Point of Order

The Government didn’t need to wait for the ONS to release the migration figures to begin taking action to reduce the number of people able to come into the UK. Two days prior to those statistics coming out – which showed a record 606,000 people came to the UK on net in 2022 – the Home Secretary Suella Braverman was informing the House of Commons of her 6-point plan to drive the numbers down.

At the top of her list was the intention to remove “the right for international students to bring dependents unless they are on postgraduate courses currently designated as research programmes.” Enforcement will also be beefed up, with “unscrupulous” education agents clamped down on. 

The exact impact this will all have is uncertain, but needless to say, the UK will now be viewed less favourably among prospective students looking to study abroad. And while these reforms were all related to foreign students, in the coming weeks and months, be sure to expect further agitation from migration hawks clamouring for measures to reduce the numbers of other types of immigrants as well. 

Debates on immigration are all too often typified by feelings rather than facts. And as someone who comes down on the more liberal side of the argument, I think it’s worth pointing out what research we have published in this space, to give a little in the way of concrete evidence. 

A statistic of our own which we’re particularly proud of sheds light on the share of fastest-growing companies set up by people who have moved to the UK. In 2019, we found that this stood at 49% – in other words, half of the country’s fastest-growing companies had a foreign-born founder or co-founder, despite immigrants making up only about one seventh of the total population. It’s a figure that’s been used by the Prime Minister no less, and underscores the importance of foreign talent when it comes to the forefront of success in business.

Beyond company founders, immigrants have been indispensable to the growth of many businesses – especially where they can provide scarce skill sets. To best enable this, we need a visa system which is fit for purpose. Some readers might be surprised to hear that there are instances where the UK has moved in a more positive direction on this lately. One example is the creation of the High Potential Individual (HPI) Visa, which allows graduates from leading universities to move to the UK for two years without a job offer. Yet even here, there’s room for improvement – and in True Potential, we explained how to do exactly that. At present, the HPI Visa’s methodology for which universities it covers gives more weight to student-teacher ratios than how students do in the world of work upon graduating, which is surely what we should be interested in. As a case in point, India’s prestigious Institutes of Technology are currently excluded, despite the fact they count the CEOs of IBM and Google among their alumni. Do we really want to be throwing up barriers to these sorts of people?

As well as – and perhaps because of – visa complexity, something else we’ve been highlighting recently is the seeming inability of the Home Office in simply fulfilling its end of the bargain when it comes to approving applications. In Operation Innovation, our handbook for building a more innovative Britain, Coadec’s Bella Rhodes notes: “too often we speak to startups where the decisions have been delayed by three months or more. The problem is not policy intent – it is red tape and delays within the Home Office.”

Having spent a decade as the voice for Britain’s entrepreneur community, we don’t need to be persuaded of the value of immigrants to individual companies, and the economy at large. Perhaps the fact that so many politicians have comprehensively failed to get numbers down suggests, in a weird way, that they don’t either. And thank goodness for that.

Investors Calling
For a while now, we’ve been researching university spinouts, and how best to support them. The Government have started looking at this too, and we’ll be inputting our findings to them. With so much of the focus on founders and technology transfer offices, we’d like to find out more from investors. If you’ve invested in spinouts and would like to share – in confidence – your experience of dealing with them and TTOs, you can get in touch with us here. 

Also, in case you missed it, we’ve recently joined forces with FieldHouse Associates to provide a free forum for investors who want to make a positive impact on UK policy. Learn more here. 

Great Schemes of Things

Sometimes we need to turn to the past as a guide to the future. That’s why this week we published Blueprint for a New Great Exhibition, a report by our Head of Innovation Research, Dr Anton Howes.

As I wrote in Forbes, exhibitions of industry have a long and successful history of being used by policymakers to showcase and inspire innovation. Recent attempts to replicate such exhibitions, however, have not always lived up to their goals – and have been far removed from the momentous success of events such as the Great Exhibition of 1851. 

