets

• Adrian Wong – Founder & CEO at Fuse Foundry

• Maria Tanjala – Co-Founder, FilmChain

• Mark Twigg – Executive Director, Cicero Group

• Merita Memisi – CEO, Carter Labs

• Christina Richardson – Founder, weare3Sixty

• Miguel Martinez – Co-Founder and Chief Data Scientists, Signal AI

• Daniel George – Founder, StepEx

• Michael Piddock – Founder, Glisser

• Maria Inmaculada Martinez-Rubio – Venture Partner, Deep Science Ventures

• Rachael Twumasi-Corson – Co-Founding Director, Afrocenchix

• Mike Battle – Co-Founder & CEO, LaplandUK

• Simon Hall – CEO, eCommerce Performance Model

• Charlie Stein-Cohen – Founder & CEO, Net2Work

• Manya Klempner – Founder, Rathbone Boxing Club

• Robert Hollamby – Professor of Enterprise, Leeds University

• Sven Al Hamad – Co-Founder & CEO, Webiny

• Gemma Taylor – Director, Rocket Bridging Limited

• Simon La Fosse – Founder & Chairman, La Fosse Associates

• Ashok Suppiah – Co-Founder & CEO, Mitra Innovation

• Dinara Asadulina – CEO, Plombir

• Kate Grussing – Founder, Sapphire Partners

• Matt Kuppers – Founder & CEO, Startup Manufactory Ltd

• Shane Smith – CEO, Intelligent Crowd TV

• Karina Robinson – CEO, Robinson Hambro Ltd

• Randa Bennett – Founder & CEO, VeeLoop

• Vincent Boon – Founder, Standing on Giants

• Rick Lowe – Managing Director, Brands In Ltd

• Neeta Patel – CEO, Centre for Entrepreneurs

• Russ Shaw – Founder, Tech London Advocates & Global Tech Advocates

• Alpesh Patel – CEO, Pipspredator.com

• Julie Walters – Founder, Raremark

• Joe Seddon – Founder & CEO, Zero Gravity

• Ross Fobian – Co-founder & CEO, ResponseTap

• Diane Banks – Founder & CEO, Northbank Talent Management Ltd

• Elizabeth Drew – Founder, Osmology (Acre Supply Co. Limited)

• Actar Arya – CEO, D A Languages Ltd

• Mark Lightowler – Founder & CEO, Phorix Limited

• Sheelpa Patel – Founder & Managing Director, Mavens & Mavericks Ltd

• John Attridge – CEO, BBXUK

• Reina D’costa – Founder, Bizlaw UK

• James Boyd-Wallis – Director, Fourteen Forty

• David Holloway – CEO, Marlin Hawk Group

• David Benigson – CEO, Signal AI

• Joe Charlesworth – Director, Highway Data Systems Ltd

• Tim Chater – Director, Zero to Sixty

• Krisztina Tardos – Founder, The Merit Club

• Toby Schulz – Founding Director, Vantage Power

• Will Young – CEO, rais.io

• Agata Boczkowska – COO, rais.io

• Jude Ower – Founder/CEO, Playmob

• Robert Lingard – CEO, Power Brand Communications

• Hanadi Jabado – Director of Enterprise, University of Cambridge Judge Business School

• Hela Wozniak-Kay – Co-Founder, Sister Snog

• Sam Gordon – Founder, Gordon & Eden

• Halima Hamid – Founder, The Rustic Roots Company

• Lisa Thorne – Managing Director & Founder, Together Group Ltd.

• Chi-chi Ekweozor – Founder & CEO, Assenty

• Veera Johnson – Managing Partner, Johnson Capital Advisory Ltd

• Raphael Chow – CEO & Co-Founder, Wevat

• Jack Pearson – Director, EngX

• Una Cottrell – Founder & MD, Authentic Marketing

• Allison Alexander – Founder, Branue

• Lucy Sharp – Co-Founder, Dot Residential

• Frankie Fox – Co-Founder, The Foraging Fox

• Sean Ramsden – Founder and Chief Executive, Ramsden International

• Fiona Castela – Director, Castela Consulting

• Tilly McAuliffe – Owner, Think Publishing & Wanderlust Magazine

• Natalia Bojanic – Co-Founder, Form Nutrition

• Richard Carter – CEO, CCww

• Touria Roqaa – Founder & CEO, Roccabox

• Will Dracup – CEO, Biosignatures Ltd

• Simon Cherry – Director, Phantom Ltd

• Nick Sturge – Director, Engine Shed

• Yannick Brunner – Co-founder, WealthKernel

• Stuart Clarke – Director, Paceline

• Ben Brabyn – Head, Level39

• Iris Anson – Co-founder, Etiq

• Pratik Sampat – CEO, ihorizon

• Dr Nicholas Field-Johnson – Senior Partner, Fraser Finance LLP

• Madhuban Kumar – Co-Founder & CEO, Metafused

• Al Gerrie – Founder & CEO, ZigZag Global

• Rick Benfield – CEO, thirdbridge

• Andrew Tibbitts – COO, TechHub

• Kully Singh – CEO & Founder, Player Up

• Aneesh Varma – Founder & CEO, Aire

• Stephen Oldroyd – Head of Strategy, Adzuna

• Luke Robinson – Partner, Post Urban Ventures

• Alastair Paterson – CEO, Digital Shadows

• Sophie Sandor – Founder, Uncouth Chic Films

• Kristian Papadakis – Founding Director, Presso Network

• Davide Machado – Founder, Splitcab Ltd

• Jonathan Holtby – CCO, Dataswift

• Nilema Bhakta-Jones – Chief Operating Officer, Farillio

• Alex Gurr – Head of Sales, Farillio

• Manita Rai – Operations Manager, HireHand

• James Garner – Founder, Sticky

• David Hulmes – Founder, Jackhumble

• Darin Brockman – CEO & Founder, Firsty Group

• Alma Ramirez Acosta – Co-Founder, Vibio

• Rosemary forsythh – Founder, Forsyth Group

• Yogesh Gupta – Founder, GET-NILA LIMITED

• Peter White – CTO, W Cubed Tech Ltd

• Kuvera Sivalingam – Co-Founder, Learn How Now

• Niall Jones – Founder, Innevent

• Phoebe Yiin – Head of Operations, Dataswift

• George Biddle – Founder & CEO, The Grad Soc

• Theodosis Georgiou – CSO, Wild AI

• Jack Dow – Founder & CEO, Grapevine

• Sakunthala Panditharatne – Founder, Asteroid Technologies, Inc

• Geoff Anderson – CEO, PixelPin

• Natasha Guerra – CEO, Runway East

• Simon Francis – CEO, Flock Associates

• Jack Gaskin – Co-Founder, GoKart

• Steve Day – Co-Founder, Football Matcher LTD

• Phil Day – Co-Founder, Football Matcher LTD

• Carl Stephen Patrick Hunter OBE – Chairman, Coltraco Ultrasonics

• Oliver May – COO and Co-founder, Streetbees

• Seb Barker – Co-Founder & COO, Beam

• Dan Walker – Founder, Lnet Digital Ltd

• Sophie Newbould – CEO, Newbould & Co Solicitors | COO, Athensys

• Ian Merricks – Chair, The Accelerator Network

• Fabrizio Nicolosi – Founder, Leaders First

• Emma Little – Founder & CEO, ExecSpace

• Yuliana Topazly – Director, My OutSpace

• Evgeny Shadchnev – CEO, Makers

• Kevin Flanagan – Founder, Dialoguers

• Edmond Ibrahimi – CEO, Propertalis

• James Butler – CEO, Tollo Ltd

• Laurence Nicholas John – CEO, Ctrlio ltd

• Lee Strafford – CEO, ADV

• Chris Barley – Founder & CEO, Converso

• Ellie Webb – Founder, Caleño Drinks

• Vivi Friedgut – Founder, Blackbullion Ltd

• Louise Doherty – CEO, Yoller

• Meera Panchal – CEO, Synadd

• Elizabeth Ellis – Founder, Blue Marble Private

• Dr. Maria Aretoulaki – Founder & Director, DialogCONNECTION Ltd

• Chang Liu – CEO, Extend Robotics

• Jerry Young – CEO, ieDigital

• Simon Thethi – Founder, Tech City News / Indicium Ventures

• Ajay C Thomas – CEO, Sweans Technologies

• Vicky Ngari-Wilson – Founder, The Rural Retail

• Sara Ahmadi – CEO & Founder, shopest

• Christopher Lier – Co-Founder & CMO, LeadGen App

• Sharmadean Reid – CEO & Founder, Beautystack

• Pawel Bojarski – CEO, Sceenic

• Paul Bellamy – CTO, truenova

• Paul Andrews – Founder, School Lettings Solutions

• Ross Williams – Founder, Venntro Media Group

• Dalila Duffy – Finance Director, Mercanto Limited

• Anna B. Sexton – Founder, Open To Create… Ltd

• Becca Courtenay – Co-Founder, The Plantifull Food Co.

