The case for allowing dual-class shares structures

The UK hosts one of the world’s deepest public capital markets. Businesses from across the world list on the London Stock Exchange’s Main Market and its reputation among institutional investors is top-notch. But policymakers are concerned that the market is no longer a draw for some of the world’s most innovative businesses. It’s part of a broader concern that while many great tech businesses are started in the UK, many sell up to US tech giants. Autonomy (acquired by HP in 2017) and DeepMind (acquired by Google in 2014) are probably the two most famous cases.

Rishi Sunak aims to change that. This week, he announced a taskforce to look into reforms to make the UK’s listing regime more attractive to tech. The biggest question for the taskforce to tackle is whether or not to allow dual class share listings.

In recent years, when tech companies have gone public, their founders have been reluctant to give up control. They’re afraid their long-term vision will be bogged down by short-termist stock markets preoccupied with quarterly returns. To access the benefits of public markets without relinquishing control, tech companies have employed a dual class share structure. Take Facebook: everyday shareholders own Class A shares worth 1 vote per share, by contrast Class B shares controlled by Mark Zuckerberg and other Facebook insiders are worth 10 votes. As a result, Zuckerberg controls 60% of the voting shares at Facebook. The situation is similar at Google. Tesla is slightly different, but has strict super-majority rules that ensure that any proposal opposed by Elon Musk must be backed by 89.5% of outside shareholders.

Another way founder-led tech businesses can retain control is by only floating a small percentage of their shares when they IPO. For instance, when LinkedIn floated in 2011 they only released 9.4% of their shares. On this, Google was a trendsetter having only issued 8.3% of its shares when it floated in 2004.

Both of the above arrangements would bar a business from a Premium Listing on the London Stock Exchange’s Main Markets, which means the company could not join any FTSE indices. 

Should this change? On the one hand, the London Stock Exchange’s shareholder friendly rules are a hit with institutional investors. Without strong protections, there is a risk that investors would be unable to protect their interests when they conflict with management. George Dallas of the International Corporate Governance Network, who opposes the move, alleges that allowing dual class shares would “erode accountability to management and have the effect of entrenching managers and controlling owners.” It certainly isn’t hard to find examples in the 1970s where management took advantage of shareholders, investing in vanity projects and empire building. Whatever you think of Michael Milken and his ilk, his opponents such as RJR Nabisco’s Ross Johnson were hardly deserving of sympathy.

On the other hand, founders are attracted to dual-class share listings and small floats because they allow them to retain control and execute their long-term vision. They fear that a narrow focus on short-term quarterly results can lead to under-investment in research and development and long-run irrelevance.

Fears around stock market short-termism may be overblown, but they are clearly taken seriously by tech founders. With VC markets allowing businesses to stay private for longer, there is a clear need for greater flexibility in public markets. In the US, Lean Startup author Eric Ries has responded by founding the Long-Term Stock Exchange and received backing from major VCs such as Marc Andressen. It’s designed to allow Silicon Valley businesses to access the benefits of public markets, such as allowing employees to easily sell their shares while prioritising patient capital.

There is a broader political case for making it easier for innovative founder-led businesses to list. We risk undermining a culture of shareholder capitalism if ordinary investors are shut out from the fastest growing parts of the economy.

On dual-class shares, the UK is an outlier. The US has allowed the arrangements for a while and recently Singapore and Hong Kong have liberalised rules allowing founders to have greater control in certain circumstances.

Some may argue that reform is unnecessary. After all, Deliveroo and Darktrace are both set to IPO on the London Stock Exchange. However, some businesses are clearly frustrated. The Hut Group’s recent £5.4bn IPO did not achieve a premium listing and as a result, investors in FTSE indices will miss out. 

With existing rules deterring tech businesses from listing in London, the burden of proof should be on opponents of reform to prove harm. Yet, a range of studies suggest that relaxing the UK’s rules on premium listings carry little risk to investors. 

One study in the Stanford Law Review, which looked at 34 years of data of board staggering and destaggerings, found that staggered boards are “associated with a statistically and economically significant increase in firm value”. Stronger boards, which give shareholders less direct influence, deliver better returns. It is worth noting that past cross-sectional research found the opposite, but unlike this study, that research did not control for the reasons why boards staggered or destaggered.

The situation is analogous to dual class share ownership. While staggered boards reduce the ability of shareholders to kick out management when quarterly results disappoint, they also give management more flexibility to focus on the long term. 

Additional research casts doubt on the merit of the London Stock Exchange’s 25% minimum free float requirement for premium listings. A study to be published in the Journal of Banking and Finance finds that companies that float less than 20% of their shares outperform the market over the long term. The status quo is in some ways, the worst of both worlds. The researchers find that while small floats do best, big floats also perform well. It’s the inbetweeners selling between 20% and 40% that perform worst.

This is not to advocate a free-for-all, however. We may be better off charting a middle course as Hong Kong and Singapore have. As the SEC commissioner Robert Jackson Jr notes: “Nearly half of the companies who went public with dual-class over the last 15 years gave corporate insiders outsized voting rights in perpetuity. Those companies are asking shareholders to trust management’s business judgment—not just for five years, or 10 years, or even 50 years. Forever.” 

He analysed 157 dual-class IPOs form the past 15 years and found that businesses that had sunset provisions on their dual-class shares performed better over the medium to long term. 

There’s a strong case for reform and liberalisation. The taskforce should update outdated rules on dual-class shares and minimum float requirements, but consider sunset provisions to protect investors. Doing so would preserve London’s position as a world-leading financial centre and allow more retail investors to gain a stake in Britain’s most innovative businesses.

How the UK can Attract the Best and Brightest

The UK government has a long and proud history of attracting top scientific and innovative talent, not just through liberal immigration rules for skilled workers, but through proactively identifying and persuading them to settle in the country – a policy of promigration. 

In the late sixteenth century, for example, it hired hundreds of German metallurgical experts, giving denizenship rights to them and their families, in order to start Britain’s copper and brass industries, which soon became world-beating. It poached France’s textile workers and engineers, and in the seventeenth century proactively acquired civil engineering talent from the Netherlands. In the eighteenth century, the government was so keenly aware of the importance of talented individuals to innovation, that it banned the emigration of skilled workers (we don’t advise this), and spent vast sums ensuring that those who had already emigrated to France could be persuaded to return. 

If it had not been for the government’s proactive approach, then Isambard Kingdom Brunel may never have become a British engineer. His father, the prominent civil engineer Marc Isambard Brunel, was an immigrant from France who was even bailed out of debtors’ prison by the British government on the condition that he remain in the country and not emigrate to Russia.

In this briefing, we identify four policies that will enable Britain to rediscover its tradition of actively seeking to draw in the world’s brightest innovators, scientists, and entrepreneurs.  

1. Attract scientists to the UK by replicating low-bureaucracy grant funding systems such as the Howard Hughes Medical Institute. 

By some estimates, researchers spend half of their time writing and applying for grant-funding. However, some of the most successful research funding initiatives have focused on identifying  promising individuals, as opposed to evaluating each individual project proposed and regularly monitoring the researcher’s progress. For instance, Yale’s Institute for Advanced Studies (IAS), responsible for two-thirds of Fields Medalists and 34 Nobel Prize winners, famously gives researchers no teaching responsibilities, and research is not directed or contracted. It was instrumental in the transfer of scientists from Europe to the US.

The UK could learn from the IAS and other institutes, which prioritise funding individuals over projects, and draw in high-impact scientists by limiting their administrative workload and allowing them to work on the research projects they are most interested in.

Research from Azoulay et al. suggests that this low-bureaucracy approach can lead to higher researcher productivity. They studied the Howard Hughes Medical Institute, which supports more than 300 researchers for at least 5 years based on their personal qualifications – not what the project they are working on. The researchers receive limited oversight once approved. HHMI grantees wrote 50% more papers in the top 1% of their field (as measured by citations), when compared with similarly qualified researchers who went through standard project-based grant funding. 

The UK should consider developing a similar individual-based funding programme for early career researchers, and make strenuous efforts to promote the scheme overseas.

2. Reform the under-utilised Startup and Innovator Visa by allowing endorsing bodies to charge for applications.

While just 14% of UK residents are foreign-born, 49% of the UK’s 100 fastest-growing startups and 11 out of the UK’s 16 startup unicorns (pre-IPO startups with a valuation of over $1bn) have at least one foreign-born co-founder. 

To attract international entrepreneurial talent, the government created the Innovator and Start Up visas, which aim to give incubators, accelerators, and venture capital firms a key role as external endorsing bodies. These organisations should be well placed to identify top talent, but serious flaws in their implementation have made it even harder for entrepreneurs to come to the UK than through the much-criticised scheme it replaced. In the first quarter since the Innovator visa route opened, just two applications were successful, and at least four of the initial 30 endorsing bodies have already dropped out.

The new visa routes have been blighted by poor consultation, communication, and unclear guidance. Most critically, not allowing endorsing bodies to charge immigration fees has meant the schemes are underpromoted by legitimate organisations and have been partially hijacked by a few organisations that charge thousands for supplementary services through the back door.

The system could be fixed by allowing endorsing bodies to charge fees to applicants for the visa (which could be capped, if deemed necessary). A significant number of more credible organisations would apply to become endorsing bodies, who would have an incentive to actively promote their scheme through their networks – including internationally. These are the incentives we see functioning in the Government Authorised Exchange (GAE) visa (Tier 5) scheme, for which endorsing bodies charge reasonable fees due to their being enough of them to create a competitive market. 

In addition, allowing endorsing bodies to charge fees would diversify away from the accelerator model, a few of whom have an incentive in endorsing entrepreneurs through this route because they’re taking equity in the companies they invest in. While accelerators can be beneficial for some, a lot of entrepreneurs don’t see them as useful for their business, for example, serial entrepreneurs who have already received Venture Capital investment,  and don’t want to give away equity unnecessarily. 

3. Expand the Enterprise Management Incentive (EMI) scheme, where stock options are taxed as capital gains (not income), to businesses with 250 to 500 employees and £100m in assets to attract in-demand product managers to the UK.

Due to the relative immaturity of the UK’s tech sector, at least compared to Silicon Valley, there are relatively few senior product managers and domain experts who have scaled startups from 10 to 10,000 people. As a result, most UK unicorns and scale-ups will seek to hire managers from Silicon Valley.

The salaries of such managers are typically very high, as British startups must compete with Silicon Valley wages to draw talent to the UK. They can, however, attract talent by also paying workers with stock options for the chance of a large payout down the line. The UK’s tax treatment of stock options, through the Enterprise Management Incentive is attractive, with stock options taxed as capital gains (not income) and qualifying for Entrepreneurs’ Relief. The EMI scheme may also stimulate VC activity, as there is solid econometric evidence that countries with lower rates of taxes on stock options see increased venture capital activity. 

