Building Back Better

The Women’s Enterprise Policy Group (WEPG) has made fresh calls for more gender-responsive policy to address gaps identified in COVID-19 enterprise support schemes. In this blog, we cover the new report, insights from our inspiring Members, and updated guidance on the government’s support schemes. 

Female Founder Highlights

Here is a quick wrap up of this week’s news highlights, featuring some of our inspiring Members:

• A new report from the Women’s Enterprise Policy Group (WEPG) has warned of a “catastrophic economic impact” if government policy fails to support women’s enterprise. The group is urging the Chancellor to bring them to the policy table to help shape policy that ‘Builds Back Better’ for women entrepreneurs, for the economy, and for society. Roseann Kelly MBE, CEO of Women in Business NI said the study outlines how current policies have failed to reflect the extra challenges female entrepreneurs face from childcare, gender bias to access finance. Read the full article here.

• TechRound interviewed our Member, Tugce Bulut about the challenges she has faced as she grows Streetbees and her thoughts on being a Female Founder in 2020. “There is no such thing as ‘female’ or ’male’ entrepreneur, you are simply an entrepreneur but the reality is that there’s still a distinct lack of diversity among c-level positions in business, particularly tech.” You can read the full article here.

• BBC covered its most memorable interviews over the years for its CEO Secrets series, including their interview with Female Founders Forum Member and Mumsnet founder Justine Roberts where she revealed crushing feedback from early potential investors who told her “she didn’t look the part.” Read more stories about finding resilience here.

• Harriett Baldwin, MP for West Worcestershire and our Member has urged people to treat themselves to a meal out in support of the ‘Eat Out to Help Out’ campaign for the hospitality industry. Harriett said, “hospitality is one of the industries that will need extra support as we try to protect as many jobs as possible.” Read the full article here.

Government Support

Grants for businesses completing customs declarations
Businesses can apply for 3 grants to help their business complete customs declarations. They can apply for funding for:

• Training that helps a business to complete customs declarations and processes;

• Hiring new staff to help their business complete customs declarations; and

• IT improvements to help their business complete customs declarations more efficiently.

You can find out more information about the scheme, eligibility criteria, and how to apply here.

Coronavirus Job Retention Scheme and overtime work
The government has published updated guidance on calculating how much employees can claim under the Coronavirus Job Retention Scheme for fixed employees who have worked enough overtime (in the tax year 2019 to 2020) to have a significant impact on the amount they need to claim.

Barclays Support and Opportunities

Female Founders Forum 2020 Digital Events
We are pleased to announce that Alexandra Daly, founder of AA Advisors and Julia Elliott Brown, founder of Enter The Arena will be joining our first webinar on Access to Finance on Thursday, 3 September 2020 from 10 am - 11:30 am. You can sign up for the event here.
 
As we mentioned in last week’s Newsletter, we will be running additional webinars in this series over the coming months, including:

• Attracting & Retaining Talent webinar: 10 am - 11:30 am, Thursday 8 October 2020

• Building Personal & Operational Business Resilience webinar: 10 am - 11:30 am, Thursday 5 November 2020

• Cementing Your Story webinar: 10 am - 11:30 am, Tuesday 4 December 2020

In each webinar, we will be joined by two eminent high growth Female Founders Forum members, an expert speaker, and hear insights from Juliet Rogan, head of Barclays High Growth & Entrepreneurs team. 
 
If you are interested in attending a specific webinar, please contact jess@tenentrepreneurs.org and we will add you to the invitation list.

Barclays Boosting Female Entrepreneurship Facebook Live event
Join Hannah Bernard, Head of Business Banking as she announces Barclays’ commitments to support female entrepreneurs through COVID-19 and beyond. Hannah will be joined by a panel of experts, including Barclays' long-standing LifeSkills ambassador Baroness Karren Brady CBE, as they offer their top business tips, discuss their own experiences and highlight why it’s so important to develop the next generation of female entrepreneurs whilst supporting the founders of today. Tune in on Wednesday 26 August, 10:00 – 11:00 to our Facebook Live to hear more.  

Eagle Labs Virtual Events
Barclays’ programme of virtual events covers a range of topics from cashflow management to building resilience to help entrepreneurs and start-ups navigate these uncertain times. Forthcoming events include a session on thinking differently about social media marketing and an event to demystify AI, machine learning, and machine intelligence. All events are free to attend and open to anyone. For more information visit the Eagle Lab event page.

Barclays Coronavirus Support Hub
The Barclays COVID-19 Support Hub provides the latest information, tools, and guidance to support businesses throughout the COVID-19 pandemic. This hub includes information about Barclays’ products, webinars, Facebook Live events, and more information on how to access government schemes. You can also download Barclays’ coronavirus checklist to support your business resilience planning throughout this period. There is also an updated FAQ section on this hub.

We want to inspire female entrepreneurs across the UK. Do you know any inspiring female entrepreneurs?

If so, please connect them directly to me at jess@tenentrepeneurs.org.

We will be sending through our Newsletter every two weeks. If you share content with the hashtag #femalefoundersforum, we will retweet you or repost it.

On the Level

Getting exam results is stressful enough – knowing that you’ve got the wrong ones must be devastating.

Working out A-Level results was always going to be a challenge but some of today's results are nonsensical. For example, one in thirty people taking Maths and Further Maths got a grade B in the former and a grade A in the latter. This is absurd, and something that was extremely unlikely in previous years. 

Thanh Duong, for example, got an A in Maths and A* in Further Maths, and as a result will miss out on his place at Cambridge University. Ironically, Thanh’s father had pre-warned of today’s failure following an analysis of Ofqual’s published data, calculating that 39% of grades between A* and D would be lower than the teacher assessments.

To rub salt in wounds, there appears to be a bias in favour of the children of the wealthy, with the year-on-year rise in proportion of students achieving A or A* grades much higher at independent schools than state comprehensives.

While the awarding bodies have provided schools with standardisation reports, in order for schools to do detailed checking they would need to be given the measures of prior attainment used and how they have been banded in each subject, both for 2020 pupils and for historic pupils, explains Dave Thomson, chief statistician at FFT.

Many, including David Davis MP, are calling upon universities to be more flexible and offer places based on mock results and predicted grades. And even before today’s confirmation of the failings, the Royal Statistical Society called for the UK Statistics Authority to launch an urgent review into Ofqual and the Scottish Qualifications Authority over the algorithms used to predict students’ exam results.

Exam results aren’t everything, but a lot of young people are inspired to become entrepreneurs at university. Our Future Founders report we undertook in partnership Octopus found that young people are more likely to consider starting or have started a company if they are attending (65%) or have graduated from university (63%) compared to 18-25 year olds who haven’t attended university (53%).

(A note of caution though, we shouldn’t use this failing to bash the use of all algorithms. After all, there is evidence that fintech algorithms discriminate 40% less than face-to-face lenders. And for further reading on this, check out Sam Dumitriu’s article from last year, Chris Stucchio and Lisa Mahapatra's thoughtful piece on the way data scientists think about bias as distinct from journalists, and this great debate on algorithmic bias.)

Every Cloud 
Our good friends at Coadec are cooking up proposals for the Government to encourage small businesses to buy productivity-boosting digital services and technologies by providing them with financial incentives and reliefs on their purchases. But they need your help, and have a few questions for B2B tech startups which will help them make the case to the Government. It will take less than a minute to complete (honestly!).

Just last month we produced a report with Xero on this issue. Upgrade argued that if the UK’s 1.1m micro businesses doubled their uptake of key digital technologies, it would lead a £4,050 average productivity boost for the 4.09m workers employed by micro businesses, restoring four-fifths of lost productivity growth since the financial crisis, and enabling businesses to bounce back faster post-lockdown.

Ask the Experts
Getting good advice is critical to any business. Over the years we’ve had lots of entrepreneurs approach us with questions about their business, and while we know a thing or two about policy, we aren’t really best placed to advise on business matters.

Up until now we’ve always connected entrepreneurs in our network to people in an ad hoc way, but this isn’t very efficient. As such, we’ve created an Ask the Experts page on our website so entrepreneurs can quickly find people and organisations that we think it’s worth chatting to about various areas of your business.

Our first recommendations are Kingsley Napley for immigration advice and Form Ventures for regulatory matters. We’ve worked with Kingsley Napley for a number of years on roundtables and so far the feedback from entrepreneurs in our network who’ve followed up with them has always been positive. Leo Ringer of Form Ventures is one of our Research Advisers and is an expert on the regulation of high-potential / high-growth firms that are operating in markets where public policy is a major source of risk and opportunity.

Our experts will answer relevant queries and also support entrepreneurs by contributing to our essential Policy Updates. We’ll add more experts in the coming weeks in other policy areas, including taxation, finance and employment. If you’re an expert who wants to support the network, drop me an email to find out more about how you can help.

Sign up to the Friday Newsletter here.

Building Hopes

Whenever I’m asked which policy changes would best support entrepreneurship in the UK, planning liberalisation always features near the top (often to the surprise of the person asking the question). Up until last week, it’s an area where meaningful reform looked unlikely, but Housing Minister Robert Jenrick’s Planning for the Future White Paper offers reasons to be hopeful. It would involve councils being set higher requirements for new housing, especially in and around cities, while ensuring that new buildings are more beautiful.

The first person I turn to when trying to understand planning reform is John Myers (aka London YIMBY, which is a campaign group that aims to end the housing crisis). Planning is a policy area that attracts some wacky views (just take a look at nine that Sam Bowman skewers), and for my money Myers is the most knowledgeable and intelligible thinker on this policy area. While he is unashamedly pro-building, he is an honest broker of ideas. Myers describes Jenrick’s White Paper as an “ambitious new step”, in an article explaining the changes.

So why does this matter? In short, we haven't built enough homes in the right places to meet demand. Evidence suggests that if we solved the housing crisis GDP per capita could be as much as 30% higher in just 15 years if we built enough homes in the right places. That’s £10,000 extra on the average household income.

But what’s this got to do with entrepreneurship? Helpfully, Sam Dumitriu has an excellent article on our blog explaining why entrepreneurs should back planning reform. In essence: planning policy has driven up the cost of talent in places like London, Cambridge and Oxford; reduced the innovation we see in tech clusters; and pushed up the cost of office space. Sam calls on UK entrepreneurs to get involved in the debate in the same way that Patrick and John Collison (Stripe founders), Jack Dorsey (Twitter founder), Marc Benioff (Salesforce founder), and Reid Hoffman (Linkedin founder) have in Silicon Valley. If you’re the UK’s equivalent – get in touch.

A White Paper isn’t law. There is a consultation which may change things. And Myers sounds a note of caution about the need to ensure homeowners are on board with any reforms: “We will only have plentiful, high quality, affordable housing when building new homes is truly popular with the locals. To achieve the two percentage point boost to annual GDP growth that eminent economic historian Nicolas Crafts says better planning would deliver, we would need to go further than this White Paper and adopt bottom-up processes to unleash a popular wave of new building.” (Read Nicholas Crafts on housebuilding in The Guardian for more on this.)