• Michele Trusolino – Co-Founder & CEO, Debut

• Shelley Stuart – Director, Stuart Consulting

• Lizzy Hodcroft – Co-Founder, Myndr Ltd

• Charlie Mowat – Founder & CEO, The Clean Space

• Nicolas Colin – Co-Founder & Director, The Family

• Chris Butcher – Co-Founder & CTO, Portify

• Jonathan Wiggin – Founder and CEO, Pionr

• Sho Sugihara – Co-Founder & CEO, Portify

• Michael Nabarro – CEO & Co-founder, Spektrix

• Anne Sutton-Scales – Start-up Founder, Designihastings.com

• Daniele Baroncelli – CEO, Trenìt! / GoBright Media Ltd

• Rafael dos Santos – CEO, High Profile Club

• Dharmin Polra – Partner, London Investable

• Michael O’Sullivan – CEO, Bywire News

• Sorcha Lorimer – Founder & CEO, Trace

• Carlo Alberto Seneci – CEO and Co-Founder, Future Forge Ltd

• Shaan Ahmed – Founder, Uown

• Kirsty Macdonald – Investment Manager, JamJar Investments

• Fotini Markopoulou – CEO, doppel

• Freddie Blackett – CEO, Patch

• Sarah J. Wadham – Founder & CEO, SJW Corporate Services Ltd.

• Peter Bance – CEO, Origami Energy

• Keyu Sumaria – Co-Founder, The Oblique Life

• Adrian Palmer – Former CEO, Proven Legal Technologies

• Dmitry Ivanov – Co-Founder, Wevat

• Sophie Eden – Co-Founder, Gordon & Eden

• Elizabeth Varley – Founder & CEO, TechHub

• Alexander Fitzgerald – Founder and CEO, Cuckoo Internet

• Silvia Ferrero – CEO, MediaLoc Ltd

• Simon Hulme – Programme Director, MSc Entrepreneurship, UCL School of Management

• Diane Young – Co-Founder & CEO, The Drum

• Dr Christopher Haley – Head of Startup Research, Nesta

• Jessica Mendoza – Founder and CEO, Monadd

• John Stapleton – Founder, Entrepreneur & Business Advisor

• Giles Palmer – Brandwatch

• Letitia Seglah – CEO and Founder, Build Scale Grow

• Jonathan Cohen – Founder, Canvus

• Ufuk Polat – Founder & Engineer, Deplike

• Kim Palmer – Founder, Clementine

• Annabel Denham – Founder, Female Founders Forum

• Emma Sinclair MBE – Co-Founder, EnterpriseAlumni

• Karen Kerrigan – Chief Operating Officer, Seedrs

• William Page – Co-Founder, FilmDoo

• Jillian Kowalchuk – Founder & CEO, Safe & the City

• Jinn Koriech – Managing Director, Ixydo

Have a Cow

Hei from Slush!

I'm briefly in Finland at Helsinki's founder-focused event to speak at three events on our recent reports: Job Creators, Future Founders, and Here and Now. As a general rule, I don't attend conferences – not least, because we put on so many events of our own – but with great speakers like Sequoia Capital's Michael Moritz, Stripe's John Collison and Clearbanc's Michele Romanow, this one is making me think I should attend more. If you have any that you think are particularly worthwhile for busy entrepreneurs, let me know so I can share them in advance with our 10,000+ members.

The State of European Tech Report 2019 was launched at the event. The headline finding is positive, the number of industries receiving significant capital is increasing, but there is certainly room for improvement. One fun fact stuck out: based on Meetup data, Milton Keynes is one of the fastest growing tech hubs across the continent. From concrete cows to concrete businesses.

Labour the point
Political parties are busy making their policy positions more concrete. Labour and the Lib Dems have released their manifestos.

Labour's is radical. By its own calculations, it would push up day-to-day spending by £80 billion in 2023–24. To pay for this, the tax burden would be well above levels sustained in the UK since the Second World War. As usual, the IFS has produced the leading economic analysis.

The independent IFS has a robust take on Corbyn's plan to increase corporation tax from 19% to 26% (this would take corporate taxes in the UK to the highest in the G7 and almost the highest in the whole OECD):

"The truth is of course that in the end corporation tax is paid by workers, customers or shareholders so would affect many in the population. In the end, it is unlikely that one could raise the sums suggested by Labour from the tax policies they set out. If you want to transform the scale and scope of the state then you need to be clear that the tax increases required to do that will need to be widely shared rather than pretending that everything can be paid for by companies and the rich.”

Entrepreneurs would also be impacted by the end of Entrepreneurs' Relief; the new treatment of dividend and capital gains income, which would be treated as other income (ie. 40%, 45% or 50%); and the minimum wage increase from £8.21 to £10. While for larger companies, 10% of shares in all UK companies with more than 250 employees would be owned by employees through inclusive ownership funds.

I should point out, John McDonnell disagrees with the IFS analysis, insisting that 95% of people would pay no more tax than they do now. And Labour would give EU nationals the right to remain, which while logistically challenging would be welcomed by many entrepreneurs and their staff. They also have some good stuff around the apprenticeship levy – making it easier for employers to spend the levy by allowing it to be used for a wider range of accredited training. This is something we suggested in our Management Matters report that we produced as part our Business Stay-Up campaign with ABE.

Land liberalisation
You can read what the IFS thinks about the Liberal Democrat's manifesto here. It's not as dramatic as Labour's manifesto, but it still gets quite a lot of criticism. But ultimately, their promise to remain in the EU is probably the marmite policy that will trump all others for entrepreneurs (though don't forget that Labour is promising a second referendum on Brexit).

I want to pick on a policy recommendation in the Lib Dem manifesto that mimics something recommended in our APPG for Entrepreneurship Tax Report (and elsewhere). On page 11 of our report, we suggest the Government transforms business rates into a business land tax levied on landowners. We called for the Government to reform Business Rates to reduce administrative burdens and cash-flow issues by levying the tax on commercial property owners and not occupying businesses. And in order to incentivise investment, we suggested it should be assessed on rateable values upon the underlying land value of a commercial site rather than on the value of the property itself.

This might sound like niche stuff, but it's important. It's the smart way to fix business rates and is pretty much what the Lib Dems have in their manifesto. Labour and the Conservatives are also reviewing the plan. This is pleasing and why think tanks matter.

The Conservative Party hadn't released its manifesto yet at the time this was written. To read the full e-bulletin click here, and don’t ever miss one in the future by signing up here.

Uber loses London license: reaction

In response to the news that Uber has lost its license to operate in London", Research Director Sam Dumitriu comments:

“TfL’s decision to strip Uber of its license to operate in London is disproportionate. It sends a signal across the world that London isn’t open to innovation and competition.