But other nations, such as France, are now developing similarly attractive ways of taxing stock options. And UK scaleups face a further problem. To qualify for EMI, they must have under 250 employees and £30m in assets. Many startups believe this requirement, set in 2000, is out of date. In fact, three quarters of startups have cited a ‘brain drain’ of talent to large tech firms over the last 5 years because their growth and success has unintentionally locked them out of the EMI scheme.

To prevent this brain drain overseas and allow scale-ups to compete for the highly sought-after product managers, the government should increase the current limits of EMI from a £30M asset capitalisation to £100M, and from 250 to 500 employees.

4. The UK isn’t properly promoted abroad and the visa system is too slow and complex. 

The UK government doesn’t adequately promote itself abroad to leading innovators and scientists. Due to mid-stream changes to the criteria of the Highly Skilled Migrant Migrant Programme, the scheme was accused of false advertising. But the wrong lesson was learned from this episode. Instead of redoubling efforts, we are now failing to promote the UK’s competitive visa system, as well as its other significant advantages.

To attract the very best and the brightest, we need to properly promote the UK abroad, such as the ease of access to capital, its universities, other talent, and tax breaks, as well as the relevant visa routes. The UK’s forward-looking approach to regulation, through such innovations as regulatory sandboxes, should be especially highlighted. Such promotion should be done centrally but delivered locally, by every relevant arm of government (e.g. the Global Entrepreneur Programme, embassies etc.) in concert with the private sector (e.g. universities with foreign campuses, and UK business organisations with an international reach).

To aid in these efforts, the government also needs to offer more clarity and certainty on the timeframe for visas – it is often a deciding factor in people’s choices to immigrate. Top talent is being dissuaded from the Global Talent visa (formally the Exceptional Talent visa), Innovator visa, and Investor visa due to their complexity and the time it takes to process applications.

In addition, the complex rules associated with keeping your visa (e.g. Start Up and Innovator visas) and for moving between different routes, put off many people from applying. Many entrepreneurs understandably don’t want to take on the added risk of not knowing how or whether they can stay in the country. For example, a startup founder who used to work at Entrepreneur First told us: “The number of people we were offering who were on Tier 4s or Tier 2s, who couldn't switch to a Tier 1 without going back to their home country was painfully low”.

Additionally, many leading innovators may need to look after their parent(s) at some point and we risk losing them to emigration (or them never coming in anticipation of this). The current system requires too much bureaucracy for close relatives to prove that they are a dependent, with very few able to move to the UK. The government should consider relaxing the rules on dependency provided funds are available for support, with an additional NHS surcharge applied to cover the cost to the government.

Sound of Victory

Barring a Pastor Paula White-Cain induced miracle, Joe Biden will be the next President of America. Many US entrepreneurs seem to be on the verge of celebrating – particularly immigrant entrepreneurs – but a case can be made that UK entrepreneurs will also be better off with someone else in the White House. In fact, our Adviser Andrew Dixon does just that in a City AM debate:

“Over the last four years, time and time again, Trump has undermined global cooperation — in everything from pulling out of the Paris Climate Agreement and the Global Compact for Migration, to his sustained efforts to weaken the WTO and Nato. Trump’s populist “America First” approach to international relations has undermined the prospects for global trade — and directly impacted British businesses.

After the pandemic has been defeated, huge global challenges will remain — from the demographic (such as ageing western populations and rising regional and intergenerational inequality) to the technological (like the rise of artificial intelligence, automation, under-employment, the power of Big Tech and the appropriate antitrust response).”

A fair COP
On Monday we released Green Entrepreneurship with the Enterprise Trust. We launched it to coincide with when COP26 was supposed to take place in Glasgow, but we want it to influence the environmental policy agenda between now and next year's meeting.

Innovation has been key in the UK’s success over recent decades. As Business Secretary Alok Sharma explained this week: “Over the last 30 years, the UK economy grew by 75%, and yet we also cut our emissions by 43%. We were the first major economy to legislate for achieving Net Zero emissions by 2050.”

Despite positive action by multiple governments, the report argues that incentives still aren't aligned as well as they could be to spur entrepreneurs to innovate. I won’t go through all twenty recommendations, but one of my favourites is perhaps broadest and something we have argued for in the past: making the Annual Investment Allowance unlimited.

The Annual Investment Allowance allows businesses to write-off the costs of new plants and machinery, but currently those who exceed the limit have a reduced incentive to invest in energy efficiency. The report also suggests further thought could be given to broadening out the qualifying lists.

As I write in Forbes, Green Entrepreneurship also has some inspiring case studies of UK entrepreneurs whose innovations will help the environment. Businesses like Too Good To Go, the Uber for unwanted food; Electron, whose platform helps optimise the network capacity for renewable energy; Ryse Hydrogen, which is at the forefront of Britain’s green hydrogen industry; and Saturn Bioponics, which uses fewer resources by growing food vertically in 3D hydroponic towers.

If you want to find out more, we also have a couple of events to launch the report with Bim Afolami MP and Luke Pollard MP that you’re welcome to attend.

Sign up for the Newsletter here.

Wage Against the Unseen

With the Office for Budget Responsibility predicting that unemployment will surpass the peak of joblessness in the 1980s, over the next few months this issue will come to dominate politics.

We aren’t in the same world as we were before the pandemic hit. Through no fault of our own, on net we have become less productive – particularly anyone working in sectors like retail and hospitality. This is simply a result of customers’ understandable reluctance to shop and eat out, and restrictions like the Rule of Six, Tier Two measures, and curfews that are aiming to stymie the pandemic.

Sadly, the National Living Wage could exacerbate the problem, with the weight of evidence suggesting minimum wages around the world cause unemployment. This isn’t a surprise as it’s predicted by the theory, and it’s why we have a Low Pay Commission to advise the government of the level we should set it to avoid too much damage.

The Living Wage is set to rise in April, but the Low Pay Commission may soon suggest an emergency break in an effort to reduce unemployment. However, the government may choose to increase it anyway. And you can understand why. On the face of it, it looks very mean-spirited and the disemployment effects aren’t easily observable.

But there is a way out of this impasse. As Research Director Sam Dumitriu argues for CapX, there is a third way: the taxpayer could split the difference. Drawing on the work of Prof David Neumark, Sam suggests creating a Living Wage credit to reduce the unwanted side-effects of a higher minimum wage.

Sam explains: “What if employers got a refundable Living Wage credit worth up to half the difference between the National Living Wage and what the National Minimum Wage was in 2016. It would be a significant subsidy to employers, but it could prevent job losses and allow businesses to stay open when trading under significant restrictions. To reduce the cost of the scheme, it could be targeted at certain sectors facing restrictions, similar to the Job Support Scheme Open. phased suggests limiting the subsidy to people without a university education. The subsidy would be phased out gradually as workers move up the wage scale.”

I think it’s a cracking idea, not least because it’s something people across the political spectrum could back due to its progressivity. As well as increasing unemployment, National Living Wages can lead to lower profits for business owners. But this isn’t just hitting the wealthy, but also the many marginal business owners struggling to get by. In contrast, the tax system is more progressive, meaning the richest will pay relatively more. Also, as we come out of the recession, it could be better targeted at people who really need it, such as the long-term unemployed.

Charter schooling
Our friends at the Small Business Charter have got in touch to share news of an initiative to help small and medium-sized businesses survive and thrive beyond COVID-19 which they’re running with the Department for Business, Energy & Industrial Strategy.

The Small Business Leadership Programme is free to participants and will be delivered by top business schools across England. The programme will support senior leaders to enhance their business’s resilience and recovery from the impact of COVID-19, and develop their potential for future growth and productivity. Find out more here.

In the SheEO
SheEO is looking to give away some cash to women-led businesses turning over between £40,000 and £2m. You would join a portfolio of 73 other ventures in Canada, the US, New Zealand and Australia. The deadline is Monday and all the details you need are here.

Late payments
The Government has opened a consultation on increasing the scope and powers of the Small Business Commissioner. They are seeking views on strengthening the Commissioner’s ability to provide small businesses with mechanisms for redress, in respect of late payments. The consultation will remain open until 24 December 2020 and you can respond here. If there is enough interest from the network, we could coordinate this to save time. Just let me know if you would respond to a survey from us on this – if there is enough interest I’ll let you know how this will work next week.

Folk tales
Were you born outside of the UK, have settled in Norfolk or Suffolk and subsequently created a thriving business? If so, Warren Page would like to hear from you. He is embarking on a photographic project and wants to illustrate the diversity of sectors and nationalities involved to show the positive effect migration in his area. The project is backed by Suffolk/Norfolk Director magazine and they will run it as a feature early next year. I appreciate this opportunity is quite niche, but even if it’s not one for you it would be great if you could pass it onto someone who might be able to help. Warren can be contacted here.

A fair COP
Next week was supposed to be COP26 in Glasgow. The pandemic has put paid to that, but not the need to protect the environment. Alongside the Enterprise Trust, we’ll release a report on Monday on how entrepreneurs can solve – nay, are already solving – the biggest environmental challenges we face. It’s got 20 policy recommendations so that we can speed this up and properly align the interests of business and the environment.

I can’t say anymore for now, but if you would like me to send it to you on Monday morning, just let me know. If you’ve already told us that you're interested in the environment when you signed up, we will send it to you. And if you’ve not let us know what you’re interested in yet – let us know here.

Sign up to our weekly newsletter here.

Building Business Resilience

In this year’s Female Founders Forum report, Resilience and Recovery, we combined discussions with female founders and original data analysis, to identify the reasons why female entrepreneurs have been disproportionately impacted by the COVID-19 pandemic. This report was created in partnership with Barclays, who have launched a major new commitment to support 100,000 women to start up and run their own businesses over the next three years. You can read the two page summary or full report here. In this week's newsletter, we cover highlights from our recent Attracting & Retaining Talent webinar and provide updated guidance on government support schemes and opportunities. 

Female Founders Forum 2020 Digital Events

In our next session on Thursday 5 November 2020 from 10am – 11:30am, we will be discussing Building Personal & Operational Business Resilience. You can still sign up for the event here.

We will be joined by Anna Sofat, multi-award winning financial planner and founder of Addidi Wealth. We will also hear from Tamara Lohan, who co-founded the boutique hotel travel specialist company Mr & Mrs Smith. As we mentioned in the last Newsletter, we will be running a series of events over the coming months: 

• Cementing Your Story webinar - 10am - 11.30am, Tuesday 4 December 2020 - sign up here

Female Founder Highlights

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

• This year’s Female Founders Forum report - Resilience and Recovery has been featured in Sifted, City AM, The Telegraph, Startacus, Startups Magazine, The Scotsman, Verdict and Angel News - just to name a few. Go read the report now. 