Emma Duncan offers a louder note of caution in The Times. She thinks the Government's solution to nimbyism involves too much centralisation and would be better solved by allowing councils to keep more of their money. “If more houses and flourishing businesses brought revenues back to local communities, rather than just spoiling the view and clogging the roads, people would be more enthusiastic about economic growth happening near them.”

She may be right, but hopefully this is the new debate. Not whether we need to build more – that should be a given – but how to do it best. To build back better, first we must build.

Read the whole thing here, and sign up for the newsletter here.

Why entrepreneurs should back planning reform

In April, legendary technologist Marc Andreesen declared that “It’s time to build”. A new White Paper “Planning for the Future” suggests the government is answering the call. While there is still a risk that the radical reforms to the planning system will be watered down as the White Paper becomes legislation, the plans have the potential to make a big dent in the UK’s housing shortage. If successful, it could have massive positive impacts on innovation and entrepreneurship.

Housing is a key issue for founders in Silicon Valley. Stripe founders Patrick and John Collison donated $1m to California YIMBY, a pro-development group co-founded by GitHub CEO Nat Friedman. In 2018 more than 120 tech leaders including Twitter founder Jack Dorsey, Salesforce founder Marc Benioff, and Linkedin Founder Reid Hoffman signed a letter in support of SB 827, an unsuccessful law that would have made it much easier to build near public transport in San Francisco. Yet, strangely, entrepreneurs in the UK tend to avoid the housing debate.

This is unfortunate, as restrictions on development are a major barrier to entrepreneurship and innovation in the UK. We have made it extremely difficult to build in places like London, Oxford, and Cambridge, which are our most productive cities.. According to the Greater London Authority’s Housing In London report, in the last two decades the number of jobs in London has grown by 40% and the number of people by 25%, but the number of homes by only 15%. As a result, rents are high and most young people’s only hopes of owning a home is through inheritance or moving away from the UK’s most productive regions. 

This has a knock-on effect on entrepreneurship in a few key ways. First, high rents push up labour costs making it harder to attract talent from elsewhere. We’ve priced many people out of the places where it is easiest to start a business in terms of access to contacts, capital, and knowledge. We’ve spoken a lot about how to lift sluggish productivity levels in the UK, but they all pale in comparison to increasing housing supply in London and the South East. A study from Enrico Moretti and Chang Tai-Hsieh analysed 220 US metropolitan areas from 1964–2009 and found restrictions on new housing supply cut aggregate US economic growth by more than a third between 1964 and 2009.

Second, this is particularly bad news for innovation. Another study from Enrico Moretti finds innovators are more productive when they move to tech clusters like San Francisco. Using advanced statistical techniques, he finds that if inventors couldn’t move to tech clusters the annual number of patents produced in the US would be 11.07% smaller. Restricting development around Oxford and Cambridge means fewer ideas for entrepreneurs to bring to market. As Stian Westlake once tweeted: “If you want to increase R&D, or improve "tech transfer", I strongly suspect that planning reform in Oxford, Cambridge etc would get you a better return on your political capital and £££ than ...most classic science & innovation policies.”

Third, a lack of development has also pushed up the cost of office space. LSE economists Paul Cheshire and Christian Hilber note that “office space in London is not just more expensive than anywhere else in the world; it is some three times as expensive as the next most expensive city in Europe, Paris, and more than three times as expensive as in Manhattan.” The problem isn’t isolated to London either. “Birmingham was the next most expensive European city after Paris, and Glasgow, Edinburgh and Manchester were all more expensive than Manhattan.” 

Some argue that planning isn’t to blame. For instance, the Town and Country Planning Association and Local Government Association both point to high rates (90%) of acceptance for planning applications and a backlog of a million homes with planning permission.

But their numbers are misleading. High rates of acceptance do not take into account the applications that are never made. The high cost of acquiring planning permissions deters all but the applications most likely to succeed. The acceptance rate for applications to McDonald’s Hamburger University is lower than the acceptance rate for Oxford, but it’s obvious that this tells us little about the relative ease of getting into either institution.

Similarly, developers ‘sitting’ on planning permissions are a direct consequence of the unpredictability of the planning system. As we saw with the Brexit debate around Just-In-Time manufacturing, small delays can cause havoc for supply chains. The risk of planning permission being withdrawn at a late stage makes it rational for developers to hold back projects to build up a pipeline. Without a pipeline, a developer may end up paying for materials, land, and labour they can’t use. This problem has forced many smaller suppliers out of the market as planning has become more restrictive. Thirty years ago small builders were responsible for 40% of new build homes, today it’s 12%.

The government’s proposal would remove the discretionary nature of the planning system by moving to a zoning approach where development is ‘by right’ opposed to subject to a lengthy approval process. It replaces protracted Section 106 negotiations for affordable housing with a simple flat-rated tax. It’s not NIMBYproof, but it’s a positive step.Entrepreneurs should root for it to succeed, because by making it easier to build in our most productive we can increase access to talent, cut office costs and boost innovation.

Supporting Female Founders Through COVID-19 And Beyond

As lockdown restrictions begin to ease for businesses, the Treasury is starting to think about how public finances can be put back on a sustainable footing. In this week’s blog, we cover the proposal for an online sales tax, a new study into childcare issues during lockdown, and share the latest updated COVID-19 guidance from the Government.

Female Founder Highlights

Here is a quick wrap up of this week’s news highlights, featuring some of our inspiring Members:

• A new study suggests that 1 in 4 parents have considered giving up work or reducing their hours due to childcare issues during lockdown. Commenting on the study, Justine Roberts, founder of Mumsnet and Female Founders Forum Member, said “lockdown was tricky for nearly everyone, but for parents of young children it was nerve-shreddingly difficult”. You can read the full NewsChain article here.

• Laura Tenison, our Member and founder of JoJo Maman Bébé, a leading boutique mother’s and baby omni-channel retailer, appeared on the Today programme to discuss the prospect of an online sales tax, like the one reported to have been proposed by the Treasury. In an Express article, Laura is quoted as saying “I think it's a great idea, but with some caveats”. You can read the full article here.

• Anne Boden, founder of Starling Bank and our Member, shared her views on the resilience of Wales’ tech sector in a roundtable discussion, supported by the Welsh Government. In a Business News Wales article, Anne said “we are now working very effectively remotely… I think there’s a chance for Wales to grab some of that opportunity from London”. You can read the full article here.

• Cofinitive, a corporate communications consultancy founded by Female Founders Forum Member Faye Holland has signed up as a Local Business Champion for Cambridgeshire. In a Cambridge Wireless article, Faye said “it’s never been more essential for businesses to have a voice, so it is important for us to be seen as a Local Champion”. Our virtual scale-up hubs are launching soon. For more information about our regional scale-up hubs, see our Barclays Opportunities section. 

Government Support

1. Small Business Leadership Scheme and Peer Networks

Small Business Minister, Paul Scully MP has announced two new training schemes designed to improve small businesses' management, productivity, and problem-solving skills. The two schemes are:

• Small Business Leadership Scheme - a 10-week virtual training programme delivered by university business schools; and 

• Peer Networks - a peer-to-peer networking programme for SMEs that is delivered locally by the network of Growth Hubs across England.

We covered the launch in our recent policy update.

2. Job Retention Bonus

The Government is planning to introduce a new Job Retention Bonus to provide additional support to employers who keep their furloughed employees in meaningful employment, after the Coronavirus Job Retention Scheme ends on 31 October 2020. 

The Job Retention Bonus is a one-off payment to employers of £1,000 for each employee they have previously claimed for under the scheme and who remains continuously employed through to 31 January 2021. Find out more about the eligibility criteria and more information about the Job Retention Bonus here.

3. Reporting outbreaks of COVID-19

The Government has released new guidance for businesses and organisations on how to recognise, contain and report incidents of COVID-19. The guidance has been published to ensure business owners:

• Know how to recognise and report an incident of COVID-19

• Are aware of measures local health protection teams may advise in order to contain it

Action cards have been developed to cover a range of business industries and provide tailored advice on the issues organisations may face now that lockdown restrictions are easing. You can download and print the action cards here.

4. Eat Out to Help Out Scheme

The UK Government has published new guidance for participating restaurants on how to claim reimbursement for discounts given to diners with the Eat Out to Help Out Scheme. Businesses can offer discounts through the Scheme to encourage diners to eat at their establishments. You can see examples of how to calculate the discount here. You can also register your business here. Registration will close on 31 August 2020.

Barclays Support and Opportunities

1. Female Founders Forum 2020 Digital Events

As you know, we have been busy re-invigorating our 2020 Female Founders Forum event schedule. We are pleased to announce the topics of our upcoming webinar series to support female founders through the UK’s economic recovery. Save these dates in your diaries:

• Access to Finance Webinar – exploring the barriers that Female Founders face when accessing finance and how policymakers and business leaders can address this as part of the UK’s economic recovery (10am - 11:30am, Thursday 3 September 2020)

• Attracting & Retaining Talent Webinar – fostering a strong culture to attract and retain talent isn’t new but we explore why it has never been more critical as the UK enters into the post-COVID world (10am - 11:30am, Thursday 8 October 2020)

• Building Personal & Operational Business Resilience Webinar – as the UK enters into a sustained period of uncertainty in the post-COVID world, we explore the importance of personal and operational business resilience (10am - 11:30am, Thursday 5 November 2020

• Cementing Your Story Webinar – exploring how brand narrative and entrepreneurial storytelling has evolved during COVID-19 and what approach entrepreneurs should take to building long-term prominence in the minds of consumers and investors (10am - 11:30am, Tuesday 4 December 2020

In each webinar, we will be joined by an eminent high growth Female Founders Forum member, an expert speaker and hear insights from Juliet Rogan, head of Barclays High Growth & Entrepreneurs team. 
 
We will be adding invitation links to our upcoming webinars in our Newsletters, so look out for these. If you are interested in attending a specific webinar, please contact jess@tenentrepreneurs.org and we will add you to the invitation list.
 
2. Eagle Labs Virtual Events

Barclays’ programme of virtual events covers a range of topics from cashflow management to building resilience to help entrepreneurs and start-ups navigate these uncertain times. Forthcoming events include a session on thinking differently about social media marketing and an event to demystify AI, machine learning, and machine intelligence. All events are free to attend and open to anyone. For more information visit the Eagle Lab event page.

3. Barclays Coronavirus Support Hub

The Barclays COVID-19 Support Hub provides the latest information, tools, and guidance to support businesses throughout the COVID-19 pandemic. This hub includes information about Barclays’ products, webinars, Facebook Live events, and more information on how to access government schemes. You can also download Barclays’ coronavirus checklist to support your business resilience planning throughout this period. There is also an updated FAQ section on this hub.