“The violations uncovered by TfL, while troubling, have been addressed through stricter checks on drivers using AI and facial recognition. There’s no reason to expect that this specific problem will continue. Furthermore, if you take into account Uber’s other safety features, it’s likely they compare favourably to other modes of transport in London and definitely favourably compared to transport in London ten years ago before Uber.

“Unlike the initial ban, there is now intense competition in London’s private hire market. However, there is a serious risk that a similarly aggressive regulatory approach will be applied to Uber’s competitors, such as Kapten and Bolt. 

“Disruption, innovation, and competition in the private hire market has been overwhelmingly beneficial to Londoners. Cutting fares and wait times, while providing flexible work for thousands of drivers in London.“

Sleep, Scientific Progress and Child Labour

What's wrong with "why we Sleep?"

Suggested by Annabel Denham, Associate Director at The Entrepreneurs Network

Alexey Guzey’s analysis of Professor Matthew Walker’s critically acclaimed book Why We Sleep is worth reading. Contrary to Walker’s claims that the shorter you sleep, the shorter your life span, Guzey reveals that most studies on the relationship between life span and sleep duration find a U-shaped relationship between length of sleep and longevity: both short- and long-duration sleep are associated with higher mortality.

Neither will sleeping less than six hours a night double your risk of cancer: “Walker does not cite any studies that support this assertion anywhere in the book.” Nor has the World Health Organisation ever declared a sleep loss epidemic throughout industrialised nations (though if you now Google “WHO” and “sleep loss epidemic” you’ll find results citing, you guessed it, Matthew Walker.

That two-thirds of adults in developed nations fail to obtain the recommended amount of sleep is a conclusion Guzey suggests Walker reached through a series of non-sequiturs. Further, “the quote is empty because the WHO does not stipulate how much an adult should sleep anywhere”.

We should worry less about sleep. Sleep is like a cat, it only comes if you ignore it. Instead, let's heed Guzey’s advice: “as long as you feel good, sleeping anywhere between five and eight hours a night seems basically fine for your health, regardless of whatever Big Sleep wants you to believe”.

Is the rate of scientific progress slowing down?

Suggested by Sam Dumitriu, research director of The Entrepreneurs Network

A new paper by my former colleague Ben Southwood and economist Tyler Cowen suggest it is. Defining and measuring scientific progress is a tricky task, so Southwood and Cowen look at a range of metrics including "productivity growth, total factor productivity, GDP growth, patent measures, researcher productivity, crop yields, life expectancy, and Moore’s Law"

However, their findings aren't so straightforwardly negative. While "a wide variety of “per capita” measures do indeed suggest that various metrics for growth, progress and productivity are slowing down. On the other side of that coin, a no less strong variety of metrics show that measures of total, aggregate progress are usually doing quite well. So the final answer to the progress question likely depends on how we weight per capita rates of progress vs. measures of total progress in the aggregate."

Why child labour beats school
 
Suggested by Philip Salter, founder of The Entrepreneurs Network
 
As part of Unherd's radical policies series, Ed West has an article on why child labour beats school.

"Sure, when you put it like that, it sounds a bit… regressive. Perhaps I also think women should be denied the franchise or that MPs should be elected by rotten boroughs? Maybe the return of serfdom?", writes West.

West believes most - perhaps all - children would benefit from working a bit. And he thinks some children could benefit from ditching most of school and working after fourteen.

Referencing economist Bryan Caplan, West suggests schooling is often a costly arms race for credentials and is an overrated part of economic development. Would many teenagers not be better off in a "working environment [that] allows them to interact with adults, adopt adult social norms and learn skills when their brain is rapidly absorbing information?"

West's idea is as big as it will be unpalatable to some. But having sat in classes where some students got precisely nothing out of it - except the daily humiliation of being reminded that they aren't up to scratch (to say nothing about the impact on other children they disrupt), those shocked by West's solution still need to find one or two of their own to solve this policy failure.

Unpicking the Conservative & Labour CBI Announcements

The leaders of the main parties have today attempted to woo businesses with a raft of pledges. Boris Johnson has promised to put Corporation Tax cuts on hold to “help fund the NHS,” while Opposition leader Jeremy Corbyn has turned his attention towards the Apprenticeship Levy. Our Research Director, Sam Dumitriu, comments below.

On Business Rates

“The Conservatives have committed to “launch a fundamental review” of Business Rates at their first budget. If elected, they should replace business rated with a tax on commercial landowners. In their current form, Business Rates discourage investment in commercial property, they impose a large administrative burden upon smaller businesses, and can create cashflow constraints for smaller firms. Moving to a commercial land tax solves all three problems. It might be tempting to simply reduce the burden by cutting business rates, but landlords will be able to raise rents in the long-run, leaving businesses no better off.”

On R&D Tax Credits

“There is a strong case for modernising the R&D tax credit. For example. Data sets are essential to the R&D projects of many tech startups in AI and machine learning, but don’t qualify as an R&D expense. Boris’s commitment to review the scope to consider whether the credit should apply to “areas of investment such as cloud computing and data” could have a significant impact on innovation.”

On Scrapping Cuts to Corporation Tax

“Further cuts to the headline rate of Corporation Tax aren’t the best way to stimulate growth. Osborne’s rate reductions weren’t “self-funding,” as some have suggested. Revenues increased as a result of base-broadening measures, i.e. cutting capital allowances. The actual incentive to invest for businesses barely shifted. This improved following Budget 2018, when Philip Hammond created the Structures and Buildings Allowance, increased the write-down rate for certain types of investment and expanded the Annual Investment Allowance. 

“To boost investment, the next government should use the additional revenue to expand capital allowances. Removing anti-investment distortions in the tax system would help manufacturers in left-behind regions, too. The UK’s historically ungenerous capital allowances may explain the UK’s rapid deindustrialisation. The 1 percentage point increase in the Structures and Buildings allowance is a welcome move.”

On Reforming the Apprenticeship Levy

“Labour’s pitch to business involves reforming the Apprenticeship Levy to give employers more flexibility. In our Management Matters report we called for the Levy to be rebranded as a general Training Levy. The status quo is too bureaucratic and inflexible, and is leading spending on training to fall. Under a more flexible levy funds could still be restricted to ensure they’re only spent on developing in-demand skills. The reform should also be paired with measures to allow the self-employed to benefit from tax breaks when they fund their own training.”

Milking It

What do you want to ask Britain's leaders? If Lord Ashcroft's focus groups are anything to go by, perhaps why Boris he puts the milk in before taking the teabag out? Or who's going to pay you for a four-day week? (Or something even more amusing, if unprintable)

On 25 November you'll have the chance to ask some of the UK's political heavyweights your burning questions, when we join forces with Enterprise Nation, IPSE, Coadec and ICAEW for a hustings in Moorgate.

The 2019 General Election Small Business Debate will be chaired by the FT's Dan Thomas, and will feature: Liz Truss (Conservative), Ed Davey (Lib Dems), Bill Esterson (Labour), Amelia Womack (Greens), and Benyamin Habib (Brexit).

Find out more here, and sign up here. You'll need the code 'TENHUSTING' to get your ticket. I hope to see you there!

(NB. I'll update you next week with details of the live stream, as well as IPSE's Scottish hustings.)

Members' Manifesto
I'm not sure why it's taking the major parties so long to produce their manifestos. We managed to write ours with Coadec in a week. It's a blueprint for any new government that wants to unleash the dynamism of Britain's ambitious startups.

We will launch it in about a week, but before this we're asking entrepreneurs to sign a letter to back the policies. If you want to take a sneak peek at the Manifesto with a view to signing the open letter, please sign up here for FREE to become a Member of The Entrepreneurs Network.

By backing us, you are backing Britain's entrepreneurs.

Queen of the castle
New research from Octopus Ventures ranks universities on the number of high quality spinouts they produce. Queen’s University Belfast tops the list.