• You can also read more about why Barclays is pledging to support 100,000 women start up and run their own businesses over the next three years here. Also, find out more about CMe Media, which is just one of the inspiring founders we profiled in the Resilience and Recovery report and who Barclays has supported throughout the pandemic.

• In our latest blog, we covered highlights from our webinar on Attracting & Retaining Talent with expert panel: Eugenia Migliori, Principal Policy Adviser at the Confederation of British Industry, Aimee Bateman, founder and CEO of Careercake.com and Tugce Bulut, founder and CEO of Streetbees. In this session we explored how to build an open and inclusive workplace for growth. Read the blog here. 

Government Support

Kickstart Scheme - funding to create new job placements
The government has published new guidance for organisations who want to be a Kickstart gateway and help other employers apply for the Kickstart Scheme.
If you are an employer looking to create jobs for young people:

• Apply for funding here if you are looking to create 30 or more job placements 

• Apply for funding here if you are looking to create 29 or less job placements 

Updated Guidance: Deferring your Self Assessment Payment
You had the option to defer your second payment on account if you were: registered in the UK for Self Assessment and finding it difficult to make that payment by 31 July 2020 due to the impact of coronavirus. The government has published updated guidance on what you need to do if, after 31 July 2020, you chose to defer your second payment on account for the 2019 to 2020 tax year.

New Guidance: Test & Trace Support Payment Scheme 
If you have been contacted by the NHS Test and Trace and told to self-isolate on or after 28 September 2020 you could be eligible for a £500 Test and Trace Support Payment. This guidance sets out who can claim support and explains how to apply.

Barclays Support and Opportunities

Launch of Barclays’ second ‘Investing in Women Code’ commitment 
To help female-led businesses continue to recover from the pandemic and tackle the gender funding gap, Barclays has announced a major new commitment to help 100,000 women start up and run their businesses over the next three years. The second in a series of three-year commitments will see Barclays target local events and mentoring via Barclays’ UK-wide network of Eagle Labs and Rise hubs, increasing training and tools for Barclays’ coverage teams, as well as dedicated regional champions across the UK. You can read more about the launch of this second commitment here.

Barclays Money Management Hub
With many customers facing turbulent times, and so many coming to the end of loan repayment holidays, Barclays have created a dedicated Money Management Hub to help businesses keep their finances healthy. It’s continually evolving with lots of useful tips to help businesses budget and plan cashflow, as well as articles and guidance to help consider challenges businesses may be facing. 

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.

Showing Up

The economist Tyler Cowen is skilled at explaining how the world works and has an uncanny knack of spotting important trends. It’s why so many people read Marginal Revolution, listen to Conversations with Tyler and take what he writes seriously – especially his critics.

One recent idea – crucially raised before the pandemic – was what he called State Capacity Libertarianism. It articulated a change that many defenders of a more limited government have seen over the last decade or so – not least in themselves. While (now former) libertarians still acknowledge that a rapid increase in the size of the state can be very dangerous, many have shifted their thinking by acknowledging that high levels of state capacity are not inherently tyrannical. Tyler uses the examples of Denmark and Singapore.

The pandemic has made the issue of state capacity only more relevant. It’s not that larger governments have done well and more limited governments have done badly – it’s that the question of the size of the state is suddenly much less important to most people compared to how well it functions. It’s reasonable to demand why many East Asian countries, Australia, New Zealand, Germany, Estonia et al. have been much more capable at fighting the pandemic than many others – including the UK.

The issue of state capacity reared its head in a recent discussion the Founders Forum had with Camilla Cavendish (FT), John Micklethwait (Bloomberg News), Adrian Wooldridge (The Economist), Megan J Smith (former CTO under President Obama), Toomas Hendrik Ilves (former Estonian President), Daniel Korski (PUBLIC), Peter Mandelson (Global Counsel) and Andrew Griffith MP.

It’s worth reading the brief summary, but I want to move onto another point made in the final line of this article, namely: “It is now up to politicians to give entrepreneurs the ability to participate and be heard.”

It’s something you hear all the time, but how should entrepreneurs – or those supporting them – go about doing this? The webinar that the article relates to was organised by Founders Forum, an awesome organisation co-founded by Brent Hoberman. Brent is famous for starting lastminute.com and selling it for $1.1bn and is a textbook example of how to influence policies to support entrepreneurship. Just to give one example, while others were involved (including us, in a small way), the Future Fund, which is supporting many equity-backed companies through this crisis, may not exist if it wasn’t for Brent’s hard work lobbying for it.

So there’s your answer: build a tech company, sell it for a fortune, then give back! Of course, Brent’s incredible success affords him that luxury (although very few in the same position give back to the extent he does), but that doesn’t mean you can’t have an impact at the margin.

Another (easier) way to give back is just by engaging with us and other groups like us – sharing your insights on our webinars, surveys or the other calls for action I put out every week to help bridge the mismatched worlds of politics and entrepreneurship.

And if you’re looking to engage a bit more actively, you might want to consider becoming an Adviser. I say this now because we are just in the process of confirming evening virtual drinks for our Advisers (which have taken over from our dinners) with Bim Afolami MP, Bill Esterson MP, Katherine Fletcher MP, George Freeman MP, Alan Mak MP, Chi Onwurah MP, Alan Whitehead MP and Nadhim Zahawi MP. I don’t think the problem is politicians not being willing to speak to entrepreneurs – it just needs someone to organise things.

You can see our current list of Advisers here, find out more about becoming an Adviser here or just drop me an email to arrange a call/Zoom/Teams etc. to chat about it in more detail.

As Megan J Smith, CTO under Obama, said at the event: “Government is only whoever shows up.”

Tenth time lucky
Julia Lopez MP, the Cabinet Office’s new parliamentary secretary with responsibility for the Government Digital Service (GDS) has unveiled her vision for a single sign-on system through which citizens can access online services throughout government. 

It’s a welcome ambition. Her speech was pitch perfect (at least for me): “[T]he key point and core principle is user control. We want to work towards a state where data use in government is set up to ensure that people, when they choose to, don’t need to restate their data on repeat occasions to different parts of government. Instead, data can be accessed, verified and stored when appropriate, in order to provide a proactive and low-friction service to the user.”

Since GDS’s creation under Francis Maude, Lopez is the tenth person responsible for it in little over five years. Let’s hope she is given time to see through this vision. It would certainly make life a lot easier for entrepreneurs if she could. For example, it is estimated that these sorts of reforms are saving business owners in Estonia around 12 million hours every year.

Tiers for fears
If you’ve yet to catch up on the Chancellor’s latest announcement, we’ve got just the Policy Update for you. 

As research director Sam Dumitriu writes: “Currently, more than half of England’s population lives in areas in Tier 2 or higher. In his speech in Parliament Sunak addressed the ‘Tier 2’ dilemma. Until today, Tier 2 represented as Stephen Bush puts it 'the worst of both worlds” where “businesses … face significant restrictions on how they operate, but [receive] no economic support.' New measures will ensure that some businesses will no longer be paradoxically better off under Tier 3. The new measures announced also included expanded funding for the self-employed, businesses forced to close due to local restrictions and the Job Support Scheme.”

Read the whole thing here, sign up for future updates here and let me know if you’re an expert who wants to write these on your area of expertise (e.g. tax, visas, regulations), as we sometimes have outside authors.

Resilience and Recovery

In case you’ve not been reading the news (and I certainly wouldn’t blame you for avoiding it), on Monday we released Resilience and Recovery – the latest report from the Female Founders Forum, which we run in partnership with Barclays. It got a lot of coverage, including in The Telegraph, FT Sifted, City AM, The Scotsman, Evening Standard, and loads of other places. 

Drawing on Beauhurst data, we find that equity-backed businesses have been disproportionately impacted by the COVID-19 pandemic. But it’s not all doom and gloom – female founders are fighting back, with more than 60% of female-founded, equity-backed businesses now operating with minimal disruption to their business.

The report’s author Aria Babu identifies four trends which explain the discrepancy.

First, women have often had to take on greater childcare or unpaid work burdens during lockdown. While clearly not all female founders are impacted by this to the same extent, one thing that surprised me is that even women who significantly outearn their male partners tend to do more of the household chores, which presumably includes a lot of successful entrepreneurs in lockdown. (For further reading, check out the Women in Leadership report Annabel Denham wrote for the APPG for Entrepreneurship to see how we can even things up – particularly around childcare.)

Second, women are more likely to start businesses in sectors which have been worse affected by the pandemic, such as retail, hospitality, and leisure. Also, female-founded businesses are less likely to be tech or IP-based businesses (28% and 33% for all equity-funded startups), which have been most likely to find opportunities for growth at this time.

Third, in the lead-up to the pandemic the equity funding gap has persisted. According to Beauhurst data, in the past 18 months, the average raise for startups with at least one female founder was less than half of the average raise for startups with all-male founders. In 2020, just 13% of total equity investment went to female-founded startups and when it did, it tended to be for smaller amounts. (For further reading, take a look at Untapped Unicorns, our first Female Founders Forum report, which was one of the first times the UK’s equity funding gap was revealed.)

Finally, women are less likely to seek external finance, though once they received an initial investment, female-founded startups were just as likely to raise additional rounds of funding compared to non-female-founded firms. (For further reading, check out last year’s Here and Now report.)

Resilience and Recovery has 15 recommendations, covering everything from the Department of International Trade publishing statistics about the gender breakdown of SME exporters; the government incorporating elements of crisis planning into the application process new business support schemes; and equalising Statutory Shared Parental Pay with Statutory Maternity Pay.

Barclays has pledged to support 100,000 female-led businesses off the back of the report. And while there’s no silver bullet, there’s a pot of gold at the end of the rainbow. As Juliet Rogan, Head of High Growth and Entrepreneurs at Barclays, says: “Creating an environment where women start and scale businesses at the same rate as men could add nearly £250bn to the UK economy.”

You can read the report or a pithy two-page summary here, and give this Twitter thread a retweet or share elsewhere to show support.

Enterprise Allowance 2.0
As reported by the always excellent James Hurley in The Times, former chancellor Sajid Javid has backed a plan to give the unemployed £100 every week for 12 months to help them to get start-ups off the ground.

It’s a new version of the “enterprise allowance”, which began in the unemployment crisis in the 1980s. The proposed scheme would be available to anyone not presently employed, with a viable business idea and access to £2,000 in start-up capital. Any income earned from the start-up would not affect what the founder might receive via universal credit benefits.

As Hurley reports, the original enterprise allowance funded more than 325,000 individuals, including Julian Dunkerton, the Superdry founder, Alan McGee, the Creation Records entrepreneur, and Simon and Chris Donald, founders of Viz magazine.