4. Balancing the Books Facebook Live event

With businesses adjusting to the ‘new normal’, Barclays hosted a panel event to discuss what the knock-on effect could look like for businesses and customers alike and what support is available to mitigate the challenges that lie ahead. Calling on an expert panel, panelists discussed the management of cash flow, the impact this could have on the supply chain processes, and how to diminish late payments.  You can watch a recording of this Facebook Live event to learn more. 

We want to inspire female entrepreneurs across the UK. Do you know any inspiring female entrepreneurs

Connect them to jess@tenentrepeneurs.org.

Charity Begins at Startups

Startups and charities tend to inhabit very different worlds, but some innovative entrepreneurs and third sector organisations are breaking down their silos, which is the subject of a great new report from our friends at Nesta.

Better Together shows how the third sector is experimenting with a range of collaboration models to engage with startups, such as co-working spaces, accelerator programmes and investment funds.

The Alzheimer’s Society, for example, has an Accelerator Programme that launched in 2018 supporting innovators to develop products or services that can benefit thousands of people affected by dementia. It offers investment of up to £100,000 and a 12-month programme with tailored support depending on the startup’s need, including the opportunity to test and develop products with people affected by dementia.

Entrepreneurs considering collaborations may want to scour the report for opportunities, such as the Friends of the Earth Experiments, The Children’s Society and Bethnal Green Ventures Partnership, and the UNICEF Innovation Fund.

Among the recommendations for policymakers is a tweak to the Charity Commission’s guidelines targeted at encouraging innovation in the sector. The report suggests that there is too much focus on mitigating risk, and guidance should be added on how trustees can support or encourage innovation, growth or increasing impact. For example, Charlotte Guiver of Versus Arthritis describes the current governance requirements as “immensely time consuming”, when discussing setting up an arms-length social venture.

Octopus's springboard 
Octopus is calling for the government to help create a plan to enable a 'nation of entrepreneurs' to support the UK’s post-pandemic recovery.

As Octopus co-founder Chris Hulatt sets out in The Times, the Springboard campaign is calling on the government to provide individual grants of £10,000 to create 100,000 businesses. Alongside this, they’re asking successful founders and companies to back the programme by offering mentorship to participants.

Chris and his co-founder Simon Rogerson are Advisers to The Entrepreneurs Network and have supported us since the very start. Springboard isn’t meant to be the last word in policies to ensure an entrepreneur-led recovery. As Chris concludes in his article: “Businesses big and small must work with politicians on a campaign to encourage and support new businesses. Providing a financial cushion — as well as networks and skills — is one idea that should work. There must be more great ideas out there. Let’s hear them.”

If you’d like to offer mentorship or support to the Springboard campaign, or would like to stay up to date with developments, you can sign up to the campaign here.

Don't spite
Sam Dumtiru has an article in City AM this week on why a digital tax is no way to reward our innovative online retailers. As Sam explains, “since the lockdown, thousands of small shops have used e-commerce to stay afloat and diversify their income when the government shut down their ability to trade physically. In fact, the government is rumoured to be looking at ways to build on SMEs’ shift online during lockdown.” Of course, business rates need reform, but hitting online retail with another tax isn’t the right way to save the high street.

Trading places 
Next year the transition period with the European Union will end. This means that controls will be placed on the movement of goods between Great Britain and the EU. With businesses somewhat preoccupied – what with one thing and another – the Government has decided to introduce the new border controls in three stages up until 1 July 2021.

The Border Operating Model provides the technical detail on how the border with the EU will work after the transition period and the actions that traders, hauliers, ports and carriers need to take. If you trade with the EU, you may want to take a look, although it's quite a long read. 

More digestible trade guides on how to import and export goods are available in the form of a ‘journey’, so that you can see steps you need to take to ensure that your goods are transported successfully. You can also use the checker tool to work out what actions your business needs to take.

What you really, really want
I’m always keen to get feedback about our work so we can do things better. To that end, it would be great if you could let us know what you think about our newsletters. What is useful? What is superfluous? What could be added? Are there any technical issues that we should fix? Anything that helps us do a better job of bridging the gap between entrepreneurs and policymakers. I’m all ears.

Read the whole newsletter here, and sign up here.

The Most Influential Women In UK Tech

Who are the most influential women in the UK tech industry? Computer Weekly has released its shortlist and unsurprisingly, it features many of our Members. In this week’s blog, we cover Computer Weekly’s 2020 Longlist of Influential Women in UK Tech, the Government’s plans to lift restrictions on businesses and updates to the Government's COVID-19 support schemes.

FEMALE FOUNDER HIGHLIGHTS

Here is a quick wrap up of this week’s news highlights, featuring some of our inspiring Members:

• Computer Weekly’s Most Influential Women in UK Tech: The 2020 Longlist has been released. Unsurprisingly, several of our Members have been shortlisted including Alex Depledge, Anne Boden, Debbie Wosskow, Emma Sinclair, Erika Brodnock, Faye Holland, June Angelides, Justine Roberts, Marta Krupinska, Tamara Lohan, Tania Boler, and Tugce Bulut

• Our Member, Marta Krupińska hosted a Google for Startups UK session showcasing 10 innovative tech startups from across the UK. Marta was joined by public and private investors who spoke about the challenges and opportunities that building startups all around the UK can offer. You can watch the full session here

• A new study by Streetbees, co-founded by our FFF Member Tugce Bulut uncovers what the British public really thinks about social distancing. You can read the article written by Tugce here

GOVERNMENT SUPPORT

1. Lifting restrictions for businesses in the UK

The Government has outlined a plan to lift restrictions from 1 August, if the virus remains around or below current levels and COVID-19 Secure guidelines are followed by businesses and the public. The Government plans to:

• Reopen most remaining leisure settings including bowling, skating rinks and casinos

• Give employers more discretion on how they ensure employees can work safely 

• Enable the restart of indoor performances to live audiences, pending the success of pilots

• Enable all close contact services to resume including make-up application

• Carry out pilots in venues with a range of crowd sizes including sport and business events

• Enable wedding receptions with sit down meals for up to 30 people

• Reopen schools, nurseries, and colleges for all children and young people

2. Face coverings at work

In last week’s blog, The Entrepreneurs Network covered how the mask mandate will help the UK’s high street. The Government has published guidance on face covering, the role in reducing transmission of COVID-19, and how they should be safely used and stored. This may be relevant to your business and you can read it here.

3. Eat Out to Help Out Scheme

Restaurants and other eligible establishments serving food for on-premises consumption can register for the Eat Out to Help Out Scheme. In order to be eligible, the establishment should:

• Sell food for immediate consumption on the premises

• Provide its own dining area or share a dining area with another establishment

• Have registered as a food business with the relevant local authority on or before 7 July 2020

Establishments who are taking part in the Eat Out to Help Out Scheme can use posters, images, and other promotional material here. Registration will close on 31 August 2020.
 
BARCLAYS SUPPORT AND OPPORTUNITIES
 
1. Female Founders Forum 2020 Digital Events
 
In light of COVID-19, we have been busily re-invigorating our 2020 Female Founders Forum event schedule. This year, we will be hosting a series of Webinars on key policy issues pertinent to our female founders to help support them through COVID-19 and beyond. 
 
We are creating 7 virtual scale-up hubs for regions across the UK, including Manchester, Birmingham, Leeds, Newcastle, Cardiff, Southampton and Edinburgh. The virtual scale-up hubs will bring together aspiring and established female founders through inspiring and engaging stories and content. 
 
We will keep you informed about the scale-up hubs and Webinars in our Newsletters. 
 
2. Barclays Coronavirus Support Hub

The Barclays COVID-19 Support Hub provides the latest information, tools, and guidance to support businesses throughout the coronavirus pandemic. This hub includes information about Barclays’ products, webinars, Facebook Live events, and more information on how to access government schemes. You can also download Barclays’ COVID-19 checklist to support your business resilience planning throughout this period. There is also an updated FAQ section on this hub.

3. Balancing the Books Facebook Live event

With businesses adjusting to the ‘new normal’, Barclays hosted a panel event to discuss what the knock-on effect could look like for businesses and customers alike and what support is available to mitigate the challenges that lie ahead. Calling on an expert panel, panelists discussed the management of cash flow, the impact this could have on the supply chain processes, and how to diminish late payments.  You can watch a recording of this Facebook Live event to learn more. 

4. Eagle Labs Virtual Events

Barclays’ programme of virtual events covers a range of topics from cashflow management to building resilience to help entrepreneurs and start-ups navigate these uncertain times. Forthcoming events include a session on thinking differently about social media marketing and an event to demystify AI, machine learning, and machine intelligence. All events are free to attend and open to anyone. For more information visit the Eagle Lab event page.

Entrepreneurs for Research

Which country has done the most to fight coronavirus? With a delayed lockdown, botched testing regime, track and trace failings, and one of the highest death rates per million, the UK probably wouldn’t be top of your list. But perhaps it should. Noted economist Tyler Cowen makes a strong case for why the UK’s response to COVID-19 has actually been world-class – at least in one crucial way.

Cowen specifically thinks the UK’s biomedical response has been remarkable, and that’s what matters most to the world. Whether this week’s preliminary results that the Oxford developed vaccine induces an immune reaction, or the trials of the cheap steroid dexamethasone, which have gone on to save lives around the world, he ranks the UK’s response number one.

While the UK and US are maligned across the world for their poor public health responses, Cowen thinks it’s interesting how few people lecture the Australians or the South Koreans for not having a better biomedical research establishment: “It is yet another sign of how societies tend to undervalue innovation — which makes the UK’s contribution all the more important.”

Being a world-leader has involved a lot of public and private sector R&D funding, and the government plans to double R&D to £22bn per year within five years. The challenge though, as set out in a recent Public First paper, will be sustaining this commitment in the face of fiscal events, elections and economic uncertainties.

Commissioned by the Wellcome Trust and Campaign for Science and Engineering, the report sets out how to practically garner support for continued spending. One idea is to encourage individuals and organisations from specific sectors to form coalitions, such as an ‘Entrepreneurs for Research’ group, which could make the case for why research funding matters to them or their business.

For most economists, the case for public funding for R&D is obvious: economic spillovers. The famous estimate from William Nordhaus is that innovators are only able to capture 2.2% of the total value to society of new inventions. This both explains why innovators are so important to society and should be celebrated, but also why some public funding is needed (ie. it can't be easily captured and is so not adequately incentivised)

History teaches us that in the battle of ideas, too often the wrong ones win out. Perhaps we need more than economic arguments. Perhaps we need that Entrepreneurs for Research group to ensure the UK continues to play a leading role in future global challenges. 