The size of the opportunity for the UK to capitalise on more academic spinouts is massive. In the US, MIT alone has been the genesis for 26,000 companies with a combined turnover of $2tn (65% of UK GDP).

Trevor Clawson has written about it for Forbes, and you can read the full report here.

Wise Words
James Wise of Balderton has created an open sourced list for those interested in the tech policies being debated and proposed by the parties in the run-up to the election. Feel free to add policies, discuss and vote for favourites here.

Read the whole newsletter here, and sign up here so you never miss it.

Competing with China, AI regulation, and declining sound quality

Beating China at its own game

Suggested by Marc Sidwell, deputy editor of a new magazine, launching in the new year

Can unleashing global entrepreneurship reset the strategic balance with China? In a provocative essay, the ever-interesting Francis Pedraza makes the case.

Pedraza is the entrepreneur behind Invisible, an online ops platform that coordinates remote knowledge workers. He points out that China leveraged its manpower advantage in low-cost labour to end up dominating high-tech manufacturing through the Shenzhen cluster, gaining a global strategic advantage. Pedraza argues that the West can now play a similar game of its own by turning to the world outside China to coordinate low cost knowledge work online.

There are 5 billion people outside China earning less than $10 a day. Tapping that workforce, he argues, could open an advantage that China, with its total population of 1 billion, cannot replicate.

Pedraza identifies an opportunity that trades on the ever-expanding dominance of English as a lingua franca, the ever-deeper penetration of the internet around the world and the growing sophistication of online platforms that lower the transaction costs of coordinating and rewarding entrepreneurial individuals everywhere.

With increasing concerns about China’s aggressive tactics at home and abroad, perhaps it’s time for entrepreneurs to think big in response.

AI regulation in the EU: The risks of a human-rights based approach

Suggested by Sam Dumitriu, research director of The Entrepreneurs Network

The new European Commission President Ursula Von der Leyen has promised to release proposals for a new AI law within her first 100 days in office. She’s advancing a human rights-based approach to this regulatory effort – focusing on impacts on individuals, and framing potential harms by reference to human rights concepts such as individual dignity and autonomy. What does this mean in practical terms? Ben Hooper and Ying Wu of regulatory consultancy Fingleton Associates argue “the EU’s hope that trust will drive AI growth looks like a risky bet.”

There’s a danger that the EU will fall behind in AI, as other more permissive regimes attract talent. Not only would this be a bad result for businesses and consumers in Europe, but it’d also mean that the EU would find it increasingly hard for the EU to enforce its more restrictive regime.

As the authors write: “AI looks set to be the most important technology of the next few decades. Given these stakes, losing the global AI race would have immense implications for the EU’s future competitiveness.”

Music as cultural cloud storage

Suggested by Philip Salter, founder of The Entrepreneurs Network

"I would say that music is the only form of entertainment in which the technology has gotten worse during my lifetime." Ted Gioia's provocative idea comes from his excellent Conversation with Tyler.

Gioia isn't a luddite. For example, the music historian isn't concerned that streaming platforms have changed how people sing and perform (ie. needing to hold listeners' attention for a few seconds to get a royalty). But he is really concerned about the technology lessening the whole listening experience due to lower sound quality.

It wasn't always thus. Innovation in sound quality used to be the norm, with RCA the Apple of its day, inventing new sound technologies like microphones and the 45 RPM single. Columbia invented the long-playing album and Sony invented the Walkman.

Gioia thinks it was a mistake for record labels to hand over innovation to Silicon Valley. Personally, I think having the world's music in my pocket is probably a price worth paying for lower quality listening, but Gioia makes a strong case that it's not (he also has a brilliantly eclectic music taste).

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A Little Help From Our Friends

This week we've been busy writing a start-up manifesto with our friends at Coadec. It will cover a lot, including access to talent, regulations and tax reform. The aim is for this to influence whoever comes to power on 12 December. It includes some awesome ideas – many of which were sparked by speaking with our 10,000 strong network of entrepreneurs.

We're also busy planning a hustings with our allies at Enterprise Nation and IPSE, which will be hosted in Morgate by the ICAEW. Speakers and timings will be announced next week.

Regarding the election itself, a friendly entrepreneur got in touch to suggest that business owners "allow staff to arrive late or leave early so that they have time to vote." Polling Stations will be open from 7am to 10pm, but I think his point of offering clarity to employees on whether or not they can turn up a bit late makes a lot of sense (unless you suspect your employees will vote the wrong way!)

Micro management
Our pals – yes, we are a friendly bunch here – at the Small Business Charter have just launched a new programme to help micro businesses use tech to grow.

The Leading to Grow programme is part of a broader £9m package of measures to support small businesses through the Business Basics Programme (run by BEIS and Innovate UK).

Businesses can apply online or directly via one of the 15 business schools across Yorkshire, the Midlands, Manchester, Newcastle and London. Spread the word!

Nudge, nudge
The Behavioural Insights Team – informally called the Nudge Unit – has a report out on applying behavioural insights to business policy. In behavioural economics, Nudge is a theory that proposes positive reinforcement and indirect suggestions as ways to influence behaviour and decision making.

It's a useful report, but I've got reservations about some of the findings of behavioural economics. For example, even something as seemingly uncontroversial as the sunk cost fallacy – e.g. that we too readily throw good money after bad – may have its uses. (If you want to read more about this, check out this article from Jason Collins).

At the extreme, there are no doubt ways that government can help businesses make better decisions. Behavioural economists sometimes call this "choice architecture", framing information and choices to nudge business owners into making the 'right' decisions. However, the primary focus should be simply making any decision easier for business owners. Until entrepreneurs' interactions with government are at least half as slick as Estonia's (read my thoughts on Estonia here), simplification should be our number one priority.

Read the whole thing here, and sign up here.

Tech pondering, Estonia, and people vs. machines

What is a tech company?

Suggested by Dom Hallas, executive director of Coadec.

At Coadec, we help represent tech startups to Government. But what even is a tech company anyway? It’s something we wrestle with a lot. From the young entrepreneur I met ‘selling dreams’ (he was actually selling skiing holidays) to the story that a lot of Europe's AI startups weren’t using any AI, there’s now a vibrant debate about how to define the boundaries of the tech sector (sparked by the recent WeWork IPO debacle).

This is something that our friend Nicolas Colin, co-founder and director of The Family has tried to answer. He suggests:

• Its business model is marked by increasing returns to scale, sustained thanks to supply-side economies of scale, strategic positioning, built-in network effects, and supply-side platform effects.

• Its main strategic goal is to provide its users with an exceptional experience, as it’s the only way to inspire trust and retain those users that are so critical for sustaining increasing returns.

• It collects user-generated data on a regular and systematic basis — which enables it to constantly improve the experience and, again, sustain increasing returns.

Benedict Evans of A16z, Ben Thompson and Christopher Mims in the WSJ are also trying to answer this elusive question.

The inside story of building a digital nation
 
Suggested by Philip Salter, founder of The Entrepreneurs Network
 
Estonia’s innovations in governing have been a big idea for over two decades – one that has undergone multiple iterations. 

Starting with a blank slate in a country with limited internet, just collecting the data was ambitious enough. Upon this they built e-tax, X-Road (the open source distributed data system that Finland, Iceland and the Faroe Islands now also use), their ID card, i-voting, e-health and e-residency, which provides anyone anywhere in the world with the opportunity to establish a business remotely.

Earlier in the year, Taavi Kotka, former CIO of Estonia and Toomas Hendrik Ilves, Estonia’s president from 2006 to 2016, shared their views on what made Estonia so successful. When asked about the incredibly low budget, Kolta quips: “If you don’t use Accenture or McKinsey, you’d be amazed at what you can get done.”

All interactions are logged on X-Road, but the X-Road system is designed to allay privacy concerns by being totally transparent. “We had one famous case where a systems administrator with the police abused her authority. She checked up on her boyfriend. The police are not allowed to do this. She was fired and convicted of a felony,” says Ilves.