Chris Hulatt of Octopus came out with a similar idea recently. Springboard would be a £1 billion Springboard Fund, which would provide a grant of up to £10,000 per individual to help create up to 100,000 businesses and fight the economic damage wrought by coronavirus. One thing I liked about Hulatt’s plan is that it would be combined with mentoring, which I think would be vital for avoiding unnecessary business failure.

Tech (Nation) for good
From its days as Tech City to try to support the rise of the tech cluster in Shoreditch, to its expansion with its Tech North outpost, right through to its national expansion into Tech Nation, it’s an organisation that hasn’t been without its critics – particularly in the media. However, naysayers should take note of an independent impact evaluation from the Department for Digital, Culture, Media and Sport, which suggests that the largely government-backed organisation is making a sizeable difference.

Using a number of different measures, it concludes that Tech Nation’s key initiatives are delivering substantial benefits, identifying a substantial gross value added (GVA) impact 1 to 2 years after participating in Future 50, Upscale, and Northern/Rising Stars.

Evaluations of this sort aren’t always so glowing – just take a look at the one on the Catapult Network from 2017 – so credit should be given where it is due. While this isn’t the last word – one of the recommendations is Tech Nation to collect more and better data – we should celebrate when we have evidence of public money being put to good use.

Sign up to future newsletters here.

Attracting & Retaining Talent Webinar

The Female Founders Forum is hosting a series of webinars to bring leading business owners and parliamentarians together to discuss key policy issues pertinent to female founders in order to to support them through COVID-19 and beyond. 

 In our latest session on Attracting & Retaining Talent, we explored how to build an open and inclusive workplace culture for growth.

In this session, we heard from Eugenia Migliori, Principal Policy Adviser at the Confederation of British Industry, alongside incredible female founders including Aimee Bateman, founder and CEO of Careercake.com and Tugce Bulut, founder and CEO of Streetbees. We were also joined by Juliet Rogan, head of Barclays HG&E team.

We’ve picked out some of the most thought-provoking insights from the session. You can view this on our YouTube channel. 

 Highlights & Insights from our Speakers

Tugce Bulut opened with some insights on Streetbees hiring strategy. She mentioned that  almost half of Streetbees hiring comes from employee referrals. Hence, their people strategy has been integral to supporting the company’s growth.

“I strongly believe that your hiring strategy starts with your people strategy. Your employees are the best possible advocates you can have for your company to be able to attract the best talent”

She also gave our female founders some tips on retaining top talent, including to listen to your team, highlight your company’s benefits and give your employees space to bring in their expertise: 

“When you hire someone, you are bringing them in to build their dream, on your dream”

Aimee Bateman spoke about the importance of finding out what motivates the person you are looking to hire. Are they extrinsically or intrinsically motivated? 

“I would be wary of the people who are motivated by the stuff. They will always be looking over your shoulder for the next pay rise or the next startup that could potentially offer them more and be focused on their goals and helping them to win when they leave you”

When it comes to employing people, Aimee stressed it is important to attract people who love your customers and the problem your business is trying to solve rather than just falling in love with the founder:

“Make sure that they love your business, not just you”

She also touched on some of the difficulties she has experienced with existing staff:

“As founders, it is our responsibility to recognise who thrives and who doesn’t and be brave enough to have those conversations with them… having the wrong people in the wrong positions, in the wrong play, is one of the largest reasons why startups fail”

Eugenia Migliori spoke about the disproportionate impact that the Covid-19 has had on women. She reflected on the importance of retaining top talent and the importance of flexible working arrangements to keep employees engaged during the pandemic:

“It will be important for businesses to think about how they retain talent and motivate talent during the pandemic”

Questions & Recommendations

During the Q&A session, we touched on a range of key issues. 

One attendee asked our expert panel whether they recruited for cultural fit or cultural add?

Tugce Bulut said that it is incredibly important to Streetbees to recruit people who fit their culture but also stressed the importance of hiring staff with diverse perspectives:

“There are certain values we adhere to that are not open to negotiation. Those are the values that make Streetbees successful… whereas there are lots of cultural components that get richer by adding more people to the team”

Juliet Rogan stressed that it is important for companies to have teams that reflect their diverse customer base.

Aimee Bateman agreed with Tugce and Juliet and touched briefly on the importance of also being aware of your own unconscious biases when hiring staff:

“The only thing that you have to have the same is that core value. Everything else needs to be different. There is not enough conservations happening around unconscious bias and I hope that changes”

Another attendee asked our speakers how they deal with imposter syndrome?

Aimee said that she followed someone's advice on dealing with imposter syndrome which was to give the imposter a name in order to stop overthinking:

“When you feel that moment, say thank you for caring and looking after me but I have got this. That is how I deal with it. Get out of my head and think of it as it’s own person”

Tugce said that is important to distance yourself from people who make you feel like a failure and stressed that failure is an important part of the journey to success:

“If anyone can do it so can you and if you can’t do it, you can still give it a shot”

Another attendee asked the panel about some of the challenges that they have faced with retaining talent while they scale

Tugce stressed the importance of trusting your employees and spoke about Streetbees KPI driven culture and how they constantly look to other companies to learn how to continue motivating their staff: 

“In a startup, you are so motivated by your mission and so busy that you sometimes forget about ensuring that you create a motivational environment”

Aimee spoke about Careercake.com’s journey and the importance of introducing processes for employees along the way:

“I wanted to learn from people who have taken it from the kitchen table and exited and learnt from that process to tell me about what kind of processes I should put in place”

Juliet spoke about how she has enjoyed seeing how cultures develop within the startups that her team at Barclays deal with and how she has tried to emulate this within her own team:

“I think that is one of the major advantages that startups have have over large companies is that ability to drive culture through everything they are doing”

Eugenia spoke about some of the work that CBI do, including producing resources to help entrepreneurs attract & retain talent and stressed the important role that government plays in supporting this:

“The government has an important role to play in supporting businesses to scale up their activities”

Aimee touched on the importance of editing your people strategy to your business stage to ensure that you have the right people to support your business in its journey:

“When you come out of startup to scale up mode, you have to up your game and not everyone will want to do that”

We will be continuing the conversation on removing the barriers that female founders face starting and scaling their businesses in our upcoming webinars. You can find out more about the event schedule and sign up for the events here.

Good Judgement

With much of the country already locked down, and the other half seemingly not far away from a similar fate, the government has decided to expand the Job Support Scheme.

From 1 November, businesses across the UK that are required to close their premises due to coronavirus restrictions will be paid two thirds of each employees’ salary (or 67%), up to a maximum of £2,100 a month. Employers won’t need to contribute towards wages, but they will need to cover national insurance and pension contributions. 

Over the coming months, the government will be under pressure to pull out all the stops to limit business failure, and we will be making the economic case for why a lot of this will be necessary.

In normal times, business failure is the sign of a healthy, dynamic economy. Of course, business failure is always and everywhere a personal tragedy for those involved in the failure, but the lessons learned and the reallocation of resources to more efficient uses is what makes us richer. This is why all entrepreneurs are heroic: part of a multi-generational project that has been central to lifting billions out of absolute poverty.

But these aren't normal times. As Sam Dumitiru and Sam Bowman argued early on: "If a business was viable before the shutdown, and would have been viable without it, it’s a loss to society and the economy if the shutdown drives them to a bankruptcy they would have otherwise avoided." Clearly there is a limit to what can and should be be saved, but ignore the siren call of liquidationists, whose (sometimes understandable) cynicism of what government can do, is getting the better of them.

As difficult as things are for entrepreneurs right now, this too shall pass. A vaccine isn’t as far away as many seem to realise. For example, superforecasters (who, despite a lot of articles to the contrary, should be listened to) at the Good Judgement project think the odds are very high that by early to mid-2021 there will be both a vaccine and enough doses to inoculate 25 million people.

A vaccine isn’t the only option for avoiding future future lockdowns – just look at countries with highly-functioning track and trace systems – but it’s reason enough to fill your glass half full.

Do you remember?
In case it slipped your mind, the UK is leaving the EU single market and customs union at the end of this year. The Department for Business, Energy and Industrial Strategy has asked me to let you know about some live sessions they’ve put together to help you check the new rules and understand the actions to take.
 
See the full schedule and sign up for live sessions here. The live sessions will take place at the following times, and will be available to watch again:    

• Services and investment – 11am, Tuesday 13 October

• Retail – 11am, Wednesday 14 October

• Automotive – 2pm, Wednesday 14 October

• Metals and other materials – 11am, Tuesday 20 October

• Electronics and machinery – 11am, Wednesday 21 October

• Consumer goods – 11am, Thursday 22 October 

• Life Sciences – 11am, Tuesday 27 October

• Construction – 11am, Wednesday 28 October  

• Aerospace – 11am, Thursday 29 October  

Monday calling
On Monday, we’ll be releasing our annual Female Founders Forum report in partnership with Barclays. As regular readers will know, this is one of our biggest projects and past reports have had a significant influence on policy.

This report looks at the impact of the pandemic on female-led businesses and the amazing resilience of their founders. Any journalists who want to see an embargoed copy should drop me an email. And for anyone who wants a copy when it launches, just drop Jess an email to get it first thing on Monday morning.

Educating Future Founders

We tell our children to dream big... and they do. Young people are bursting with imagination. They soak up knowledge, they take risks and are natural collaborators and inventors. Despite this, when I visit schools around the world, the question I get asked most often by children as CEO of ABE Global is “How can I become an entrepreneur?”

New research that we have supported at ABE from The Entrepreneurs Network shows that students as young as eleven should have the opportunity to learn about entrepreneurship in order to develop the skills and mindset necessary to prosper in the modern economy. 

As children begin to return to school post-lockdown, I believe that there should be a sense of urgency if we are to equip them with the skills they need to thrive in the post-pandemic modern economy. If there was ever a moment to inspire a younger generation of entrepreneurs, it is today. 

In too many countries, entrepreneurship education remains largely bracketed in universities and business schools, which are only accessible to a small minority. We are missing a trick. As Educating Future Founders argues, there is a lot of evidence from around the world showing that earlier interventions can develop traits that are key to entrepreneurial success, such as creativity, persistence, and communication. 

Educating Future Founders also reveals that entrepreneurship education at an early age also has benefits beyond business creation – making people more employable. It suggests there is an untapped opportunity to promote economic development and reduce unemployment by expanding access to entrepreneurship education to secondary school students particularly within developing countries. 

This research takes a wide perspective, examining the case for school-age entrepreneurship education across multiple countries and cultures. The results of these interventions speak for themselves but combined for the very first time in one conclusive report, they offer policymakers and educators vital context for rethinking curriculum planning.