Cap or trade
Creator Fund has a report out this week which finds that 57% of founders who’ve passed through the venture capital firm’s doors have a foreign-born founder. This chimes with our research which found that 49% of the UK’s fastest-growing startups have at least one foreign-born co-founder.

Encouragingly, given the context of COVID, healthcare startups lead the way, with 16% of university startups in healthcare and a further 4% in biotech. There are lots of interesting facts in the pithy report, including areas where the Creator Fund’s investors would like to see more activity from university startups: improving clinical trials, culture meat and leather, gaming, technology solution for the elderly, and B2B SaaS startups.

The report finds Chinese students are most likely to start a company. As Chinese founder Shawn Du says: “I came here to Imperial to study because I wanted to start a company and thought the UK had the best talent for building my team.”

Yesterday, Onward, a think tank closely aligned with Theresa May’s leadership, put out a report arguing for fewer foreign students in UK universities – specifically Chinese students. Onward thinks British students are being crowded out by Chinese students. This is wrongheaded, as all the evidence shows that foreign students effectively subsidise more places for British students and research activity in our universities. 

In no other sector would anyone dare to call on the government to cap a successful British export of a UK product or service on such flimsy evidence. If there are impediments for the higher education sector in scaling to increase places, let's focus on those instead of capping exports.

Turning away the next generation of foreign-born founders would be a bad policy at the best of times – it would be tragic now.

GovStart 2020
PUBLIC has just opened its sixth-month growth programme to help tech startups transform the public sector. It takes startups at different stages and in various sectors, working with products that have powerful public sector applications, providing them with the tailored support, strategy and networks. Applications close in mid-August. Find out more here.
 
Apprenticeships
For the hundreds of you signed up to our Policy Updates, you might have seen one earlier today on the latest announcements around apprenticeships. It was written by Tim Smith from WhiteHat. It covers details on bonuses for hiring apprentices, greater access for SMEs and the dropping of the 50% university ‘target’. Read it here, and sign up to future updates here. And if you're an expert who would like to help entrepreneurs know how changes to legislation will impact their business, get in touch. 

Read the whole newsletter here, and sign up here.

Female Enterprise In Our New Economy

The Government has laid out a suite of policies to support the UK’s female entrepreneurs. We covered the Government’s efforts to support diversity in our blog last week. While the Future Fund’s diversity data is a step in the right direction, it is clear that there is still work to be done. In this week’s blog, we cover the launch of a new Female Ventures Fund, updates to the Government support schemes on offer, and highlights from our Members.

FEMALE FOUNDER HIGHLIGHTS

Here is a quick wrap up of this week’s news highlights, featuring some of our inspiring Members:

• The Women’s Enterprise Policy Group (WEPG), which represents leading experts and academic leaders across the UK, is urging the Chancellor to give women’s enterprise a voice and a seat at the policy table. In a Bdaily article Prof Julia Rouse, co-chair of the WEPG is quoted as having said “developing gender-responsive policy for women requires our expertise - we can help analyse how COVID-19 is impacting women-led businesses, monitor policy impact and help shape and implement policies that work for women”.

• Alternative investment fund manager Innvotec has launched a new fund to invest exclusively in female-founded enterprises. The Female Ventures Fund (FVF) is to invest in early-stage businesses founded or co-founded by women. The Seed Enterprise Investment Scheme (SEIS) fund will also look to encourage more women into the venture capital space.

• Julia Elliott Brown, our Member, and founder of Enter the Arena is running a series of podcast interviews with inspiring female entrepreneurs sharing their honest stories on equity fundraising. You can listen to the podcast series here.

• June Angelides, our Member and founder of Mums in Tech, has been named in Forbes list of 25 Leading Black British Business People To Follow. You can follow June on Twitter here.

GOVERNMENT SUPPORT

1. Summer Economic Update - Plan for Jobs 2020

The Chancellor presented his 'Plan for Jobs' to Parliament to outline how the government will boost job creation. 

The plan includes: 

• A Job Retention Bonus that will be introduced to help firms keep furloughed workers;

• A new £2 billion Kickstart Scheme of new, fully subsidised jobs for young people across the UK;

• A total of £1.6 billion invested in scaling up employment support schemes, training and apprenticeships to help people looking for a job;

• Bringing forward work on £8.8 billion of new infrastructure, decarbonisation and maintenance projects;

• A temporary increase to the Nil Rate Band of Residential SDLT (Stamp Duty) from £125,000 to £500,000;

• The rate of VAT applied on most tourism and hospitality-related activities will be cut from 20% to 5%; and

• A new Eat Out to Help Out discount to encourage people to safely return to earing out at restaurants.

Laura Tenison, our Member and founder of Jojo Maman Bebe spoke to News 24 about the Chancellor's Summer Economic Update, welcoming the meal reduction plan. "The best thing for me is the midday meal because we desperately want people out of their homes with any PPE who wish to wear and enter our stores."

2. Launch of the Sustainable Innovation Fund

The Government has launched a £200 million package to help innovative businesses bounce back from the impact of the COVID-19 pandemic and keep their cutting-edge projects and ideas alive. The Sustainable Innovation Fund will help power the UK’s economic recovery and develop new sustainable opportunities for businesses while also helping the UK to meet its ambitions to cut carbon emissions to net-zero by 2050. 

Businesses can apply for support through the Sustainable Innovation Fund here and find out more about the package here. 

3. More start-up and innovative firms will be eligible to apply for the Future Fund

The Future Fund’s eligibility criteria have been changed. UK companies who have participated in highly selective accelerator programmes and were required, as part of that programme, to have parent companies outside of the UK will now be able to apply for the Future Fund. Find out more here. 

4. Support for university research and innovation

The Government has announced 2 new packages to support research jobs and ground-breaking projects impacted by the COVID-19 pandemic. A new research funding scheme will open in Autumn to cover up to 80% of a university’s income losses from a decline in international students and around £280 million in funding will be made available to enable universities to continue their cutting edge research. Find out more here. 

 BARCLAYS SUPPORT AND OPPORTUNITIES
 
1. Female Founders Forum 2020 Digital Events
 
In light of COVID-19, we have been busily re-invigorating our 2020 Female Founders Forum event schedule. This year, we will be hosting a series of Webinars on key policy issues pertinent to our female founders to help support them through COVID-19 and beyond. 
 
We are creating 7 virtual scale-up hubs for regions across the UK, including Manchester, Birmingham, Leeds, Newcastle, Cardiff, Southampton and Edinburgh. The virtual scale-up hubs will bring together aspiring and established female founders through inspiring and engaging stories and content. 
 
We will keep you informed about the scale-up hubs and Webinars in our Newsletters. If you know any inspiring female founders in these regions, send them through to jess@tenentrepreneurs.org.

 2. Virtual Event – with Nicky Goulimis (co-founder and COO of Nova Credit)

Nicky Goulimis, the Co-Founder and COO of Nova Credit will be joining Juliet Rogan, Head of Barclays High Growth and Entrepreneurs, for an informative discussion on how to rapidly scale and expand your business. In this session on Thursday 9 July at 5 pm, you’ll find out how Nova Credit went from light-bulb moment to a $50m Series B funding round, and learn more about Nicky’s experiences as a successful female founder. To sign up for this event, please register here.

3. Barclays Back to Business Programme
 
Barclays has launched a free toolkit to help small and medium-sized enterprises (SMEs) across the UK get back on their feet as they navigate the uncertainty created by COVID-19. The ‘Barclays Back to Business’ programme has been designed in partnership with the Cambridge Judge Business School and is open to all UK SMEs. The toolkit is designed to help business owners assess the overall health of their business, and create a tailored resilience plan for challenging periods. It is packed with practical tools including a working capital calculator, cash flow forecasts, and guidance on managing supply chain relationships.
 
Register your interest here. Cambridge Judge Business School will get in touch to confirm your place on the programme, including how to access the online platform, which launches on 22 June 2020. For more information, check out Barclays Back to Business Programme.

 4. Barclays Coronavirus Support Hub

The Barclays coronavirus support hub provides the latest information, tools, and guidance to support businesses throughout the coronavirus pandemic. This hub includes information about Barclays’ products, webinars, Facebook live events, and more information on how to access Government schemes. You can also download Barclays’ coronavirus checklist to support your business resilience planning throughout this period. There is also an updated FAQ section on this hub.

Fixing Leviathan

Here’s an idea. Let’s scrap (nearly) every tax – whether on individuals or businesses – and replace it with a progressive consumption tax. Ed Conway proposes this in The Times today, but it’s a very British idea that’s been circulating since at least from the time of Thomas Hobbes.

In Leviathan, Hobbes argued that we should tax consumption as it’s the material manifestation of the enjoyment of life. Like so much of his thinking, it has stood the test of centuries, though we now have a few additional reasons to think it’s a good idea. Famed British economists of the last century Nicholas Kaldor and James Meade have shown that consumption taxes provide significant efficiency gains. A consumption tax eliminates the incentive to consume things now by ending the tax on savings, and reduces the effective tax on capital encouraging greater investment, which in turn leads to economic growth.

It may sound like an idea that only the rich could get behind, but as The Economist reported a decade ago Robert H. Frank posited it as a solution to inequality, and others, like Isabel Correia, have argued it could include a lump-sum transfer like a universal basic income. We could afford to pay for the progressiveness of this on the back of higher rates of economic growth.

At the end of the year we will properly leave the European Union. The last-minute deal that will presumably be struck with the EU and other Free Trade Agreements will mean there will be many areas where we’ll be limited on what we can do, despite Brexit. Often, though not always, this is to our advantage, but we will be able to go it alone on taxation.

Completely overhauling the tax system would be no mean feat. But then again, neither is exiting a trading block during a pandemic.

Masking the truth
Sam Dumitiru makes a forceful case on our blog as to why the government is right to make face coverings mandatory in all shops and supermarkets from next Friday. It’s a rebuke to the Telegraph journalist Timothy Stanley and others who are refusing to shop because of it.

The choice isn’t between wearing masks and continuing our lives as we did before the pandemic. It’s between wearing masks and the need for more stringent curbs on freedoms – including more lockdowns. It’s perplexing that an unmerry band of conservatives are shirking this very minor duty at a time of national crisis, and that an even less merry band of self-styled libertarians prefer to be locked in their homes than wear a bit of cloth on their face.

Luckily, they are in a tiny minority. Sam’s article cites opinion polls showing that people feel safer with masks. Britain’s high street entrepreneurs need people to feel safe to return – masks do exactly that.

Silver linings
What a difference a crisis makes. As we argued in Upgrade, businesses should be encouraged to make better use of digital technologies to tackle the sluggish productivity which characterised the pre-Covid economy and bounce back faster post lockdown.

As we noted, a lot of this is already happening. A new report from twillo confirms this, revealing that 97% of enterprise decision makers believe the pandemic sped up their company’s digital transformation, with 95% of all companies are seeking new ways of engaging customers. 