Many countries claim that copying Estonia is too hard due to legacy issues. But surely not as hard as successive Estonian governments building these systems from scratch.
 

People versus machines in the UK

Suggested by Sam Dumitriu, research director of The Entrepreneurs Network

Just over a month ago, Chancellor Sajid Javid announced bold plans to raise the UK’s minimum wage to £10.50, the highest in the developed world. It’s part of a dramatic change in the UK labour market. As Tim Harford writes: “When the minimum wage was first introduced in the UK in the late 1990s, only a few hundred thousand workers were paid it. Last year, 2m workers received the minimum wage.”

One under-discussed aspect is the impact of minimum wages on automation. As minimum wages become higher, firms may be tempted to automate jobs typically performed by low-skilled workers. There’s a risk point to moving too fast, as Harford again states: “Once a minimum wage rises too far, and the new machine is installed or the factory is moved offshore, reversing the policy will not easily bring the old jobs back.”

A new study by the LSE’s Grace Lordan looks at the impact of recent minimum wage rises in the UK on automation. She finds that “a 10% increase in the minimum wage leads to a 0.11 percentage point decrease in the share of automatable jobs done by low-skilled workers.” Relatively modest, you might say, but as ever it’s more complicated.

There’s been “a stronger effect over the last decade and a half which is roughly double in size, implying that the importance of the interaction between the minimum wage and automation has been accelerating.” She concludes: “while the effects found in this study are modest, they should not be used to predict the future. Rather, monitoring of these trends, and ensuring that low skilled low wage individuals are not unduly hurt by the advent of the 4th industrial revolution is a key role for government and social science researchers.”

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Not another one?

It’s November 1st and somehow Britain is still in the EU. Boris was unable to keep his “do or die” pledge and Brexit has been delayed, again, until January 31st. With the risk of a No Deal Brexit subsiding, at least in the short term, the Prime Minister was finally able to get the opposition to agree to the General Election he’s wanted since the start of September. Coincidently, Brenda from Bristol has stopped answering the door.

The Brexit Party stand out as an unknown quantity. While they won the European elections, the First Past the Post (FPTP) system tends to close the door on insurgent parties. Counter to popular wisdom, Stephen Bush argues the Brexit party may be an asset to Boris, noting that “the Conservatives actually did slightly better overall in seats where Ukip stood than where they stood down, because disgruntled Labour voters, flirting with Ukip, reverted back to Labour rather than backing the hated Tories.”

The other unknown is whether the Liberal Democrats can maintain their jump in the polls. FPTP has a habit of squeezing out smaller parties.

The polls are hinting at a Conservative majority as Labour struggles to hang on to the Remain votes they won in 2017. But as we learned back then, a lot can change over the course of an election campaign.

So what does this mean for entrepreneurs? Every party will be making a pitch to business and we’ll be interrogating their plans on tax, immigration, and regulation closely.

Why talent matters?

This week I blogged about a new US study on the impact of immigration on startups. It found that startups who won the H-1B visa lottery (and therefore were able to hire skilled migrants) were more likely to receive additional rounds of VC funding, to patent, and to successfully exit through IPO. It’s a stark reminder of the rewards of being open to international talent.

You can read the post here.

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Rock climbing, skilled migrants, and trains

Rock climbing and the economics of innovation

Suggested by Anton Howes, economic historian and author of Age of Invention, a newsletter about the causes of Britain's industrial revolution.

Richard Jones provides a fascinating explanation for how modern rock climbers, often without any ropes or gear to support them, have managed to surpass even the wildest feats of their predecessors.

Contrary to what some might think, the key has been new technology. From cheap air travel, to better rubber soles, to superior ropes and ways to secure them to the cliff face, today's astounding free climbs are made possible by the ability to practice, practice, and practice before doing them without the ropes.

It's time to reverse the Beeching Axe

Suggested by Sam Bowman, principal at Fingleton Associates and author of Reviving Economic Thinking on the Right

The last fatal rail accident took place when Tony Blair was still Prime Minister, with one fatality. Since then, 23,000 people have died on our roads.

Niall Gooch makes the case that the Beeching Cuts, which closed hundreds of miles of suburban and cross-country railways during the 1960s, were the turning point when we gave up on public transit and surrendered to the motorcar. That’s led to huge expenditure on roads, including highways straight through once-booming metropolises like Birmingham.

Today we’re rebuilding some of the most valuable lines killed by Beeching – HS2 recreates the Grand Central Main Line, and the old Varsity Line between Oxford and Cambridge is being brought back too. Many more may be worth reviving if we’re serious about plugging in ‘left behind’ towns to booming cities near them so that they can grow as well.

There may be one thing to add to Gooch’s piece. Apart from a few toll roads and London’s congestion charge, roads are effectively free at the point of use. That creates a lot of traffic congestion, which makes buses unreliable. If we’re serious about moving people onto trains and buses, and out of their cars, we’ll need to get serious about road pricing, too.

Give Me Your Tired, Your Poor, Your High-Skilled Labor: H-1B Lottery Outcomes and Entrepreneurial Success

Suggested by Sam Dumitriu, research director at The Entrepreneurs Network

A new study allows us to quantify the value to startups of being able to hire high-skilled workers. In Give Me Your Tired, Your Poor, Your High-Skilled Labor: H-1B Lottery Outcomes and Entrepreneurial Success, researchers exploited the lotteries used to allocate H-1B skilled worker visas to businesses in the US. While economists typically can’t conduct randomised controlled trials on immigration policy, the H-1B lottery, while arguably a bad way to allocate visas, created a natural experiment that allows us to see just how important access to talent.

They find that a one standard deviation increase in the H-1B visa lottery win rate for a company is associated with a:

• 1.5pp (23%) increase in the probability of IPO.

• 4.5pp (10%) increase in the probability of receiving additional external funding.

• 2.9pp (20%) increase in the probability of a successful exit over the next five years.

• 4.8% increase in the number of patents filed and a 4% increase in quality adjusted of patent citations.

I blogged about the study here.

The value of talent

It is hard to overstate the importance of international talent for the success of an/our entrepreneurial ecosystem. Our recent report, Job Creators: The immigrant founders of Britain’s fastest growing companies, is strong evidence. We found that 49% of Britain’s fastest growing startups – companies like Deliveroo, Monzo, and Gousto – have at least one immigrant co-founder. Our data fits with past research from AnnaLee Saxenian, which found that over half of all Silicon Valley engineering and technology companies had at least one immigrant founder. 

But that’s not the whole story. Job creators deserve credit, but so do the talented managers, engineers, and product designers who actually do those jobs.  When I speak to founders at fast-growing tech startups, they will typically tell me that the biggest barrier to more growth isn’t access to finance or consumer demand, but a lack of access to talent.

A new US study, Give Me Your Tired, Your Poor, Your High-Skilled Labor: H-1B Lottery Outcomes and Entrepreneurial Success, highlights how access to skilled talent is crucial to a startup’s success. The study exploits the lotteries used to allocate H-1B skilled worker visas to businesses. In economics, we typically can’t conduct randomised controlled trials on immigration policy, but the H-1B lottery, while arguably a bad way to allocate visas, creates a natural experiment that allows us to see just how important access to talent.

The researchers found:

Relative to other firms that also applied for H-1B visas, firms with higher lottery win rates are more likely to receive additional venture capital funding and to have a successful exit via an IPO or acquisition. H-1B visa lottery winners also subsequently receive more patents and patent citations. Overall, our results show that access to high-skill labor is a critical determinant of success for start-up firms.

The results are stark. A 1 standard deviation increase in the H-1B visa lottery win rate for a company is associated with a:

• 1.5pp (23%) increase in the probability of IPO.

• 4.5pp (10%) increase in the probability of receiving additional external funding.

• 2.9pp (20%) increase in the probability of a successful exit over the next five years.

• 4.8% increase in the number of patents filed and a 4% increase in quality adjusted of patent citations.