With close to 50 years’ experience in business skills development, ABE is delighted to support this exciting research programme because we passionately believe that both children and society stand to benefit greatly from early entrepreneurship education. Educating Future Founders shows that it doesn’t take much to motivate young people to think like entrepreneurs. This report should persuade us all to take immediate steps.

Attracting & Retaining Top Talent

In a post COVID-19 world, it will be extremely important to attract and retain the best talent. In this weeks blog, we cover our upcoming event on building an open workplace for growth, alongside highlights from our members and updated guidance on the government’s support schemes. 

Female Founders Forum 2020 Digital Events

In our next session tomorrow, Thursday 8 October 2020 from 10am - 11:30am, we will be discussing Attracting & Retaining Talent. You can still sign up for the event here.
 
We will be joined by Tugce Bulut, founder of technology company Streetbees which was recently named one of the Top 10 UK Startups. We will also hear from Aimee Bateman founder of Careercake with 15+ years of experience working in talent attraction and development as well as Eugenia Migliori, Principal Policy Adviser on Employment at the Confederation of British Industry.
 
As we mentioned in the last Newsletter, we will be running a series of events over the coming months:
 

• Building Personal & Operational Business Resilience webinar: 10 am - 11.30 am, Thursday 5 November 2020 - sign up here

• Cementing Your Story webinar - 10 am - 11.30 am, Tuesday 4 December 2020 - sign up here

Female Founder Highlights

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

• Tania Boler, founder of Elvie and member of the Female Founders Forum was featured in Vogue speaking about her revolutionary FemTech products. She spoke in the article about how the lack of studies conducted into women’s health and resulting lack of adequate products created with them in mind spurred her into action. Read the full article here

• The Social Element, founded by our member Tamara Littleton, wrote a piece on what marketers should know when getting started with social media. The article discusses some key things marketers should consider when choosing which platforms to post content on and how effective engagement can lead to long term success. Read the blog post here

• In order to support the hospitality sector during Covid-19, Criton, founded by our member Julie Grieve is offering hoteliers a guest app completely free of charge until 2021 and with no commitment. With their own branded app, hoteliers can reduce touchpoints and put guests' safety first. Find out more here

Government Support

Job Support Scheme
The government has announced a new Job Support Scheme which will be introduced from 1 November to protect viable jobs in businesses who are facing lower demand over winter months due to COVID-19. Under this scheme, which will run for 6 months, the government will continue to pay towards the wages of employees who are working fewer hours due to decreased demand. 

In order to support viable jobs, employees must be working at least 33% of their usual hours. The grant will be calculated based on the usual salary of the employee and capped at  £697.92 per month. The scheme will be open to businesses all around the UK, even if they have not previously claimed under the furlough scheme. Read more about the scheme here.

Self-employment income support scheme
The government will continue supporting millions of self-employed individuals through extending the Self-Employment Income Support Scheme (SEISS). An initial taxable grant will be provided to those currently eligible under the SEISS and who are continuing to actively trade but face decreased demand due to COVID-19.

There will be an initial lump sum payment made covering 3 months' worth of profits from the period of November to January next year. This is worth 20% of average monthly profits, up to a total of £1,875. An additional second grant, which may be adjusted to respond to changing circumstances, will be available for self-employed individuals to cover the period from February 2021 to the end of April. Read more about the extension of the SEISS here. 

Tax cuts and deferrals
The temporary 15% VAT cut for the tourism and hospitality sectors will be extended until the end of March next year. In addition to this, businesses who have deferred their VAT bills will be given more breathing space through a New Payment Scheme, which gives businesses the option to pay back the VAT in smaller instatements. 

Barclays Support and Opportunities

Barclays' first 'Investing in Women Code' commitment 
Barclays is taking action to close the entrepreneurship gender gap, through a series of measures designed to boost the resources and financial support available to female founders. The first in a series of three-year commitments, launched last month, will see the next generation of female founders supported through the bank’s LifeSkills programme, helping them turn their plans into action.  Hannah Bernard, Head of Barclays Business Banking, explains how the bank is backing women in business. You can read more about the first commitment here.

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.

Remote Works

Today we launch The Case for Remote Work in which innovation expert Dr Matt Clancy makes the economic case for why, even when the pandemic has passed, we won’t all go back to the office – or, at least, not as much.

I’m sure you’ve read, heard, or debated the pros and cons of working from home. It’s an inevitable conversation for anyone living through the varying degrees of lockdown. But while we all have preferences on how much we want to work from office or home, and it’s easy (often based on these preferences) to have strong instincts on what the world of work should look like, Clancy’s paper follows the evidence, which strongly suggests the virus has pushed us towards a new equilibrium.

Clancy shows that working from home doesn’t make us less productive. As you might expect, this varies across business size and sector, but there are a decent number of experiments showing that a lot of firms benefit from home working. For example, a Chinese travel-booking company, CTrip, assorted employees by lottery to work from home, finding worker performance increased by 13% at home.

It’s not just call centres: since the pandemic, 29% of American small business owners believe productivity has increased for their remote workers and more than half of hiring managers think remote work is going better than expected. Over 60% of hiring managers are planning to increase their use of remote work in the future. And the times appear to be a-changin', with more than 40% of small business owners aged 18-34 planning to hire full-time remote workers, compared to just 10% of small business owners aged 50 and up. 

It’s not just about productivity though. Cities are great places to build businesses because of agglomeration effects – ie. the benefits of having lots of people and infrastructure in one place. It’s why businesses in the same sectors cluster together. However, remote work done well means we can get more of the benefits of agglomeration without the costs. These costs are obvious things like commuting, rental and house prices and transport emissions, but an increase in working remotely could allow people to live away from big cities, which for some people is less preferable than living in the countryside or closer to friends and family. Also, given how obsessed this government is with levelling up, an increase in working from home could help spread wealth a little more evenly around the country.

Clancy isn’t arguing that we’ll all be working from home. Only that this will become more common, alongside working from co-working spaces and satellite offices. (Anecdotally, friends based in Canary Wharf who have nightmare commutes are mostly happier to work from home than we are, based in our convenient TOG co-working space in Victoria.)

The report recommends a range of policies to support the transition to remote work, including tax relief for home working expenses, investment in broadband infrastructure, and better online education. Ultimately, it should be up to each business owner to work out how to organise their workforce and then let the market decide which is more efficient, but government would waste a lot of time and effort trying to turn back the tide.

To accompany the launch of the report, we have a video where Sam Dumitriu interviews the author, alongside Rory Sutherland of Ogilvy UK and Adam Ozimek of Upwork. We’ve also uploaded the recording to Soundcloud. It’s over an hour long, but I think it’s one of the most thought-provoking events we’ve ever done. For those in a rush, Clancy's CapX article is worth checking out, and if you only have a minute this Twitter thread will give you the main points of the report.

As Stian Westlake, Chief Executive at the Royal Statistical Society, and author of Capitalism without Capital, says: “It sets out a clear, intuitive model for how to think about remote work from an economic point of view, and a clear explanation for why a shock, like Covid-19, might change things permanently. What's more, it provides a superb survey of what existing economic research says on the pros and cons of remote work. If you read one economic paper in 2020, make it this one!”

A nation of technologists
Applications are now open for Tech Nation’s flagship growth programmes: Rising Stars 3.0, Upscale 6.0 and Future Fifty 9.0. Rising Stars is a pitch competition for early-stage, innovative tech companies; Upscale is a growth programme for mid-stage tech companies; while Future Fifty a late-stage growth programme. There is a simple tool to help you know which category your company fits into.

Entrepreneurship 101
On 21 October, the APPG for Entrepreneurship will be hosting a panel event to mark the launch of Dr Eamonn Butler's new book: An Introduction to Entrepreneurship for the Institute of Economic Affairs. 

Accompanying the launch, the Institute of Economic Affairs will be creating and disseminating a short explainer video, and they are looking for entrepreneurs to take part by filming short clips (up to 30 seconds), introducing themselves and explaining why entrepreneurship matters and the role it will play in supporting the recovery. 

The video will be pushed out through social media, as well as played at the launch event. If this is of interest, please contact Annabel Denham. The event will feature Dr Eamonn Butler, Emma Jones MBE, Matt Ridley, Author. You can register for the event here.

Sign up to future newsletters here.

Remote Work is Here to Stay

A new study by innovation expert Dr Matt Clancy sets out the economic case for making remote work the new normal.

• Remote work was on the rise in Britain before the COVID-19 pandemic. Since 2010, the number of workers usually working from home increased by almost two-thirds.

• Employees that switch to remote work do not become less productive in general; in fact, they are frequently more productive after the switch. Studies from the UK, US, and China find remote work can improve worker performance, even before savings on office costs are factored in. 

• Surveys of employers and hiring managers taken during the lockdown find that over half thought remote work was going better than expected and over 60% planned to increase their use of remote work in the future.

• In the long run, a permanent shift to remote work will be attractive to employers. It will create the opportunity for both cost savings and productivity gains, as they can choose from a larger pool of talent and attract workers from regions where the cost of living is lower.

• This will shift the economic centre of gravity away from London and the South East and support the levelling up agenda of the government. Graduates will no longer be forced to move to London away from friends and family in search of good jobs.

• Cities have become increasingly economically important in the UK’s information economy due to the power of agglomeration. But the benefits of clustering together to help workers exchange ideas and enjoy “knowledge spillovers” have shrunk due to technological shifts.

• While market forces are already pushing the economy towards a greater use of remote work, policymakers should seek to accelerate the trend in order to reduce regional inequalities, cut carbon emissions, and raise productivity.

• The report recommends a range of policies to support the transition to remote work, including tax relief for home working expenses, investment in broadband infrastructure, and better online education.

Will working from home become the new normal? Yes, according to The Case for Remote Work, a new report by innovation economist Dr Matt Clancy. Reviewing a wide range of research from across economics and social science, it argues that the business case for remote work has improved significantly over the past decade.

Remote work offers two key advantages for employers. First, businesses hiring remote workers are able to access a significantly larger pool of talent. Instead of being limited by geography, they are able to hire workers from across the UK and beyond, increasing the likelihood that they will find a good match. Second, remote workers may not require office space in expensive cities, may reside in regions with lower living costs, and may also value the freedom to live anywhere. As a result, remote work can create significant cost-saving opportunities. In some cases, businesses may pass on the savings to remote workers in the form of higher wages, so as to attract better talent.

At the same time, the costs of remote work in terms of reduced productivity are overblown. A range of studies from the US, UK, and China lend support to the idea that workers may be more productive when they are spared the distractions of the office. Employees that switch to remote work do not become less productive in general; in fact, they are frequently more productive after the switch. 

The study highlights three key trends that have made a shift to remote work more common. More workers are using the internet to find jobs. At the same time, algorithms have made it easier to identify and assess remote workers allowing for better matches between employers and employees. Most workers, however, find their jobs through personal connections. For such workers, social media has been a boon helping younger workers to have larger personal networks than past generations.