Businesses are busy pivoting. Isn’t it about time that government did the same?

FSB on EMBs
The Federation of Small Businesses has a report on the obstacles holding back the UK’s ethnic minority entrepreneurs. It finds that ethnic minority businesses (EMBs) contributed £25 billion to the UK economy at the last count – equivalent to the economic contribution of Greater Manchester – and are more likely to export than their non-EMB counterparts. However, EMBs are often detached from mainstream business support, and struggle disproportionately when it comes to accessing finance. 

We’ll explore some of the issues raised in this report – and others – in an event with the APPG for Entrepreneurship, supported by NatWest. We now have a time and date: 11am on 6th August. If you want me to send you a diary invite so you can save the date in your calendar just drop me an email. Speaker details to follow next week!

Read the whole newsletter here and sign up here.

Mask mandates will help the High Street

From July 24th onwards, face coverings will be mandatory in all shops and supermarkets in England. It’s move that’s been broadly welcomed, one poll found 80% of the public supported the mandate, and one that’s arguably overdue, Germany made them mandatory in late April. However, some people aren’t convinced. In the Telegraph, Timothy Stanley writes:

…the problem with this sort of “new normal” is that it aims to bring Britain back to life yet makes life so unpleasant that many people will prefer to stay away. In other words it repels at least as much as it attracts.

I hate masks but I respect other people, respect the law and will obey it – hence I’m going to avoid public transport for so long as it treats me like a highly infectious child. I’ll walk or, better still, decline all invitations.

On a similar note, IEA Director General and Times columnist, Mark Littlewood tweeted:

I don’t want to hear from anyone who backs this absurd move about “saving the high street” ever again. This is lunacy. I’ll be doing as much shopping as possible through Amazon from now on.

Objections to mask mandates tend to either be based on an appeal to liberty, or a belief that wearing a mask is so inconvenient that it will put people off shopping on the high street.

I disagree and I think masks will be key to securing the economic recovery. First, It’s important to understand why the economy has contracted. Whether the lockdown or the virus itself are to blame for the recession, may sound like splitting hairs, but actually has major implications for policymakers.

For instance, if people are staying home because of fear of the virus, then policies such as Eat Out to Help Out vouchers and VAT cuts will do little to coax people back out.  As the New Statesman’s Stephen Bush writes:

If you believe – as I do – that the cause of the downturn is the demand shock caused by people voluntarily observing social distancing and lockdown measures, then there’s a limit to what the government can do with fiscal stimulus. It’s much more important that they demonstrate that the virus is safely under control.

While it’s hard to deny that lockdown measures dampened economic activity, they don’t deserve all the credit. As Ryan Bourne notes for ConservativeHome:

Sweden, which didn’t lockdown to the same extent, similarly suggests voluntary distancing has been the key driver of downturns.  Data from Citymapper  shows that transport mobility in Stockholm fell 70 percent by the start of March. Travel to  the holiday island of Gotland was down 96 percent  compared with Easter last year, despite no government orders banning it.

…

Here, OpenTable data shows that UK restaurant bookings fell 82 percent by March 17th against last year, a full three days before Boris Johnson closed restaurants.  City Mapper  shows mobility in London had fallen 75 per cent the day before full lockdown was announced, with Manchester and Birmingham exhibiting similar patterns.

Ryan points me in the direction of a new study that tries to quantify the respective impacts of voluntary and involuntary social distancing. In “Private Precaution and Public Restrictions: What Drives Social Distancing and Industry Foot Traffic in the COVID-19 Era?” economists Christopher Cronin and William Evans find that mobility data:

…at the national and state levels start to change dramatically in a short window from March 8-14, well before state or local restrictions of note are in place. 

Specifically, the data shows:

Private, self-regulating behaviour explains more than three-quarters of the decline in foot traffic in most industries. Restrictive regulation explains half the decline in foot traffic in essential retail and 75 percent of the increase in the fraction home all day. In this latter result, public school closings have a substantial effect.

NB: (For a UK focused analysis, see this great Bank Underground post - HT Mike Bird)

If mandatory mask use can then reduce the risk of catching the virus (and evidence suggests it can), then it will reassure consumers and increase high street activity. This isn’t to say there aren’t costs to face masks, many people find them uncomfortable, and they can be particularly inconvenient for glasses wearers. But, if fear of the virus is keeping people at home, then the benefits will likely outweigh the costs.

A new poll from Kekst CNC suggests that mask mandates may make people feel safer. Of those polled, 42% said seeing other people in masks made them feel reassured, while just 5% said they made them feel scared or less safe than usual.

Of course, if mask mandates reassure consumers, it prompts the question – why haven’t shops imposed them anyway? The issue is you only benefit from reassuring customers if you can advertise your mandate. This isn’t easy and unless you have a direct route of communication with your customers, it isn’t cheap. As a result, shops that decide to go it alone receive few benefits, while at the same time losing out on the non-mask wearing trade (unless they provide the mask themselves).

Furthermore, the mandate will also reduce virus prevalence more generally, reducing the risk you’ll come into contact with a coronavirus carrier, masked or otherwise.

But even if you take the view that lockdown rules take most of the credit for changes in consumer behaviour, you should still welcome mask mandates as by reducing R they make outbreaks, and by consequence, lockdowns, less likely.

Upgrade

The big news for entrepreneurs this week was the launch of Upgrade, our new report on closing the digital gap and lifting productivity for SMEs, which was launched at a packed Webinar by Paul Scully, the Small Business Minister.

Ok, maybe the Chancellor’s the Summer Statement pips it to the post. But you can read about both in my article for City AM on why we need a productivity revolution. I argue that the real test of this government comes next, and will require reforms across all areas of government that put increasing productivity at the centre of our economic recovery.

(You can find out more details about how the Job Retention Bonus, Kickstart Scheme, and other Summer Statement announcements will impact your business in our latest Policy Update.) 

The best explanation of Upgrade, which was commissioned by Xero, comes from our research director and author of the report Sam Dumitriu. In his CapX article Sam discusses how Upgrade highlights the potential to raise wages through increased digital adoption among the UK’s SMEs. 

Analysing the Enterprise Research Centre’s Micro Business Britain survey, the report finds that the 4.09m workers employed by micro businesses would receive a £4,050 average productivity boost if digital adoption rates among micro businesses were doubled.

This isn’t a pie in the sky ambition – EU data reveals the UK has a particularly large proportion of businesses (38%) with very low levels of digital adoption compared to countries like Sweden and the Netherlands, where just over a fifth (23%) of firms have very low levels of digital adoption. While in Finland, just one in ten (11%) have low levels of adoption. 

We think this represents some relatively low-hanging fruit for the economic recovery. Not least, because so many businesses are already undergoing digital transformations due to the pandemic. But we have nine policy recommendations in the report to ensure it sticks and have produced a handy two-page summary if you don't have time to read the whole report. Also, here’s Sam explaining a few of them:

“Upgrading the UK’s SMEs will require making it easier to finance digitisation by modernising the R&D tax credit’s 70’s style definition of research. It will also mean making it easier for workers to self-fund training and learn new digital skills. For instance, at the moment a graphic designer cannot claim tax relief for taking a course in digital marketing, even though it could lead to new business in the future.”

“It’s also important to make it easier for businesses to identify digital opportunities. Advice serves an important role, but the Government must not overstep its mark. Businesses are more likely to trust other businesses than politicians"...  "That’s why it’s important to outsource advice to trusted business organisations. Funding is useful, but delivery should be left to the real experts.”

Eamonn to that
If one report on how new technologies can help tackle Britain’s productivity isn’t enough for you, Eamonn Ives of the Centre for Policy studies has another for you: Platforms for Growth.

Among other things it calls for an urgent review of the Apprenticeship Levy to ensure employers use funds to invest in digital training that will deliver recognised productivity benefits for their businesses, and a comprehensive new cyber security strategy to take effect after 2021 to provide reassurance for those who operate online.

Free lunches
Emma Jones, Founder of Enterprise Nation and Adviser to the network, has pulled out the stops again, launching the Recovery Advice for Business scheme.

The Recovery Advice for Business scheme, which is supported by the Government, will give small firms access to free, one-to-one advice with an expert adviser to help them through the pandemic and prepare them for long-term recovery.

Advice offered will include accountancy, legal, advertising, marketing, recruitment and digital. It is free until the end of the year and is supported by ICAEW, CIPD, The Law Society and the Advertising Association.

Are you a startup looking to raise £300k to £3m? KPMG and Central Research Laboratory have an intensive 3-day programme – packed with founder talks, VC clinics, pitch coaching, financial reviews and negotiation workshops, aiming to give you the tools and knowledge to successfully raise your next major round of investment. Find out more and register to apply through Eventbrite.

Sign up to the Newsletter here

Make Lockdown Switch to Digital Permanent to Secure Economic Recovery

A new report from The Entrepreneurs Network, commissioned by cloud accounting platform Xero, argues that small firms should make better use of digital technologies to tackle the sluggish productivity which characterised the pre-Covid economy and bounce back faster post lockdown.

Upgrade: Closing the digital gap and lifting productivity for SMEs reveals:

• If the 1.1m micro-businesses (0-9 employees) doubled their uptake of key digital technologies, the UK economy would get a £16.6bn boost.

• This would restore four-fifths of lost productivity growth since the financial crisis, and enable businesses to bounce back faster post-lockdown.

• The small business response to lockdown with shops switching to selling online and offices going remote shows that major digital transformation is achievable.

• As the economy reopens, it is vital that the switch to digital becomes permanent and more small businesses make the most use of the right digital tools.

• The report calls on the government to widen the scope of the R&D tax credit to make it easier for SMEs to invest in innovation.

• It also backs support for peer-to-peer learning initiatives so business-owners can overcome knowledge barriers by learning from entrepreneurs in similar situations.

• To tackle digital skill shortages, it proposes allowing tax relief for self-funded training and improving awareness of existing digital training programmes.

Upgrade shows many small firms are failing to make use of the right digital tools.  It finds that although the UK is one of the world’s most innovative economies hosting over 70 tech unicorns, over a third (38%) of small businesses are not adopting tried-and-tested tech.This is important because if the UK’s 1.1 million micro businesses doubled their uptake of key digital technologies it would lead to a total £16.6bn boost to the economy. This amounts to a £4,050 average productivity boost for the 4.09m workers employed by micro businesses, restoring four-fifths of lost productivity growth between the financial crisis and the lockdown. 

While the UK's productivity has on average underperformed relative to other major economies, top-performing UK companies are on par with the most productive businesses in the world. The problem is the large gap between the UKs ‘leaders and laggards’. Technology adoption is a similar story. Although the UK is home to world-leading tech businesses, many SMEs do not do the basics.