If policymakers want British startups to succeed they need to recognise the importance of accessing skilled workers. Recent moves such as the reinstatement of the post-study work visa and adding roles such as software developer to the shortage occupation list will help, but we need to go further. 

Plans to end free movement and impose a £30,000 minimum salary on all new arrivals will damage the UK’s entrepreneurial ecosystem. At the very least, the plans should be amended to take into account the preference of early-stage startups to pay workers in equity. 

If Britain is to be truly ‘open for business’ then we must be open to talent.

If you’re an entrepreneur and want to discuss the impact of Brexit on the immigration system, then why not come to our upcoming breakfast roundtable at Kingsley Napley - “Britain Needs Talent: What Next For Entrepreneurs”. 

Turkeys Don't Vote for Christmas

Philip has departed for warmer climes – all founders need a break from time to time. It has been left to me to make sense of the week's events (thank you, Philip).

Super Saturday began auspiciously and with unexpected victory – for the England rugby team. Politically, however, we witnessed an anticlimax to rival season eight of Game of Thrones. The Letwin Amendment, an "insurance policy" to ensure Britain would not crash out of the EU without a deal, passed by 322 to 306. On Titanic Tuesday the bill seeking to put into law Johnson's deal was passed by MPs, but just 20 minutes later they voted against the government's programme motion. The compressed timetable – essential fo the Prime Minister to stay true to his "do or die" rhetoric – was rejected.

We are now told that Johnson will launch a fresh bid to hold a general election on 12th December to "get Brexit done". His fate is partly in the hands of EU leaders, who today agreed to a delay of unspecified duration. Of course, passing the Withdrawal Agreement will be just the beginning. Some fear that, having taken 40 years of membership to get to this point, it will take another four decades for us to untangle ourselves from the world's largest economy.

Unlike the focus group who were stunned into silence on Monday when informed that the wrangling, double-dealing and persistent threat of crashing out without a deal after the transition period are set to go on and on, entrepreneurs know all too well that we're staring down the barrel of medium to long-term uncertainty.

Looking Up

That's the bad news. But as Jimmy McLoughlin, former special adviser to Theresa May, wrote in The Times this week, it has never been easier to start a business – regardless of demographic or geographical location. Some entrepreneurs thrive in uncertain economic conditions while large companies decrease investment: see Microsoft or Apple, both started during recessions.

Fifteen years ago, McLoughlin explains, entrepreneurs needed relevant experience and the support of a local chamber of commerce to turn an idea into reality. "It was likely you quit your job on the Friday and started your business on the Monday." Today, two-thirds of founders start up while in full-time employment.

Citing our Future Founders research, McLoughlin draws attention to the fact that just 15% of young people say they've never thought about starting a business (and never will). Over half of 14-25 year olds, meanwhile, have thought about starting (or have already started) a business. Call it the end of the job for life. Call it progress. McLoughlin calls it a revolution.

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Boomer Memes, The Backfire Effect, and Anything-as-a-Service

How the Liberals beat Labor at its own game

Suggested by Sam Dumitriu, research director at The Entrepreneurs Network

It’s only a matter of time before Parliament is dissolved and Britain faces another general election. Today, the Conservatives tweeted their slogan “Get Brexit Done” in Comic Sans. Predictably it led to a fair deal of mockery and within 20 minutes “Comic Sans” was the top trend on UK Twitter.

There may be a method to their madness. I found this analysis of how Australia’s Liberal party used social media to pull off a shock election win informative. One part stood out:

“CCHQ deliberately turned out tacky content it dubbed Boomer Memes. These would often riff off a well-known movie or television show but always contain a serious message about Shorten being an economic risk.

"We'd make them really basic and deliberately lame because they'd get shares and lift our reach - that made our reach for the harder political messages higher," one campaign staffer says.”

Coincidentally, two weeks ago the Conservatives hired the Kiwi behind the tacky memes, Sean Topham.

Truth can only take you so far in politics

Suggested by Annabel Denham, associate director of The Entrepreneurs Network

US academics Ethan Porter and Thomas J Wood set out to show that the backfire effect exists. The more you told conservatives in the US that Iraq did not have WMDs, the more they believed it did – or so the theory went. But instead they discovered that Americans are not immune to facts. People will accept correction even when the original view is one they like and is held by people they approve of. Further, though we may prefer being corrected by a “fellow partisan,” we’d take being put right by someone we dislike.

Framed in the context of one of the most contentious claims since 2003, that we “send the EU £350m a week”, Finkelstein exposes an uncomfortable truth. The reason factual correction is possible is that facts simply aren’t that important to people in forming their political views. As the authors put it: “People do not care enough about facts to engage in motivated reasoning against them.” It is unlikely, Finkelstein concludes, that persuading the public that “£130m a week might have been a fairer figure would have altered the referendum result in any way”.

A new deal for big tech

Suggested by Kirsty Innes, Head of Tech And Economy at the Tony Blair Institute for Global Change.

Starting a business has never been easier. Thanks to cloud-based services, your company can store data, manage its accounts, or build an app cheaply and efficiently, without needing to run its own servers, procure accounting software, or design its own web development platform.

“Anything-as-a-Service” utilities have become part of the essential infrastructure of the economy. Just like roads, telecoms or the National Grid, they underpin millions of businesses who depend on them in order to function. Unlike traditional infrastructure, these services are almost entirely unregulated.

Does this matter? What would be the economic fall-out if, say, Amazon Web Services were to go bust, get hacked or suffer a serious technical failure? What would be the benefit if all companies made the best use of these services? If cloud services are infrastructure, do governments need to get involved, or get out of the way? Chris Yiu’s paper A New Deal for Big Tech sets the context for this debate. Over the new few months, TBI’s Tech and Public Policy team will be answering these questions and more – watch this space!

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#bobptd?

Entrepreneurs are used to working weekends, while Members of Parliament haven't had to officially work on a Saturday since the Falklands War. Tomorrow they vote on the Prime Minister's Brexit deal. It's too close to call.

While the Democratic Unionist Party (DUP) will vote against the deal, a few of the Tories in exile, some self-styled ‘Spartans’ from the European Research Group (ERG) and quite a few Labour MPs will vote with the Government.

However, whatever happens tomorrow, Sir Oliver Letwin MP and others could force Boris to ask the EU for an extension. Their stated concern is that a vote in favour on Saturday would cancel the Benn Act, leaving the door open for a no-deal if Boris pulled back from the deal.

But perhaps the biggest shift in recent days is the split among anti-no dealers. While many have their heart set on remaining come what May (or Johnson), there's a growing #bobptd movement – #bobptd stands for 'Bored Of Brexit, Pass The Deal'. (Of course, while passing the deal would eventually take Brexit off our front pages, the new deadline of December 2020 isn't far off. Whatever happens, this is just the beginning – or the end of the beginning.)

The think tank Open Europe has a useful explainer on the new deal. In essence, the backstop has been replaced with a ‘frontstop’ special arrangement for Northern Ireland which will come into force immediately after the end of the transition period. The UK will have to enforce EU Customs procedures at points of entry into Northern Ireland, which will impact exporters into and importers in Northern Ireland. Businesses will continue to enjoy unfettered access to the market in Great Britain, but the region will also follow the EU’s regulatory framework in certain respects.

More Erg
Whatever happens tomorrow, a hard Brexit remains possible. Some RRG types are supporting it precisely because of the possibility of a no deal come December 2020. Giles Wilkes, former adviser to Theresa May and Vince Cable has written a paper for the Institute for Government on the potential for a bailout for business in a no-deal Brexit. Wilkes sensibly calls for the Government to develop clear principles now to reflect the purpose and constraints of business support.

Sham Pain
A think tank's work is never done. As you'll see below, we're putting on a couple of events on immigration and visas. It's not just for the champagne and slap-up breakfast, we're busy scoping out a new paper on fixing the failing Start-Up and Innovator visas. If you're an entrepreneur or expert with experience or knowledge of these visas, drop me an email so I can ensure you're consulted.