A major justification for returning to the office is that workers being exposed to new ideas and fresh perspectives from other nearby colleagues boosts productivity. Such knowledge spillovers have been a key driver of the UK’s geographically uneven economic performance. But new technology is reducing the importance of spillovers and allowing innovators to collaborate effectively. Data on patenting and academic collaboration suggest it's less important than ever to work physically near other people to access their expertise and ideas.

Even before Covid-19, remote work was on the rise. The prevalence of remote work in the UK was stuck just under 3.0% from 1994 to 2010, but then climbed steadily to 4.7% in 2019. However, these numbers understate the overall increase in remote work by omitting those who work from satellite offices, co-working spaces, coffee shops, and other alternatives. It also fails to factor the number of workers working remotely some of the time. In the US, once these alternatives are factored in, the proportion rises from 5% to 36%.

There are major economic benefits from increased levels of remote work. The importance of agglomeration effects over the last several decades led to economic prosperity for cities in the South and economic decline elsewhere, at significant social cost. While remote work is not a panacea, by decoupling where people live and work it spreads economic activity more equitably and may reverse the tendency for economic activity to cluster in a few cities. This will reduce regional inequality and deliver the promise of levelling up. It will also mean graduates will no longer have to leave friends and family behind to move for work.

A rise in remote work may also contribute to a reduction in carbon emissions by reducing commuting, therefore making it easier to meet the 2050 Net Zero Target.

To access these benefits, the report argues that policy makers should actively promote remote work by granting tax relief for home office expenses, improving digital infrastructure, and investing in online education and training.

Dr Matt Clancy, author of The Case for Remote Work, says:

“In the midst of the Covid-19 global pandemic, the case for short-term remote work is obvious. What other choices do organisations have to keep the lights on when their workers are isolating themselves? But the case for long-term remote work is also much stronger than is typically thought. Remote work does not have to be merely an emergency response, to be discarded when the pandemic subsides. For many industries, it can be the new normal.“

Praise for the Case for Remote Work

Stian Westlake, Chief Executive at the Royal Statistical Society,and author of Capitalism without Capital:

“The Case for Remote Work is an incredibly timely and rich piece of analysis. It sets out a clear, intuitive model for how to think about remote work from an economic point of view, and a clear explanation for why a shock, like Covid-19, might change things permanently. What's more, it provides a superb survey of what existing economic research says on the pros and cons of remote work. If you read one economic paper in 2020, make it this one!”

Watch or listen to the launch event with:

• Dr Matt Clancy – Iowa State University

• Rory Sutherland – Ogilvy UK

• Adam Ozimek – Upwork

• Sam Dumitriu – The Entrepreneurs Network

Supporting Unrepresented Founders

The UK is full of talented entrepreneurs who can help solve some of the world’s biggest challenges. In this Female Founders Forum blog, we cover new research from The Entrepreneurs Network which makes the case for expanding access to entrepreneurship education, alongside highlights from our Members and provide 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:

• Google for Startups is welcoming two new cohorts of Black and Women founders across Europe and Israel who are driving change in their industries. The Founders will have access to the best of Google’s people, products and connections. This is a great initiative, supported by our Member and head of Google for Startups UK, Marta Krupinska. You can read more about the programme here. 

• In our latest blog, we covered all of the highlights and insights from our Access to Finance session with expert speakers, Julia Elliott Brown, Alexandra Daly, Juliet Rogan and Baroness Kramer. You can read more about the session here. 

• New research from The Entrepreneurs Network has revealed that there is an untapped opportunity to promote economic growth and reduce unemployment by expanding access to entrepreneurship education to secondary school students. Earlier interventions can help girls to develop traits that are key to entrepreneurial success later in life, such as creativity, persistence, and communication. You can read the full report here. 

Government Support

Chancellor announces new package of support for businesses
The Chancellor has announced a new Job Support Scheme, starting in November to replace the previous 'Furlough Scheme'. The Government will top up the wages workers covering up to two thirds of their hours for the next six months, with the Government contribution capped at £697.92 per month. There will also be an extension of self-employed grants on similar terms as the Job Support Scheme.

The 15% VAT rate cut to the tourism and hospitality sector has been extended until 31 March 2021 and firms who deferred their VAT bill will no longer need to pay the lump sum in March. They will have the option of splitting it into smaller, interest fee payments over the course of 11 months.

The application deadline for all coronavirus loan schemes has been extended to the 30th November. Firms will also be offered greater flexibility to repay the Bounce Back Loans.

Lastly, the CBILS Government guarantee will be extended up to ten years, and a new replacement loan guarantee programme will be announced in January.  For more, read TEN's policy update.

New Guidance: Venues required to record contact information
Venues and premises across the UK will need to record contact details of their customers, visitors and staff according to new guidance from the Department of Health and Social Care. Details must be stored for 21 days and shared with NHS Test and Trace, if requested, and fixed penalties will apply for businesses that don’t comply. You can read the new guidance here. 

New Guidance: COVID-19 testing guidance for employers
The government has published new guidance to help employers who want to introduce their own internal testing programmes, outside of the NHS Test and Trace service. This guidance will help employers to ensure that their testing programmes are reliable and effective. You can read the new guidance here.

Barclays Support and Opportunities

Female Founders Forum 2020 Digital Events
 
In our next session on Thursday 8 October, 2020 from 10 am - 11:30 am, Tugce Bulut, founder of Streetbees and Member of the Female Founders Form will be joining our expert panel to discuss Attracting & Retaining Talent. You can sign up for the event here.
 
As we mentioned in the last Newsletter, we will be running a series of events over the coming months:

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

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

 
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 HG&E team. 

If you are interested in attending a specific webinar, please contact jess@tenentrepreneurs.org and we will add you to the invitation list.

Launch of Barclays’ first ‘Investing in Women Code’ commitment 
Barclays is taking action to close the entrepreneurship gender gap, through a series of measures designed to boost the resources and financial support available to female founders. The first in a series of three-year commitments, launched on 26 August, will see the next generation of female founders supported through the bank’s LifeSkills programme, helping them turn their plans into action.  Hannah Bernard, Head of Barclays Business Banking, explains how the bank is backing women in business. You can read more about the launch of this first commitment here.

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.

Thin Ice

Rishi Sunak has unveiled his Winter Economic Plan.

At its centre stands the Job Support Scheme – as detailed in our latest Policy Update – which replaces the furlough scheme. It was inspired by the German Kurzarbeit short-time work scheme, which is largely credited for keeping employment stable during the global financial crisis. Running from November to April, all SMEs will be eligible and can use it, even if they have not previously furloughed employees.

It will support the wages of people working for businesses facing reduced demand. Workers participating in the scheme will need to work at least 1/3 of their current hours and be paid for that work as normal. Employees will then be paid 2/3rds of the wages they lost by reducing their hours, split evenly between employer and government.

For example, a worker previously working a 36 hour week could have their hours reduced to 12 hours a week, but be paid as if they had worked 28 hours. From the employers’ perspective, they will have paid for 20 hours worth of work.

While enthusiastically welcomed by the CBI, Federation of Small Businesses and the British Chambers of Commerce, the Resolution Foundation isn't convinced. The think tank believes business owners won’t be incentivised to pay employees for hours not worked. And once employer NICs are factored in, it will cost a firm £1,500 to employ one full-time worker on £17,000, but more than £2,000 a month to employ two half-time workers on the same full-time equivalent salary.

Can you kick it?
Whether or not the Job Support Scheme works, we don’t just need to protect old jobs. We need to create news ones.

So who will create them? While large, mature businesses account for a large fraction of jobs, they aren’t where most new jobs are created. It is new businesses that create jobs, as, conditional on survival, young firms grow more rapidly than their more mature counterparts. In the US, though startups only account for 3% of employment, they account for almost 20% of gross job creation.

This is why it’s wrongheaded to exclude startups from the generous Kickstart Scheme, which subsidises wages, national insurance and pension contributions. To qualify directly businesses need to hire a minimum of 30 people, so it’s a policy aimed squarely at the biggest employers.

There’s a third-party option that circumvents the need to bring on 30 people, but I’m hearing that the £300 of funding third parties get for each job placement isn’t enough of an incentive for organisations to get involved. That said, you can find out who to contact at DWP here to be connected to third-party support in your region. They promise to get back to you in two days. If you do this, please let me know how it’s working – or not.

Of course, it would be a whole lot easier if they just got rid of the minimum requirement.

It's 25%
In a newly launched newsletter, Jeremy Driver makes the case for why we should pay politicians more. He thinks we should pay more across the board – from the Prime Minister, who’s on around £150,000, an MP on £81,932, or the Mayor of Tees Valley on £35,700. (This latter role involves heading up a Combined Authority representing almost 700,000 people and responsibility for a multi-million pound investment fund.)

Driver thinks we need more talent in politics, citing the astonishing 2012 test by the Royal Statistical Society, which saw 60% of MPs fail the basic test of working out the probability of getting two heads in a row when you toss a coin.

Of course, money isn’t the only factor when people decide whether or not to go into politics, but like Driver, I’ve spoken to some great people for whom it’s the main reason they’re sticking with the private sector. When you factor in the job insecurity and public ridicule, it’s amazing anyone wants to do the job – let alone the incredibly smart, dedicated MPs we have, for example, on the APPG for Entrepreneurship (and, of course, the Members of Parliament who have wisely signed up to this newsletter).

I would go further than just raising the pay of politicians though. In normal times, the average MP gets £26,000 a year to run their office. I would have no hesitation in doubling this overnight, which would both ensure that constituents’ concerns are better understood and dealt with, but would allow for more support in scrutinising legislation and developing policy positions from within each MPs’ office.

It wouldn’t be the most popular thing to do – quite the opposite. But doing the right thing isn’t always popular.

Read the whole newsletter here, and sign up here.

Access to Finance

The Female Founders Forum is hosting a series of webinars to bring leading business owners and parliamentarians together to discuss key policy issues pertinent to female founders in order to to support them through COVID-19 and beyond. 

In our latest session on Access to Finance, we explored how policymakers and business leaders can come together to address the barriers that female founders face accessing finance.

In this session, we heard from the Liberal Democrat’s Treasury Spokesperson Rt Hon Baroness Kramer, alongside incredible female founders including Julia Elliott Brown, founder and CEO of Enter the Area, and Alexandra Daly, founder, and CEO of independent placement agency, AA Advisors. We were also joined by Juliet Rogan, head of Barclays HG&E team.

We’ve picked out some of the most thought-provoking insights from the session. You can view this on our YouTube channel.