Over a third (38%) of UK SMEs have very low levels of digital adoption. According to the EU’s Digital Intensity Index, which measures the use of digital tech by businesses, many lack a website, social media presence, or fast broadband. By contrast, in Sweden and the Netherlands just over a fifth (23%) of firms have very low levels of digital adoption. In Finland, just one in ten (11%) have low levels of adoption.

Sam Dumitriu, Research Director at The Entrepreneurs Network and author of the report, says:

“Recent events have highlighted the importance of digital technology in enabling businesses to continue trading in the most difficult of circumstances. It is now time to take advantage of a massive opportunity to boost productivity by increasing the rate of digital adoption. “Britain is a world-leader in innovation, but too often best practices are not spreading to all SMEs.”

Gary Turner, UK Managing Director, Xero says:

“One of the achievements of so many small firms in recent months has been how they have been able to pivot their business models to operate differently. They are discovering new digital ways to achieve greater value, scale and resilience. 

“As the economy reopens and small firms look to rebuild, we must close the digital divide to help small firms bounce back more quickly. Hence, the lessons in this study on how we can encourage firms to make more use of the right technology are more important than ever.”

Policy recommendations

We identify three key barriers to digital adoption: knowledge, skills, and finance. The report recommends nine policies to ensure that businesses have the information to identify digital solutions, the finance to invest in them, and the skills to implement them:

Knowledge

1. Prioritise support for peer-to-peer learning initiatives. Peer-to-peer learning is a tried and tested approach for increasing SME adoption of business best practices.

2. Outsource the provision of advice to trusted groups. This should be delivered through trusted business organisations.

3. Do more to leverage relationships between SMEs and accountants. Accountants are often a trusted source of information to SMEs.

Skills 

1. Allow tax relief for self-funded training. This would make self-funded training cheaper and bring the UK’s tax-code in line with other OECD countries. It could be limited to pre-approved digital training schemes to ensure that the goal of increasing business productivity is prioritised.

2. Improve awareness of and access to digital training. The government should trial different approaches to see what best increases the uptake of different schemes

Finance

1. Ensure better awareness of tech grant schemes. SMEs often struggle to keep up with schemes on offer as they change so the government should make sure that the messaging on future grant schemes is effective.

2. Improve the impact of tech grant schemes. The government should increase the impact of these schemes by tying funding to participation in knowledge-sharing networks.

3. Allow R&D tax relief for user interface and user experience development work. Businesses should be allowed to claim R&D tax relief on digitisation projects.

4. Improve the promotion and access to R&D tax credit schemes. HMRC should provide clearer feedback on rejected applications.

Big Deal

Boris Johnson is promising to "build build build". Aping President Franklin D. Roosevelt, Boris has a ‘New Deal’, “to build the homes, to fix the NHS, to tackle the skills crisis, to mend the indefensible gap in opportunity and productivity and connectivity between the regions of the UK". 

Chancellor Rishi Sunak will put some more meat on the bones of this announcement in next week’s summer statement. As recommended in last week’s newsletter, he is expected to focus on efforts to support employment. 

The Chancellor is believed to be examining options to encourage companies to hire young people. The most straightforward way to do this would be a wage subsidy for companies taking on new staff or preserving jobs. An alternative could be a cut to employers’ national insurance contributions, although the concern will be that it might not translate into new jobs. Whatever is announced on Wednesday, we will let you know how it impacts entrepreneurs via our Policy Update (our latest on more support for startups can be found here). 

One tweak could be around the Apprenticeship Levy. Former MP Nick Boles is calling on the government to deliver an apprenticeship guarantee for young people by allowing employers to use apprenticeship levy funds to pay the first year’s wages for all new apprentices under 25, while Robert Halfon MP argues in the FT that the Prime Minister should offer an apprenticeship guarantee to every young person.

The Apprenticeship Levy certainly needs reforming. It requires employers with a payroll of over £3m to pay 0.5% of their wage bill to fund apprenticeships, but it’s not incentivising employers to take on apprentices. The government responded to its failings in 2018 by allowing levy-paying employers to transfer 25% of their levy payments to employers in their supply chain, but this didn’t go far enough.

We argued in Management Matters that companies should be able to transfer 50% of their levy along the supply chain and that the Levy should be rebranded as a more flexible general training levy to allow greater flexibility in terms of appropriate training – particularly shorter courses. Sajid Javid called for something similar in his recent, extensive Centre for Policy Studies report After the Crisis.

Putting the economy in stasis was exactly the right reaction when the virus hit. It’s now clear that we need to tap into the agility of entrepreneurs building products and delivering services to meet changing demands taking place across our economy. Whatever is announced next week, the focus shouldn’t be on stimulating demand for what people wanted before Covid-19 – it needs to be about empowering entrepreneurs to adapt to a world in flux.

Go with the flow
The British Library’s Start-ups in London Libraries delivers webinars and across 10 borough libraries. The aim is to provide information access and support for individuals and start-ups looking to start and build their businesses, especially focused on disadvantaged groups. They are looking for an expert to volunteer to provide a training session on cash flows and balance sheets for startups. If you willing and able to lend a hand – or you know someone can – drop them an email.

Spider, man
The Postcode Lotteries Green Challenge has announced the 25 start-ups that have made it through the first stage of the international competition supporting green entrepreneurs. Seven of the companies are British, including Jiva Materials, which is manufacturing the world’s first fully recyclable printed circuit board to easily and safely recover precious metals, and Spintex, which through a spider inspired process artificially spins the high performance silk fibres. If you like your glass half full, check out all the amazing nominees' innovations.

We believe entrepreneurs will be key to solving many of the world’s biggest challenges – including environmental ones. That’s why we’re busy undertaking a research project on green entrepreneurship with the Enterprise Trust. Find out more here and drop Eamonn Ives an email if you want to get involved.

Startup steps from h
Disruption, The Panoply and h Foundation have developed the Future Leaders Programme in response to coronavirus. It is focused on supporting 21 to 30-year-old entrepreneurs who are BAME, from a low-income background or who have a disability. The 9-week fully digital programme includes a £200 per week bursary, a mentor, workshops and a final pitch event. Apply here.

Read the whole newsletter here, and sign up here.

Diversity and the Future Fund

Back in April 2020, Emma Sinclair MBE, one of our Female Founders and Hephzi Pemberton started a petition calling on the HM Treasury to align the Future Fund with the diversity agenda. In their open letter to Rishi Sunak, they raised some serious concerns that the Future Fund could exacerbate existing inequalities for the UK’s diverse founders. Namely, that diverse founders are less likely to have raised at least £250k of funding already, less likely to have ‘warm introductions’ and therefore less likely to have access to the Future Fund. 

In an article for Sifted, John Glen MP, Economic Secretary to the Treasury, signalled his commitment to ensuring the Future Fund did not only benefit established, male-dominated, London-based businesses. He said that the Fund would support female founders by becoming a signatory of the Government’s Investing in Women Code and provide monthly reporting on the diversity of recipients, including regional spread. 

The British Business Bank has published its first set of data on the 252 companies who have been approved for matched-funding from the Future Fund.

So did the government’s efforts to support diversity work?

On a positive note, 79% of funding went to companies with mixed gender management teams. However, if we look at the data for all-women management teams, just 3 have received funding out of the total 252. By contrast, 66 all-male management teams received funding. 

As Amy Lewin noted in her Sifted article on the Future Fund’s first set of diversity data, it is worth mentioning that the data applies to the ‘senior management team’ - not just founders. By contrast, when we track the equity funding gap, we only focus on startups with female founders. This means that the headline statistics are slightly more favourable for the government.  

When it comes to ethnicity, 113 teams were of mixed ethnicity, 109 were all-white teams and only 12 were all-BAME. 

On the diversity of the fund, Deborah Okenla, founder of YSYS said to Amy Lewin in her Sifted article that “it’s a positive start to see The Treasury commit to collecting and publishing the data. We can see from the data that we still have a long way to go. And we need to understand what the data shows for specific groups, such as black founders within the BAME categorisation, and move beyond binary gender.”

The Extend Ventures and YSYS Report on the impact of COVID-19 on Diverse Founders Startups revealed that almost half (48%) of BAME business owners did not expect to access or qualify for any government support schemes.

In our latest FFF Newsletter, we covered Erika Brodnock’s thoughts. Erika is co-founder of Extend Ventures and one of our Female Founders. Speaking to Amy Lewin from Sifted, Erika said “For too long, minority entrepreneurs have remained unsupported and have needed to ‘fend for themselves’... we need to ensure this isn’t going to be the same for newer businesses”.

So how can we change the status quo? 

With support from Barclays, we are continuing in our efforts this year to provide female entrepreneurs with the support, advice and networks they need to succeed. We will be sending out invitations to our digital events in our FFF Newsletter, which you can sign up to here.

BAME entrepreneurship policy overlaps with some of our previous work on immigrant founders – and Sam Dumitriu has just written an excellent article making a powerful case for why we should let asylum seekers work – but, of course, it is also about British-born BAME entrepreneurs. 

With support from NatWest, we’re also putting together an APPG for Entrepreneurship Webinar on BAME entrepreneurship. You can register your interest by dropping us an email. We hope and expect that this will be the start of some more focused policy work.

Just the Job

As the economy slowly opens up, entrepreneurs will need access to workers with the right skills to drive the recovery.

To that end, the CBI has released a report on Building a World-Class Innovation and Digital Economy. It measures the UK against the other G7 countries and is packed full of familiar policies that we back. One that stood out, which I’ve not discussed here before, is transforming Job Centres (now Jobcentre Plus) into Jobs and Skills Hubs. 

Jobs and Skills Hubs would harness the expertise of colleges, universities, unions, businesses, and Local Enterprise Partnerships to provide the rapid matching of people to new job opportunities and sourcing high quality training in areas of future demand in the local labour market. As furlough is withdrawn, this could be vital for supporting the rising number of unemployed.

This brings to mind a recent article by Jonathan Portes and Tony Wilson, which calls for us to ape successful countries like Denmark in the way we support employment. But as with any reforms like this, the devil is in the implementation. As Heather Rolfe from the think tank Demos argues: “For this to work, the low-grade box-ticking ‘employment skills’ courses where participants repeatedly write CVs, need replacing by real training courses, leading to technical skills and designed and delivered in partnership with local colleges and employers.”

Job Centre reform won't grab as many headlines as a cut to VAT (which is looking increasingly likely), but it would probably be a better use of limited resources. As Ryan Bourne argues in The Telegraph: “the government would get far more “bang for the buck” diverting funds into actively encouraging new hires or at least offering retraining or job-matching services for workers who find their old roles defunct.” (If you're still not convinced about the limited economic benefits of cutting VAT, read Edward Troup's dissection of the idea).