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Patent Buyouts, Fed Policy & Scott Kupor

The Nobel Prize in Economic Science

Suggested by Sam Dumitriu, research director at The Entrepreneurs Network

My first port of call when the Nobel Prize in Economics is announced is the Marginal Revolution blog. Within moments of the announcement, Tyler Cowen and Alexander Tabarrok provide an essential summary of the winners’ work. They’re good at picking out papers that might be missed by others.

Banerjee, Duflo, and Kremer won the award for using randomised controlled trials to solve tricky problems in development economics. Duflo and Banerjee have a very readable book called Poor Economics, that summarises the research project and highlights some of the more surprising findings. But in Tabarrok’s post, Kremer gets the attention. In particular, the concept of patent buyouts, a nifty idea to incentivise research without the monopoly costs of patents. The idea had a real world impact. The Advance Market Commitment for Vaccines was used to guarantee a market for the pneumococcal vaccine which has now been given to some 143 million children.

Fixing the Fed’s framework with paychecks, not prices

Suggested by Ant Breach, analyst at Centre for Cities.

A new thinktank in the US, Employ America, is pushing for a reform to how central banks and especially the Federal Reserve work. Their big idea is that the Fed should shift away from targeting 2% consumer price inflation to targeting growth in gross labour income.

They have two good reasons to do so. The first is that it will allow for more responsive monetary policy. It takes time for changes in supply and demand at the macroeconomic level to cascade their way down to consumer prices, especially to the degree which triggers a response by the Fed. But data on gross labour income can be collected much more rapidly, allowing for finer-tuned monetary policy.

The second reason is it would rewire the Fed to pursue policy which supports growing living standards. Targeting consumer prices means that monetary policy is structurally more hawkish than it is designed to be. In practice, a target of 2% average inflation functions as a cap which inflation has rarely risen above. Targeting gross labour income would connect the lever of monetary policy to aggregate demand and the purchasing power of paychecks, more effectively improving the standard of living and growth than consumer price targeting has done.

Scott Kupor on venture capital

Suggested by Philip Salter, founder of The Entrepreneurs Network

This time tomorrow evening I'll be having a fireside chat with Andreessen Horowitz’s Scott Kupor about his book Secrets of Sand Hill Road: Venture Capital and How to Get It. He wrote the book to demystify and democratise venture capital funding: “Eliminating the information asymmetry barriers between entrepreneurs and VCs.”

James Pethokoukis of the AEI interviewed Kupor earlier this year. With the growing regulatory backlash against Silicon Valley companies, Kupor offers a note of caution: “Part of what I try to talk to the regulators about is just how well we’ve done from a policy perspective in enabling entrepreneurship in this country. One of the wisest decisions the US government ever made, in the early 1990s, was to enable the internet to be released into the wild and to not regulate it. Notwithstanding some of the challenges we have today, a lot of the last twenty-plus years of economic growth and development that we’ve seen has been a function of that.”

In an increasingly flat world, Kupor is concerned that regulations could knock the US off the top spot as the best place in the world to start a company.

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Right here, Right Now

Yesterday we launched our latest Female Founders Forum report at the Barclays Entrepreneur Awards. In Here and Now we interrogate follow-on funding data to reveal that women-led businesses are just as bankable an investment as exclusively male-led businesses.

Using Beauhurst data, we reveal that female-founded startups were just as likely to raise additional rounds of funding compared to non-female-founded firms: 52% vs 51% for businesses without a female founder.

As Annabel Denham concludes in her Telegraph column: "There is more to do. A lot more. We must continue to highlight the challenges still faced by female entrepreneurs, but these new figures show we are on the right course. Only by celebrating how far we’ve come can we inspire the next generation."

We've been running the Female Founders Forum for three years in partnership with Barclays. In previous years we revealed the equity funding gap in the Untapped Unicorns report and championed paying it forward in our Mentoring Matters report. In the process we've held loads of events around the UK.

You can read more about our latest report in City AM, where Juliet Rogan of Barclays has written on why "it’s time to shout louder about the success of our entrepreneurs." And Kim Darrah of the FT's Sifted has written on the fact that "female startup bosses who succeed in raising a first round are (ever so slightly) more likely than men to attract funding later in the game".

At yesterday's launch, Annabel interviewed Emma Sinclair MBE and Tugce Bulut – both inspirational entrepreneurs and Members of the Female Founders Forum. Tugce is co-founder and CEO of the innovative market research company Streetbees, and Emma's latest venture is the corporate alumni network EnterpriseAlumni. Check them out.

You can download a two-page summary of the report here, and read the whole thing here. (Incidentally, the report's designer, and a female founder in her own right, Eleanor Hyland-Stanbrook comes highly recommended. Check out Studio Twenty Twenty.)

If you're keen to get more involved in the Female Founders Forum, sign up to Annabel's quarterly newsletter.

SEIS The Opportunity
The Enterprise Investment Scheme (EIS) and Seed Enterprise Investment Scheme (SEIS) are seen by many entrepreneurs and investors as critical to supporting startups and scaleups.

We’re keen to make it easier for startups to access capital and anecdotally we’ve heard that the Advanced Assurance process for EIS and SEIS can cause real headaches for entrepreneurs.

Our Research Director Sam Dumitriu is investigating ways to improve the EIS and SEIS Advanced Assurance process to reduce unnecessary delays. If you’ve gone through the process, he’d love to hear about your experience (good or bad). Your experiences will go into informing our policy work. Drop Sam an email if you want share your experiences.

Read the full newsletter here, and sign up here.

Road Tax, Progress & Belarus

A road map for motoring taxation

Suggested by Sam Dumitriu, research director at The Entrepreneurs Network

Ahead of every Budget, the Institute for Fiscal Studies puts out its Green Budget. It sketches out the key policy choices faced by government and pushes important, but neglected issues onto the agenda. In their latest Green Budget, they look at taxes on motoring. It’s an issue important for three reasons, fiscal sustainability (they raise £40bn per year), productivity (congestion is a drag on it), and the environment (motoring is a massive source of carbon emissions).

They point out that the shift to electric vehicles, while a win for the environment will deprive the government of revenue (electric cars don’t pay fuel duty or road tax). As there’s still a need to fund the roads and to discourage congestion, the IFS calls for the lost revenue to be replaced with a system of road pricing where charges vary by time and location.

Though technologically feasible and tried elsewhere, it’ll be a tough political sell. But it’s got two things in its favour. First, it’ll be easier to replace fuel duty before there’s a large interest group of electric car drivers used to lower taxes. Second, while there’d be some ‘losers’ (drivers in congested cities), there’d be far more ‘winners’ (such as those driving long distances in rural areas).

How life sciences actually work

Suggested by Philip Salter, founder of The Entrepreneurs Network

Alexey Guzey thinks scientific progress in biology isn't slowing down. If he's right, this would be a vital corrective to the growing consensus that progress across the sciences is slowing.

Guzey writes: “Yes, funding agencies are risk-averse; yes, academia now selects for things you probably don’t want it to select for, like conformity and high conscientiousness; yes, an average scientist is not in academia for the love of science (and maybe the productivity of an average scientist is decreasing. However, all of this does not mean that science is stagnating or even that it is slowing down.”

In 2018, we had the first bionic hand, a new 3D bioprinting technique, and a method through which the human innate immune system may possibly be trained to more efficiently respond to diseases and infections, for example. And these three breakthroughs are just a snapshot of what happened in January.

Perhaps we can be more optimistic about the prospect for progress in our lifetimes. At the very least, Guzey provides an update to our template for how to think about the process of progress.