Highlights & Insights from our Speakers

Juliet Rogan spoke about Untapped Unicorns and how this research spurred The Entrepreneurs Network and Barclays into action to address the funding issue:

“If people don’t look and sound like the people that are investing in them, how can we ever get to a place where there is diversity in the funding landscape”

Alexandra Daly opened with statistics from the Allison Rose Review of Female Entrepreneurship and spoke about the huge opportunity that this research identified for the UK economy:

“Up to £250 billion of new value could be added to the UK economy if women started and scaled new businesses at the same rate as men. Only 1 in 3 UK entrepreneurs are female and female-led businesses are only 44% the size of male-led businesses on average”

She also stressed the importance of bringing business leaders and policymakers together to drive change and unlock access to funding: 

“As the economy continues to open up and we turn our attention to rebuilding post lockdown, we want to make sure that female entrepreneurs have all the opportunities to fill their potential and also contribute to the wider economy”

Julia Elliott Brown shared personal insights on the challenges she faced raising finance as a female founder and some of the lessons learned along the way. She stressed two important points:

“[It’s all about] getting women out there in the first place to raise investment and then really looking at the system to how, once they do go out there, we make it work”

She put forward some recommendations to address the funding issue including: investing in skills and support, showcasing role models, and implementing diversity tracking and setting targets. 

Baroness Kramer touched on the challenges female founders have faced during COVID-19 accessing government funding. She suggested that COVID-19 is an opportunity for a call to action to modernise the labour market, for the benefit of women:

“It seems to me that we suddenly made a very rapid shift in the direction of a world in which so many women founded businesses are in touch with where the workforce wants to be in contrast to many of the traditional players”

She insisted that women should come together to campaign and put pressure on the government to ensure that government schemes adequately support female founders. 

Questions & Recommendations 

During the Q&A session, we touched on a range of key issues. 

One attendee asked the speakers how female founders within their networks had been affected by COVID-19.

Juliet Rogan spoke about how she has been inspired by the resilience and tenacity of female founders during the pandemic. She mentioned a story about an inspiring female founder who purchased a van to hand-deliver her products during lockdown:

“I thought that it was a demonstrable story about how female founders specifically have been resilient and got stuff done. That is one of the key things I have seen [during COVID-19]”

Julia Elliott Brown said that she didn’t have many success stories to share about female founders who had successfully raised money during COVID-19:

“The only women I have seen raising are the women who have already raised a significant amount of money”

In response, Alexandra Daly stressed that this is a hard time but also shed light on the opportunities coming out of the COVID-19 pandemic:

“When you have a major downturn like this, the companies of tomorrow of tomorrow are made today”

Another attendee spoke about her challenges accessing funding and asked what more could be done to connect female founders with mentors.

Alexandra Daly spoke about the mentor network that she is helping to launch. She stressed that it is vital to match female founders with mentors who understand their industry:

“It has to be accurate, it has to be strategic and it also has to be value orientated”

Julia Elliott Brown mentioned the resources that are out there to support female founders through the fundraising journey, including Enter the Arena.

Baroness Kramer touched on the lack of support provided by the government to help female founders find a mentor and suggested that a better structure could be implemented to bridge the mentoring gap:

“I think we have a communication gap in the UK. I think there are people that are very willing to help who have no idea how to find someone they can help”

One attendee asked what resources are available to help female founders successfully scale their businesses from the start?

Alexandra Daly recommended that female founders seek out angel groups for tailored support:

“[Female Founders] need investors who assist them not just by giving them money, but by giving them advice”

In response Julia Elliott Brown cautioned that it may be difficult to obtain angel investment at the early startup stage:

“The more you can network the better. It is brilliant if you can get in with investment groups. I would just have a word of caution that it is really difficult to obtain angel investment from professional networks when you are at this early stage”

Another attendee asked the speakers for some insights on what they see to be the role of government in alleviating the barriers female founders face accessing finance.

Baroness Kramer took a robust approach and said that is incredibly important for government to follow through with its diversity initiatives to support female founders in their efforts to access finance, especially during COVID-19:

“I feel that is a dire necessity if we are going to have a UK economy that thrives”

Juliet Rogan highlighted the Investing in Women Code as one of the great government initiatives to track investment in female founded enterprises:

“You can’t manage what you can’t measure. One of the key things about the Investing in Women Code is really around tracking and looking at where investment is going”

Baroness Kramer posed a question to the speakers. She asked whether it was women that lacked the confidence to seek investment or whether they felt it isn’t worth putting the energy in because the system is so biased that they will end up being rejected?

“My assumption of [women] has always been that they have smashed into glass ceilings. I just wonder if it is women who lack the skills and confidence they need or the problem is that there is so much bias in the system”

In response Julia Elliott Brown suggested that it can be a bit of both but in her experience, women are often overwhelmed by the process:

“There are so many women that are left behind who no one is seeing in the stats because they aren’t even applying”

Alexandra Daly suggested that the difficulty lies in women being able to understand the different types of funding out there and how to access it:

“It’s about lifting the veil on funding to access the right capital for you and your business”

Juliet Rogan agreed that an important part of female founders being able to access the right finance is understanding what resources are out there to support them:

“It does help [women] to pitch themselves in a way that they can access all of those tools”

We will be continuing the conversation on removing the barriers that female founders face starting and scaling their businesses in our upcoming webinars. You can find out more about the event schedule and sign up for the events here.

Supporting the Next Generation of Female Founders

New research released by LifeSkills created with Barclays has revealed that over half of aspiring female entrepreneurs in the UK say that the COVID-19 pandemic has made them want to start their own business (51 per cent). In this Female Founders Forum blog, we cover Barclays’ Investing in Women Code commitments, the first of which is aimed at supporting the next generation of female entrepreneurs. We also share highlights from our FFF members and provide updated guidance on the government’s COVID-19 support schemes. 

Female Founder Highlights

Streetbees, founded by our Member Tugce Bulut has released its latest whitepaper, providing a deep dive into the impact of the COVID-19 pandemic on the quick-service restaurant industry. Read the special report here.

Government Support

Kickstart Scheme
The government has introduced a new Kickstart Scheme to create hundreds of high-quality 6 month work placements aimed at 16 to 24 year olds who are on Universal Credit and are deemed to be at risk of long term unemployment.

It is a very generous scheme which will: pay 25 hours of young people’s wages at National Minimum Wage; cover Employer’s National Insurance and pension contributions for 6 months and; provide £1,500 to employers for costs and training.

However, as TEN mentioned in their Newsletter last week, it’s being targeted at large businesses. You need to sign up to the scheme in batches of 30 – ie. take on 30 work placements. This might make sense for the ease of government administration, but given that it’s new, young businesses that create most new jobs, it looks like the Government may be missing an opportunity. 

There is a way around it, however by joining a group of other employers, nominating a representative for the group to submit the application, or registering your interest with existing representatives, such as local authorities, chambers of commerce or trade bodies.

If you're an employer who is looking to create a job placement, you can check here if you are eligible to apply for funding under the Kickstart Scheme.

Updated Guidance: Job Retention Scheme 
The government has published updated guidance to reflect changes to the Job Retention Scheme:

• From 1 September the government will pay 70% and employers will pay 10% of employees’ wages for the time they are being furloughed. Employers will also continue to pay their National Insurance and pension contributions.

• From 1 October the government will pay 60% and employers will pay 20% of employees’ wages for the time they are being furloughed. Employers will also continue to pay their National Insurance and pension contributions.

• You will continue to pay employees wages at the contracted rate for the hours they work for you.

The scheme ends on 31 October 2020. Find out more here. 

Barclays Support and Opportunities

Female Founders Forum 2020 Digital Events
We had an excellent session last week on Access to Finance where Juliet Rogan, Head of Barclays’ High Growth & Entrepreneurs (HG&E) team was joined by expert speakers, Alexandra Daly, founder of AA Advisors, Julia Elliott Brown, founder of Enter the Arena and Baroness Kramer. 
 
In our next session on Thursday 8 October 2020 from 10am - 11:30am, we will be discussing Attracting & Retaining Talent. You can sign up for the event here.
 
As we mentioned in the last blog, we will be running a series of events over the coming months:
 

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

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

 
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 HG&E team. 

If you are interested in attending a specific webinar, please contact jess@tenentrepreneurs.org and we will add you to the invitation list.

Launch of Barclays’ first ‘Investing in Women Code’ commitment 
Barclays is taking action to close the entrepreneurship gender gap, through a series of measures designed to boost the resources and financial support available to female founders. The first in a series of three-year commitments, launched last week, will see the next generation of female founders supported through the bank’s LifeSkills programme, helping them turn their plans into action.  Hannah Bernard, Head of Barclays Business Banking, explains how the bank is backing women in business. You can read more about the launch of this first commitment here.

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.

Educating Future Founders

Yesterday we launched a new report: Educating Future Founders. With support from ABE, the not-for-profit skills development specialist and awarding organisation, we review the evidence for early interventions in entrepreneurship education. It makes the case for teaching children as young as eleven the basics of running a business. For a neat overview, read Sam Dumitriu’s article for CapX.

It’s choc-a-bloc with inspiring examples of organisations supporting young entrepreneurs across the world, such as Teach a Man to Fish’s School Enterprise Challenge, Prince’s Trust International’s Enterprise Challenge, ABE’s KidsMBA, and VIVITA.

And It’s packed with evidence as to why many of these interventions are valuable. For example, an analysis of Junior Achievement’s Company Programme, the most widely taught entrepreneurship programme in the world, followed 9,731 Swedish participants over sixteen years. As well as finding that participants were more likely to start a business, participants earned on average 10.2% more from entrepreneurship more than a decade after compared to entrepreneurs who did not participate. 

While the evidence is significant, there is another benefit that’s laced throughout the report, and one that I think is often underplayed as it can’t be easily measured. Starting (or pretending to start) a business when you’re a child is a lot of fun. 

School can be boring (and for those that struggle humiliating). There is perhaps an inevitability that at least some aspects of schooling will be tedious, but the injection of entrepreneurship into the day, or after school, is clearly a welcome break from the daily grind. I think we should want our children to be happy as an end in itself, but I also suspect this is why some of the interventions seem have such a high impact and seem to still have a positive influence years later.

This is our third report on education. The others being Future Founders, which we undertook with Octopus and my report for the APPG for Entrepreneurship on enterprise education at universities. It won't be our last.

Smart cookies 
Building on last year’s Smart Data Review, the government has set out its Next Steps for Smart Data. For the uninitiated, Smart Data is the sharing of data with authorised third-party providers, which helps support innovative new services.

Open Banking, for example, has over a million individual and SME users, and over 250 authorised third parties and account providers. The likes of Moneybox and Xero prove that great entrepreneurial business can be built on the back of Smart Data, but as the consultation found there isn’t a sector that couldn’t benefit from it, with education, retail, transport, and health featuring prominently. 