Lunch and learn
On Tuesday, Viscount (Matt) Ridley and Dr Anton Howes will discuss how innovation works. I can’t wait for this one, as I grew up devouring Matt’s brilliant books. I would particularly recommend The Red Queen: Sex and the Evolution of Human Nature. He will be discussing some of the ideas in his new book, titled appropriately enough, How Innovation Works. 

Anton has started working with us as Head of Innovation Research, but he is first and foremost one of the UK’s experts on Britain's acceleration of innovation that gave rise to the Industrial Revolution. His first book has just been published. Arts and Minds tells the story of Britain's subscription-funded national improvement agency, the Royal Society for the Encouragement of Arts, Manufactures and Commerce (RSA).

It’s bound to be a fascinating discussion. It’s at 1pm on Tuesday, so you might want to tune in over a spot of lunch. Find out more here.

Level heads
Levelling up investment across the country will require level heads. As Sam Dumitiru writes on our blog, for every success story like Israel’s famous Yozma programme, there are a dozen failed attempts where public money has been wasted with little to show for it. Drawing on the work of Josh Lerner, Sam details the common pitfalls of governments using venture capital to level up and concludes that we should limit interventions to match funding with the private sector. Read it here.

Design for life
The British Design Fund has got in touch about an opportunity to apply for the 2020 global Design Intelligence Awards, hosted by the China Academy of Art. These awards recognise innovation in four categories: cultural innovation, living wisdom, industrial equipment and digital economy, and are designed for both established businesses with products in market and early stage innovators with prototypes capable of being brought to market. 

Ben Griffin, Innovation Lead for Design at Innovate UK, is one of the judges. The deadline is 6 July and last year’s winner Open Bionics, which is developing the next generation of bionic limbs, took home 1 million Yuan (around £115,000). Find out more here.

Seeing the wood
Our friends at Enterprise Nation have announced the Amazon Small Business Accelerator, a major support package for 200,000 small businesses across the UK. By joining the programme you can access a bundle of business offers worth over £2,000. Find out more here.

Read the whole newsletter here, and sign up here.

Embracing Tech & Innovation

The COVID-19 pandemic has presented many challenges for the UK’s female entrepreneurs but it has also created an opportunity to lean into new technologies. FFF Member, Rt Hon. Baroness Kramer stressed this point in our recent APPG Webinar on The Economy, Technology and Bouncing Back. So how is the Government investing in the opportunities that will underpin the UK’s future economy? We cover the latest policy updates and some new highlights from our inspiring Members in this week’s FFF blog.

FEMALE FOUNDER HIGHLIGHTS

Here is a quick wrap up of this week’s news highlights, featuring some of our inspiring Members:

• Erika Brodnock, was quoted in a Sifted article by Amy Lewin, talking about a new report by Extend Ventures and YSYS into the impact of COVID-19 on Black and Ethnic Minority-Led Businesses. “For too long, minority entrepreneurs have remained unsupported and have needed to fend for themselves” said Erika, “we need to ensure this isn’t going to be the same for newer businesses”. You can read the full report here. 

• Streetbees, founded by our Member Tugce Bulut, has been selected by the World Economic Forum as one of the most promising Technology Pioneers of 2020. Many of the Technology Pioneers are using their tech to support COVID-19 responses around the world, like Streetbees COVID-19 Return To Life Monitor.

• “The industry must navigate an ethical way through this crisis by providing support not only for businesses’ immediate teams but also international and developing world partners” said Laura Tenison, founder of Jojo Maman Bébé, in her article for Drapers. Laura also spoke with Marc Smith for Director earlier this year on her commitment to achieving B Corp status and the company’s dedication to putting people and the planet above profit.

• “It’s important that we don’t lose many of the start-ups that are out there because they are our future”. Read the highlights from our APPG Webinar with Rt Hon Baroness Kramer on The Economy, Technology and Bouncing Back here.

GOVERNMENT SUPPORT

1. Future Fund Diversity Data Published

The British Business Bank has published data on the companies that have been approved to receive Convertible Loan Agreements since the Future Fund Scheme launched on 20 May.

The data reveals that 79% of funding went to companies with mixed gender management teams. Since the launch, more than 30 venture capital firms and angel groups have become signatories to the Government's Investing in Women Code, alongside the Future Fund. Read the full press release here.

Priya Guha, venture parter at Merian Ventures said in a Sifted article that “Whilst the self-reported stats for management teams are encouraging, using this as the measure for diversity data could be misleading. I would encourage the British Business Bank to publish the figures showing the percentage of BAME and female founders who were successful which will give a truer picture of the the diversity of the Future Fund”.

2. Future Tech Trade Strategy launch

In a recent headline policy announcement, Rt Hon. Liz Truss MP, Minister for Women and Equalities and Secretary of State for International Trade, launched the Future Tech Trade Strategy.

The strategy includes a package of interventions to attract more investment from around the world into the UK tech sector. Among the other measures, it includes:

• A Digital Trade Network (DTN) for Asia-Pacific, to help support UK SMEs break into the Asian market;

• The launch of a new Tech Exporting Academy, which will provide expert advice to UK scaleups;

• A new DIT platform (think virtual trade shows); and

• Creation of 25 tech export champions across the UK.

Diversity is at the forefront of this agenda. In order to help make the UK’s FinTech ecosystem more diverse and bring more female tech entrepreneurs to the UK, the DIT launched it’s Women in FinTech Global Initiative. You can find out more about this initiative here. 

3. Re-opening your business safely during COVID-19

The Government has developed a tool to help businesses in England reopen safely during COVID-19. This tool is designed to help business owners carry out a risk assessment and make adjustments to their workplace. Find out more here. 

4. Code of practice for the commercial property sector and further halt to business evictions

The Government has published a new code of practice to encourage landlords and commercial tenants to map out a plan for economic recovery. The code has been developed with leaders from the retail, hospitality and property sectors to provide clarity for businesses discussing rental repayments with their landlords and to encourage best practice. You can read the code of practice here.

The Coronavirus Act has also been extended to 30 September 2020, meaning businesses who miss a payment in the next three months will not be forced out of their premises. 
 
BARCLAYS SUPPORT AND OPPORTUNITIES

1. Barclays Entrepreneur Awards – now open for nominations!

The Barclays Entrepreneur Awards are back for the fifth year running and whilst the start to 2020 has been a difficult time for all, it's given us even more reason to celebrate entrepreneurs and recognise their achievements. So often it's their exceptional innovation alongside their drive for social change and to overcome challenges that keep the country moving forward. 

To find further information on the awards itself, please visit our website here and you can find further details on the award criteria and categories directly on our nomination website. Submit your nomination by Friday 3 July.

2. Virtual Event – with Nicky Goulimis (co-founder and COO of Nova Credit)

Nicky Goulimis, the Co-Founder and COO of Nova Credit will be joining Juliet Rogan, Head of Barclays High Growth and Entrepreneurs, for an informative discussion on how to rapidly scale and expand your business. In this session on Thursday 9 July at 5pm, you’ll find out how Nova Credit went from light-bulb moment to a $50m Series B funding round, and learn more about Nicky’s experiences as a successful female founder. To sign up for this event, please register here.

3. Barclays Coronavirus Support Hub

The Barclays coronavirus support hub provides the latest information, tools and guidance to support businesses throughout the coronavirus pandemic. This hub includes information about Barclays’ products, webinars, Facebook live events and more information on how to access the government schemes. You can also download Barclays’ coronavirus checklist to support your business resilience planning throughout this period. There is also an updated FAQs section on this hub.

4. Barclays Ventures Female Founder Events

Barclays Ventures has stayed committed to supporting the start-up ecosystem during the COVID-19 crisis and has delivered a variety of measures to support female founders. From roundtable catch-ups to live panel sessions with Barclays Business Bank to discuss financing options through COVID-19, the passion with which Barclays Ventures supports tech startups remains steadfast. Check out future events across Barclays Ventures here.

5. Barclays UK Investment Insights Podcast : A high growth digital future

Listen to Juliet Rogan, Barclays Head of High Growth & Entrepreneurs talking to Phil Attreed (Barclays Head of Investment Consulting) and Will Hobbs (Barclays Chief Investment Officer) about the pandemic, Brexit and current trade tensions, as well as the accelerating the transition to the UK’s digital future. You can find the podcast here.

We want to inspire female entrepreneurs across the UK. Do you know any inspiring female entrepreneurs? 

Connect them to jess@tenentrepeneurs.org and sign up to our Newsletter, which we send out every two weeks.

If you share content with the hashtag #femalefoundersforum, we will retweet you or repost it.

Can venture capital level up the UK?

For understandable reasons, the government’s flagship “levelling up’ agenda has not attracted much attention over the past few months. But as the debate shifts to recovery, policymakers will be on the hunt for ideas to close the UK’s large regional divides. 

High growth entrepreneurship will be key to improving productivity in cities and towns outside the South East. To that end, I suspect we will see more proposals along the lines of Lord O’Neill’s ‘Good Bank’ (see Philip Salter’s assessment) to invest in growth capital outside London and the South East.  And even if central government doesn’t bite, devolution and more financial freedom may prompt some Metro Mayors to try their hand. 

The temptation to try and kick-start a venture capital industry is easy to understand. After all, venture-backed startups have a disproportionate impact on innovation, job growth, and productivity.

But for every success story like Israel’s famous Yozma programme, there are a dozen failed attempts where public money has been wasted with little to show for it. If we’re to avoid repeating those mistakes, it’s worth studying what’s worked and what hasn’t in the past. Thankfully, a pithy new paper from Harvard Business School’s Josh Lerner identifies the common factors that explain why most attempts to boost venture-backed entrepreneurship fail.

Incentives

First, it’s worth recognising the limits of public officials. Lerner’s assessment is tough, but fair.

“Government officials may have many valuable talents and play incredibly important roles; but the skill sets associated with successfully identifying and funding entrepreneurial businesses are very different from those encountered in their typical daily work. The ambiguity, complexity, and specialization associated with these ventures makes these tasks quite challenging.

In many instances, officials may be manifestly inadequate to the task of selecting and managing entrepreneurial or innovative firms. Many examples can be offered of government leaders who did not think carefully about realistic market opportunities, the nature of the entrepreneurs and intermediaries being financed, and how the subsidies they offered would affect behaviour. Whether they were rules that affect the ability of firms to accept outside financing, offshore routine coding work, or respond to shifts in customer demands, well-intentioned officials can make rules that prove to be very harmful to those they mean to help.

One potential solution is to bring in outside talent. But in order to get the best you need to be willing to pay high wages. The issue is that being part of the public sector brings additional scrutiny. Take the case of In-Q-Tel, a venture fund set up by the CIA to give them access to more cutting-edge tech. To get the right people, it was set up as an independent, not-for-profit entity. This allowed them to pay high salaries and offer performance related rewards. However, negative coverage in the New York Post led to intense scrutiny over compensation and pushed many investment staff to leave.