Insulating Belarus from external shocks

Suggested by Anthony J. Evans, professor of economics at ESCP Europe Business School

Pavel Kallaur, Chairman of the central bank of Belarus, provides a useful overview of the state of the economy in The Banker. Improving competitiveness has been a stated aim for Belarus over recent years, and my own research suggests that competitiveness has been improving in recent years. 2018 saw their inclusion in the Economic Freedom of the World Index for the first time, and they have since moved out of the "unfree" category.

Belarus Hi-Tech Park, in particular, has received a lot of attention. The lack of privatization in Belarus means that most private companies are start ups, and advanced payments technology has contributed to a blossoming tech sector. Success stories success such as Facebook-acquired MSQRD, and NYSE-listed EPAM are there.

Companies located in the park receive tax and social contribution advantages, but the zone is a virtual one – it isn’t a designated geographical area. This gives policymakers a lot of flexibility and interestingly last month officials touted the idea of Bulgarian companies joining the park.

Anthony has written here on the economic competitiveness of the Belarus.

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Share of Funding to Women-Led Firms Doubles in Less Than a Decade

A report from the Female Founders Forum – with a foreword from Rt Hon Liz Truss MP – reveals that while the percentage of deals to female-led teams slightly dipped in 2018, female-led businesses represent a growing share of investment activity and receive similar rates of follow-on funding.

• Female-founded startups are receiving a growing share of investment. In 2011, 11% of startups that raised equity investment were female founded. By 2018, this figure had nearly doubled to 21%. 

• Of the 6,147 investment deals made in 2018, 17.9% went to companies with at least one female founder, down from 18.2% in 2017.

• Nonetheless the total amount invested in businesses with at least one female founder in 2018, as a percentage, was 11.4%, up from 9.9% in 2017.

• Using data from Beauhurst, we find that female-founded businesses also have similar rates of follow-on funding. Once they received an initial investment , female-founded startups were just as likely to raise additional rounds of funding  compared to non-female-founded firms (52% vs 51% for startups without a female founder).

• Of the 19 high-growth companies that have floated on the stock market since 2011, three (or 15 %) were female founded. Of the 665 high-growth companies that have been acquired since 2011, 53 (8%) have at least one female founder.

• Though we find women-led businesses securing investment in all sectors, they are over-represented in some sectors (industrials), and under-represented in others (tech and IP-based businesses), relative to all equity-funded startups.

• In a foreword for the report, Rt Hon Liz Truss MP, Minister for Women and Equalities, says: “We have made great strides. I hope and expect that a decade from now, we will look at how far female entrepreneurship has come.”

• In March HM Treasury found that the gender gap accounts for approximately 1.1m missing businesses, which equates to a £250bn opportunity for the UK economy.

• Female VC partners are three times more likely to invest in companies with a female CEO, but Diversity VC has revealed that 83% of VC firms have no women on their investment committees.

Here and Now: Making the UK the Best Place in the World for Female Founders, a new report from the Female Founders Forum (a joint Barclays/The Entrepreneurs Network project), finds that while in 2011 just 11% of funding went to firms with at least one female founder, by 2018 this figure had grown to 21%. Further, female-founded businesses have similar rates of follow-on funding – reversing any perceptions that women are a less bankable investment.

Once funded, the percentage of women-founded startups that raised additional rounds of capital was similar to non-women-founded firms (52% vs 51% for startups without a female founder). Among startups five or more years on from their first raise, female founded startups were more likely to have secured a second funding round (66.5% vs 62.8%) and marginally more likely to have secured a third funding round (42.8% vs 41.8%).

This makes sense: at the early stages where venture capital firms make their initial investments, there is limited rigorous, objective information available. It means the founding team comes under great scrutiny, and there is a risk that gender bias can play a decisive role in who receives investment. As investors get more information, however, unconscious bias is less decisive.

The five highest raises with a female founder in 2018 were Orchard Therapeutics (£117.5m), MADE (£40m), Hyperoptic (£38.6m), Darktrace (£38m) and COMPASS Pathways (£35m). 

The Gender Gap

The report draws on other evidence that finds one in five businesses is created by a woman, that funding rates for all-female teams are still abysmal (these firms receive just a penny in every pound of VC investment) and that male-led businesses are five times more likely to achieve £1m+ turnover. Women tend to be less concerned with expanding their businesses and are over-represented in service industries.

Though we find women-led businesses securing investment in all sectors, they are over-represented in some sectors, and under-represented in others, relative to all equity-funded startups. They are less likely to be tech or IP-based businesses (27.9% vs 32.9% for all equity-funded startups) but more likely to be involved in the category of industrials (21% vs 15% for all equity-funded startups). Within the category of industrials, female-founded businesses are twice as likely to be involved in clothing (3.1% vs 1.5% for all equity-funded startups) and significantly more likely to be involved in food and drink based enterprises (10.5% vs 5.7% for all equity-funded startups).

In a Foreword to the Report, Rt Hon Liz Truss MP writes:

“It’s completely wrong that 50% of the population are not being fully utilised, they’re not having their talents used, and they’re not contributing as they could do to our fantastic economic success story. It's important to speak out against inaccurate stereotypes and celebrate the great female-founded businesses like HyperOptic and Darktrace. I commend this report and the ongoing work of The Entrepreneurs Network and Barclays on the Female Founders Forum."

Annabel Denham, Head of the Female Founders Forum, says:

Though there is undeniably work to be done to level the playing field and tackle unconscious bias, by dwelling on the negatives we risk missing how far we have come. We can now reveal that funding rates are similar for male and female-led businesses, dispelling the myth that female founders are a less bankable investment. Ensuring women-led businesses start and scale is vital to our economy and society. We need more investment to pour into these firms, more female networks, and many more role models to inspire the next generation.”

Juliet Rogan, Head of High Growth and Entrepreneurs at Barclays, says:

“The opportunity is clear – if we create an environment where women start and scale businesses at the same rate as men, we could add nearly £250 billion to the UK economy. At Barclays we are committed to helping make this happen. We have the trust of 24 million customers and nearly one million businesses, and inclusive UK economic growth is essential for our success. We are a proud signatory of the Investing in Women code, and we are committed to providing all the support and resources needed for female entrepreneurs to thrive.”

Recommendations

Here and Now raises a number of issues for policymakers, schools, the media and others to consider.

• Government should open the doors of Number 10 and Parliament to female entrepreneurs and formally validate their efforts. 

• Government should gather more data on STEM drop-off rates, examine the role of socialisation in the STEM disparity, and ensure careers guidance informs and tackles gender stereotypes.

• Schools must instil the right skills, financial literacy and self-belief in young girls from school age so that they may become the entrepreneurs of the future.

• The media must continue its efforts to shine a spotlight on the barriers to female entrepreneurship, profile those women in male-dominated industries, and ensure others get the role models they need to start and scale up.

• Venture Capitalists could continue to work with organisations like Diversity VC and consider training programmes to tackle unconscious bias.

The report features three case studies: Tania Boler (Founder – Elvie), Alexandra Daly (Founder – AA Advisors), and Tugce Bulut (Founder – Streetbees). All are available for interview.

Tania Boler, Co-Founder, Elvie

Elvie – which is behind the kegel trainer and silent breast pump – was recently listed as one of the UK’s Top 100 fastest-growing businesses. “When raising money, bear in mind that you will need to work with these individuals for a long time. You need to be sure they are right for you – not just the other way around.”

Tugce Bulut, Co-Founder, Streetbees

Turkish-born entrepreneur Tugce Bulut founded AI market research company Streetbees in 2015. It was recently listed as one of the UK’s Top 100 fastest-growing firms. “We must teach children entrepreneurial skills from the start. I cannot stress enough how important it is to learn how to take risks and cope with failure.”

Alexandra Daly, Founder, AA Advisors

AA Advisors was founded in 2007 when Daly decided to apply her skills and knowledge, acquired during a career working for some of the largest global investment banks, to her own “PnL”. 12 years later later Daly is mentor to five women and sits on the board of the APPG for Women and Enterprise. “Never before has there been a better time to be a female founder: we need to be positive about the here and now.”