In education, new businesses could be created with access to willing individuals’ education records and proof of attainments. In transport, linking trains, airlines, and vehicle data could enable apps that automatically claim for redress following delays, or enable consumers to track their carbon footprint.

We’re often told that data is the new oil. It’s always struck me as a trite analogy. However, perhaps it makes sense in describing how, with support from government and innovative entrepreneurs, data can lubricate processes, making our lives that little bit easier.

Natasha Lomas has an extensive writeup at TechCrunch on the announcement and next steps.

London calling
Our friends from the Start-ups in London Libraries project of the British Library are looking for an expert volunteer to lead a free training webinar session to a group of business advisers based across their ten London Borough Libraries. (Last time they needed help like this, I asked in this newsletter and they got some great volunteers.)

These boroughs tend to be representative of communities often disadvantaged and under-represented in entrepreneurship and their client base are pre-start-ups and start-ups that have been running for less than a year. They are looking for advice on product pricing (ie. what entrepreneurs need to think about when pricing their product) and product creation and manufacturing (ie. what to look for in terms of safety, manufacturing abroad and how to do it). 

It would be for 3 hours on either 2nd October or 6th November and will be delivered by Zoom. Drop Marette an email if you’re able to help.

Teach Children Entrepreneurship

Today, we release a new report sponsored by ABE which advocates teaching children as young as 11 the basics of running a business.

• There is an untapped opportunity to promote economic growth and reduce unemployment by expanding access to entrepreneurship education to secondary school students.

• Across the world, a third of young people aged 18-24 intend to start a business in the next three years. But many don’t follow through due to a fear of failure and a lack of knowledge.

• Employers increasingly see skills developed in entrepreneurship programmes such as creativity and innovation, self-reliance, collaboration and problem solving as key to the success of young people in the workforce.

• Entrepreneurship education programmes aimed at secondary school students have been shown to reduce the risk that a young person will become unemployed later in life.

• Since the start of the 21st century, the proportion of young people who work for themselves has doubled. Skills such as financial literacy, business awareness, and an entrepreneurial mindset will be vital for adapting to the modern world of work.

• Entrepreneurship has traditionally been taught at universities, but there is strong evidence that earlier interventions can develop traits that are key to entrepreneurial success, such as creativity, persistence, and communication.

• There is evidence that participation in entrepreneurship education programmes can lead to long-run entrepreneurial success. An analysis of Junior Achievement’s Company Programme, the most widely taught entrepreneurship programme in the world, which followed 9,731 Swedish participants over sixteen years found that participants were more likely to start a business. Participants earned on average 10.2% more from entrepreneurship more than a decade after compared to entrepreneurs who did not participate.

Is the education system equipping young people with the skills to succeed in a fast-changing labour market? A new report from The Entrepreneurs Network argues that as children return to schools after lockdown, students as young as eleven should have the opportunity to learn about entrepreneurship in order to develop the skills and mindset necessary to prosper in the modern economy. 

Recent research from MIT and the London School of Economics finds that exposure to innovation and entrepreneurship at an early age can have lasting impacts. However, half of young people in the UK (aged 14-25) do not know a family member or friend who is a business owner and the majority cannot name an entrepreneur who inspires them. Evidence from programmes in Australia, Denmark, and the Netherland finds that short, low-cost entrepreneurship education programmes targeted at students as young as eleven can raise awareness of entrepreneurship as a career and develop entrepreneurial attitudes.

Entrepreneurship education can complement traditional subjects such as Maths and English. High school students who took part in NFTE, a US entrepreneurship programme, doubled their interest in applying to university. While a Danish programme that focused on developing entrepreneurial traits made students more likely to report that they ‘enjoy being in school’ and are less likely to say ‘I get bored a lot in school’.

Many of the skills students learn when they receive entrepreneurship education are applicable beyond starting and growing a business. For example, the ability to stick at problems and proactively find creative solutions while working with others is desirable in any workplace. Longitudinal studies which track students over decades find that students who have participated in the Company Programme, the world’s largest entrepreneurship education programme, were more likely to be in leadership positions at work and less likely to be unemployed than otherwise similar students.

Teaching young people the basics of starting and running businesses will not only lead to more businesses starting up, but also will raise the overall quality of businesses. One large study found entrepreneurs who had taken part in entrepreneurship education programmes when they were young earned on average 10.2% more from entrepreneurship 11 to 12 years after graduation compared to entrepreneurs who had not taken part. 

Recommendations

Despite the strong case for teaching young people entrepreneurship, many young people across the world lack access to entrepreneurship education programmes in secondary school. To rectify this, Educating Future Founders makes three key policy recommendations.

• To identify best practices in entrepreneurship education, governments should improve data collection and fund Randomised Controlled Trials (RCTs).

• Once best practices in entrepreneurship education are identified, the Commonwealth Secretariat should promote them through the Education Hub, support members to develop new curriculums, and work with organisations such as the Global Entrepreneurship Monitor to create a Best Practice Index.

• To drive positive change, national leaders should assign clear responsibility within education and business departments for promoting entrepreneurship education at secondary level.

Rob May, Chief Executive of ABE Global, says:

“There must be a sense of urgency if we are to equip young people to thrive in the post-pandemic modern economy. If there was ever a moment to inspire a younger generation of entrepreneurs, it is today.

This research takes a vast perspective by examining the case for school-age entrepreneurship education across multiple countries and cultures. They offer policymakers and educators vital context for rethinking curriculum planning.”

Sam Dumitriu, Research Director at The Entrepreneurs Network and author of Educating Future Founders, says:“Through entrepreneurship education, we can teach young people the skills to adapt as the world undergoes rapid economic change. But many young people lack the opportunity to learn about how to start and run a business. By expanding access to entrepreneurship education, we will not only bring through the next generation of founders and job creators, but also teach young people the mindset and skills they need to thrive in the modern economy.”

The Rt Hon Baroness D'Souza, scientist and former Lord Speaker, says:

“This timely report addresses how we equip our children for the 21st century digital world. Many of the jobs that our children will have in 20 years have not yet been invented, but we continue with the old models of education and exams designed for another century.It is tempting to sink back into older and well-tried approaches to education and to development – but the opportunity to use the pandemic as a jumping off point for new and radical thinking and, most importantly, funding is here. I congratulate ABE Global and The Entrepreneurs Network on what should become a milestone report.”

You can read the report here.

Identity Politics

Over the years, I’ve become a convert to the idea that the UK government should build the infrastructure to ensure that each person has a digital identity when interacting with the state. As such, I’m cautiously optimistic at this week's news that the government “plans to enable the use of digital identity across the UK”.

I write 'convert' because when Tony Blair’s government tried to introduce ID cards between 2004 and 2010 I was hugely sceptical for reasons of civil liberties. At the time, the policy was principally framed as a fight against terrorism, asylum seekers and benefit fraud, with a National Identity Register holding everyone’s biometric data, including fingerprints, digitised facial scan, and iris scans. In 2005, the London School of Economics produced an expert, highly critical report, The Identity Project, which showed why the government was on the wrong track.

The Identity Project recommended another way. One that wasn’t centralised, and as a result more secure, with data controlled by the user. This federated approach was mainstream thinking prior to the ID cards debacle, and can be seen in developments like Government Gateway, the tScheme for accrediting third parties, and the launch of GOV.UK Verify, which allows you to access government services like filing your tax or checking the information on your driving licence. Jerry Fishenden has written a history of federated identity in the UK for access to online public services since the 1990s, for anyone that wants to get into the nitty gritty of the issue.

Since my conversion, my eulogising has mostly centred around the case of Estonia, which has a very highly developed system of e-government. I wrote back in January on why this self-styled ‘digital state’ shows the way for Whitehall reform and more recently for Forbes on why it has been able to respond better to Coronavirus than many other countries.

But what’s all this got to do with entrepreneurs? In essence, it will save an immense amount of time on bureaucracy. It’s estimated that X-Road – the backbone of Estonia’s digital society – saves around 12 million hours every year. Its once-only principle is a neat way to ensure government departments fall in line, as citizens, institutions, and companies only have to provide information to the authorities and administrations once.

McKinsey estimates that we could add 3 per cent to UK GDP by 2030 if we get the digital reforms right. I'm all for making every man, woman and child richer (on average), but just imagine the satisfaction of being able to tell the government that you don't need to fill in that form because you've already given them that information. In fact, you've given them the same information hundreds times, year after year. That will be priceless.

The value of a digital identity has become particularly acute in the pandemic. As reported in The Times: “Emergency measures in response to coronavirus, such as the self-employment income support scheme, exposed difficulties in identifying people. When the pandemic started the government’s databases had no information on nearly half of the 2.6 million self-employed people who claimed support.” Times subscribers should also read James Hurley on how the virus has left millions of Britons unable to access emergency support. A lot of entrepreneurs haven't been supported through the crisis due to a systemic failure of data, perhaps most notably company directors who paid themselves in dividends.

Despite near-universal misreporting, this isn’t a return to the ID Card and a nationalised database. On this at least, the Prime Minister, who claimed back in 2004 that he would “masticate the [ID] card to the point of illegibility” can’t be fairly accused of hypocrisy. We have been moving, albeit slowly, in this direction for decades. It’s now time to move up a gear.

Non-starter
On Wednesday, the UK Government released details of the Kickstart Scheme, which incentivises businesses to create 6-month work placements for 16-24 year olds in new roles.

It’s very generous. The scheme will: pay 25 hours of young people's wages at National Minimum Wage; cover Employers’ National Insurance and pension contributions for six months; and provide £1,500 to employers for costs and training.

However, it’s being targeted at large businesses, as you need to sign up to the scheme in batches of 30 – ie. take on 30 work placements. This might make sense for the ease of government administration, but given that it’s new, young businesses that create most new jobs, it looks like the Government is missing a trick.

Hopefully they will take heed of the criticism and open it up to smaller companies, but even if they don’t, there is a way round it. You can join a group of other employers, nominating a representative for the group to submit the application, or register your interest with existing representatives, such as local authorities, chambers of commerce or trade bodies.

For example, our friends at Coadec are looking to bring together entrepreneurs who might want to use the scheme, in order to apply together. They will sort the admin and help with the paperwork. Drop Dom Hallas an email to register your interest.

Procure meant be
The Crown Commercial Services is the biggest public procurement organisation in the UK. It helps thousands of public and third sector buyers in the UK with billions of pounds of spending each year, and is supporting the government objective to have a 33% spend of the UK Government supply chain contracted with SMEs by 2022. 

It is introducing a number of new processes with the aim of making the bidding process easier, quicker and less burdensome. To help them know what can be improved, they have asked us to share this survey with you. It takes around 30 minutes to fill in.

Sign up to our Newsletter here.