Regulatory Capture

A further issue faced by public-venture schemes is regulatory capture. Take the Department for Energy’s Clean Energy Initiative. 

“…the Department of Energy had little transparency about the criteria used to select the awards to cleantech firms discussed in the introduction. Reflecting this lack of clarity, firms responded by hiring lobbyists to seek awards. For instance, more than half the cleantech companies in the portfolio of New Enterprise Associates, a large U.S. venture firm, hired lobbyists to seek to influence the rewards”

As well as leading to waste, there’s also a risk of missing out on the best ideas. Lerner notes “the most creative entrepreneurs are often outsiders”, so any process that ends-up favouring well-connected individuals will leave high-potential investments on the table.

Geography

But arguably the biggest concern for policymakers attempting to do regional policy through venture capital is the poor performance of public venture capital in areas without private venture capital.

Take the Small Business Innovation Research (SBIR) program. It’s the largest public venture programme in the US and spoken highly of by UK politicians such as Neil O’Brien MP. Its results are impressive – businesses that receive grants through SBIR grow faster than similar businesses who didn’t get SBIR funding. However, not all grants paid-off equally well. When Lerner looked at attempts to impose geographic fairness requirements on SBIR,  he found that in high-tech regions the average recipient added 47 jobs (effectively doubling in size), while recipients in other regions only added 13 jobs. 

Political pressure can force programmes to fund weaker companies. For instance, businesses in every one of the 435 congressional districts have received SBIR grants despite high-tech businesses typically clustering together. 

This isn’t to say that some regions wouldn’t benefit from additional public support, but there needs to be some already existing demand for venture capital or else funds will be forced to invest in weaker businesses.

On a similar note, there’s a tendency for policymakers to decide to invest based on hype rather than investment fundamentals. For instance, 49 out of 50 US states have started programmes to promote biotech. Yet biotech requires a skilled scientific workforce and access to patent lawyers that only a few locations in the US possess. Ignoring this economic reality will often have unintended consequences. For instance, often when promising biotech firms were funded, they swiftly moved to a region with an established biotech sector.

Avoiding waste

The best way to avoid the pitfalls discussed above, while supporting a nascent venture sector, is to provide matching funds. Israel’s highly-praised Yozma programme provided foreign venture investors with matching funds (typically on 60% private, 40% public basis). This created discipline and ensured that public money wouldn’t be invested in businesses with poor prospects for political reasons. It also reduced the risk of capture and lobbying as private investors with skin-in-the-game have a strong incentive to only invest in viable prospects. The government’s Future Fund programme, which matched private venture investment 50:50 to provide a runway for startups struggling to raise investment due to coronavirus, is another good example of a well-designed intervention.

If politicians want to replicate London and Cambridge’s recent startup successes elsewhere in the UK, then they should proceed with caution and avoid the many pitfalls of past schemes by limiting their interventions to matching the private sector.

Fair Dinkum

Jo Johnson, former Universities, Science, Research and Innovation Minister, has written a report on the future of international students. The headline recommendation is to double the UK post-study work visa offer (Graduate Immigration Route) from 2 to 4 years, which would have a hugely positive impact on both the university sector and UK entrepreneurship.

Universities have suffered more than most sectors from the pandemic. Many are anticipating a drop in international students of 50-75%, which would represent a significant reversal for one of the great boom sectors of the globalised economy.

Universities are reliant on international students. As Johnson argues in his introduction, Governments have long required universities to develop additional revenue streams to cross-subsidise research, which loses 25p in the pound, and the teaching of certain strategically-significant laboratory and studio-based subjects that cost more to deliver than the £9,250 fees paid by domestic students. As such, “far from squeezing out qualified domestic students, overseas students have made viable courses and research opportunities that would otherwise not be offered.”

The report references our Job Creators research (which Johnson wrote the Foreword to), and the headline stat that 49% of the UK’s fastest growing start-ups have at least one immigrant co-founder, including 9 of the list’s 14 unicorns.

It draws on the case studies of a couple of top entrepreneurs in our network: “A cursory examination of the country’s top start-ups illustrates the case for keeping the country open to international students. Take Joshua Wöhle, the founder of $100m+ Internet safety company SuperAwesome, who initially moved to the UK from Switzerland to study Computer Science at King’s College London, or Christian Nentwich, who founded his $100m+ fin-tech start-up after completing his PhD at University College London.”

In recent years, UK international student numbers have been flat, while Australia, which is on the verge of overtaking the UK in terms of total overseas numbers, has now seen steady year-on-year growth of around 14%. Increasing the post-study work visa offer will help ensure we don’t land up any further down under.

Good to GREAT
GREAT is the government’s flagship international marketing strategy which in light of covid-19 will be launching a new campaign.

It will shine a light on inspirational UK businesses that have gone above and beyond during the covid-19 pandemic to operate for their employees, customers or contributed to their communities.

They’ve asked us for recommendations of a broad range of businesses from across the UK. You’ll need to be able to tell an inspirational story related to your work during the pandemic. If you want to be considered for this, send me a brief note on how your business has adapted, with a link to your company website and a contact number and I’ll pass it to the powers that be.

On the Blog
Anton Howes has written about how to improve copyright to engender more innovation while protecting rights-holders. Under the status quo, law-abiding would-be users of copyrighted material face massive hurdles when they want to use content, for which the creator is now deceased. In order to conduct a ‘diligent search’ and track down the current rightsholder to avoid liability to infringement suits, creative entrepreneurs are forced to become expert genealogists. It creates a massive barrier for innovators and creatives.

To solve this problem, Anton suggests replicating the US system, whereby works have to be registered a certain number of years after the creator’s death, in order for the rightsholder to bring an infringement case.  This idea might be developed into a research paper, so do get in touch with him if you have any feedback or potential case studies to illustrate the problems with the current system.

I like big ideas, and there are few as big as the suggestion that the UK sets up a sovereign wealth fund. However, as I wrote this week, there are reasons to be cautious about political interference. The idea being mooted is for this fund to invest in key businesses outside of London as part of the Prime Minister's levelling up agenda. I argue we should tread carefully, as this is an unusual remit for a sovereign wealth fund, and we already have policy levers and established institutions to support the levelling up agenda.

Support Ultrapreneurship
Julian ‘The Ultrapreneur’ Hall got in touch to share details of his upcoming online kids business fair, which is normally a physical event. Ultra Education is a leading social enterprise, teaching entrepreneurship to children from 7 to 18. Julian's mission is to increase the life chances of the most disadvantaged children using the skills and mindset of entrepreneurship, and over the years he has been an impressive and active part of our work around enterprise education. He is looking for support and collaboration for his inaugural online business fair. You can get in touch with Julian here.

Read the whole thing here, and sign up here.

Should the UK start a sovereign wealth fund?

Among the big ideas that have been suggested to support the UK’s economic recovery is the creation of a sovereign wealth fund. As reported in the Daily Mail, officials are understood to be 'actively considering' a £25bn taxpayer-backed fund. “Under the plan, the Government would buy shares in key businesses outside of London as part of Prime Minister Boris Johnson's agenda to strive to 'level up' the entire country after lockdown ends.” Lord O'Neill, who is pushing this idea hard, has dubbed it the ‘Good Bank’ – but is this a good idea?

Levelling up is an unusual justification for the creation of a sovereign wealth fund. Traditionally, they’re used by commodity-rich nations to invest surplus income, diversify income streams and accumulate savings for when the commodity revenues dry up. It’s a way of counteracting Dutch Disease, whereby an increase in the economic development of a specific sector (e.g. the discovery of large oil reserves) can lead to a decline in other sectors as they sap talent and resources. With high government borrowing and North Sea oil production in steady and perhaps terminal decline, the traditional justifications don't make sense for the UK.

Even when they are started for the traditional reasons, sovereign wealth funds aren’t a surefire bet, but a few have performed well. Singapore’s GIC, the Abu Dhabi Investment Authority, and Norway’s Government Pension Fund Global are envy-inducing. But due to the logic of their creation, their remit is nothing like the proposed ‘Good Bank’. Singapore's GIC, for example, is diversified across multiple asset classes, invests purely overseas, and is mandated to beat inflation.

GIC is run with strict investment discipline, as chief executive Lim Chow Kiat explains: 

“So the team have to make a proposal that what they are going to do will be better than the beta that they have. Their job – their key performance indicator, their bar – is to do better than what they have foregone. There is a cost to it: the opportunity cost of foregoing beta and the riskiness of the investment. It’s not enough that you do better than beta. You have to deliver something risk-adjusted to account for the additional risk you have taken on.”

In Boulevard of Broken Dreams, Josh Lerner argues that sovereign wealth funds face the same problems as other government schemes to promote venture activity: “the temptation to invest too locally without considering broader options, a failure to assess performance, and pressures to invest in the ‘pet projects’ of political leaders and their associates.”

Lerner cites the example of the University of Rochester to illustrate the point that goals are often in conflict – for example, between supporting local economic growth and running a successful fund. In the early 1970s it had the third largest endowment in the country, after Harvard and the University of Texas. However, the administrators decided to invest locally in companies such as Kodak and Xerox, which suffered in the 1970s and 1980s. As a result, the university had to dramatically downsize in the mid-1990s. “In this case, the goal of supporting local businesses ran counter to the goal of buffering the university against financial shortfall,” says Lerner.

Looking at successful sovereign wealth funds around the world, it’s easy to think that imitation is the best policy. It’s particularly galling for some, as perhaps the UK could have used its bonanza from North Sea oil, or even its prizatizations, to endow what might now be a significant fund. However, there is a question of whether North Sea oil and privatizations helped fund tax cuts that had a greater positive impact on the economy than a fund would have. 

For GIC’s Lim Chow Kiat: “[T]he unique thing is not what most people see. The most unique thing is the governance arrangement. The government makes it very clear and is very disciplined about that – to leave GIC alone to just focus on making money. It is hard for a lot of governments to do that.”

At the extreme, a fund buying shares in key local businesses risks corruption, as Malaysia’s domestic-focused 1MDB scandal shows, but more likely it would be a sub-optimal allocation of resources like the University of Rochester. The UK already has a flourishing venture capital industry and UK Research and Innovation has a budget of £7 billion to fund innovation. There’s a lot the government can do to support more innovation – opening up pension funds to venture capital would be a small change with potentially large consequences. 

Sovereign wealth funds are a nifty policy solution for countries with surplus income and large oil reserves. They might also be a useful way for countries like Turkey, Romania, India and Bangladesh, who are creating a new breed of sovereign wealth funds whose role it is to support the growth of their investment industries, while potentially circumventing red tape and other local political challenges – although the jury is still out. The UK has neither the surplus income, nor the local problems that couldn’t be better circumvented through established institutions like Innovate UK and British Business Bank. A sovereign wealth fund shouldn’t be applied crudely to the UK without first considering if there are better policy levers and established institutions to meet our stated goals.