This isn’t jingoistic yearning for a long-gone ideal. It’s about applying what has worked in the past to the modern world. As Anton writes, visitors would “see drone deliveries in action, take rides in driverless cars, actually use the latest in virtual reality technology, play with prototype augmented reality devices, and see organ tissue and metals and electronics being 3D-printed in front of them. They would see industrial manufacturing robots in action, have a taste of lab-grown meat at the food stalls, meet cloned animals brought back from extinction, and themselves perform feats of extraordinary strength wearing the exoskeletons that are already in use in factories and warehouses. Visitors would naturally get to meet the inventors and scientists and engineers who developed it all, too. They would browse the latest in fashion, art, and architecture, seeing them alongside historical examples. And the whole thing would be powered using only the cutting edge of clean energy technology, much like how the great new Corliss Engine drove the 1876 Centennial Exhibition in Philadelphia, or how Westinghouse’s alternating current powered the 1893 Chicago World’s Fair. Visitors might also be able to view air CO2 removal machines in action.”

While focused on the future, the paper makes the case that it shouldn’t be online. Perhaps one day such an event is best hosted in the metaverse – but that day isn’t imminent. Showcasing innovations of driverless cars, lab-grown meat and drone delivery online would be an abstraction that subtracts significantly from the goal of inspiring innovation.

We think it should be privately funded – and not just because of the state of public finances. The recent UNBOXED festival – dubbed the ‘Festival of Brexit’ – could be a Harvard Business School case study in failure: bureaucratic, politicised, and lacking in clarity of vision and oversight. The Great Exhibition of 1851, for example, albeit organised under the direction of a Royal Commission to give it official credibility while maintaining some arms-length distance from the government, was privately financed. 

The Great Exhibition was centred around the prefabricated majesty of Sir Joseph Paxton’s Crystal Palace, which was moved from Hyde Park to an area of London now (unsurprisingly) known as Crystal Palace, but was sadly destroyed in a fire in 1936. Previous World’s Fair structures with an enduring legacy include the Eiffel Tower in Paris (1889), the Space Needle in Seattle (1962), and the Atomium in Brussels (1958). We would need an equally majestic building today and played around with Midjourney to come up with some AI-generated designs to poll the public on Twitter (I’m still annoyed the glass building didn’t win, proving these things aren’t best decided by committee).

Our next reports will cover things like reforming visas and spinout policies, and unlocking commercial space for startups and institutional funding for deeptech policy. But the culture of innovation also matters. If you don’t stop and look around once in a while, you could miss it.

Job Creators II 
We're busy crunching the numbers, updating our incredibly influential Job Creators report, in which we looked at the fastest-growing companies by valuation, finding that half the fastest growing companies have at least one foreign-born founder. It got significant press coverage, including the second page of the Financial Times, and the headline statistic has been used by the Prime Minister on a number of occasions. We're open to partnering with a sponsor on this. Get in touch if you're keen to help.

Free Forum
As previously mentioned, we’re building an Investor Forum to provide a free forum for investors who want to make a positive impact on UK policy. It’s for UK investors at any stage, sector focus, or location. We will support you on an ad hoc basis through events, surveys, research, and other ways as the community develops. Join us.

First Draft

LabourList, the party’s grassroots website, has revealed Labour’s draft policy platform. It gives a long summary of the 86-page policy handbook, which is split into six sections: a green and digital future, better jobs and better work, safe and secure communities, public services that work from the start, a future where families come first, and Britain in the world. I’ve read it, so you don’t have to (though you might want to).

These policies still need to be agreed by the National Policy Forum, with amendments subject to approval at Labour’s party conference. Finally there will be a Clause V meeting, where the party's National Executive Committee and Parliamentary Labour Party agree on the final policy platform.

First and foremost, when it comes to policies supporting entrepreneurship, there is little in this document that would be out of place in a Conservative manifesto. This is good to the extent that continuity of good things is good for business; this is bad to the extent that there’s a lot that needs fixing. The art of good governance is identifying and successfully reforming the latter.

For example, Labour will promise to tackle late payments and scrap and replace the current system of business rates. Of course, these are things which the current and past Government has promised too. On business rates, I’ll be pushing Labour towards the most thought through proposal, which was led by our Adviser Andrew Dixon: Introducing the Commercial Landowner Levy.

As per the current Government, Labour wants to “unlock the supply of patient capital for fast-growing digital businesses”. I would replace “digital businesses”, which is too broad, with “deep tech”, which is what the new LIFTS programme will aim to do. We will also be pushing for Labour, if elected, to conserve the Conservative Party’s support for Focused research organisations (FROs), which would give entrepreneurs, scientists, and engineers a new pathway for developing the sorts of transformative technologies which will be required to tackle pressing public problems.

Labour wants to “ensure the UK capitalises on its world-leading universities and research base to grow the number of spinouts”. This is something that the current Government is suddenly – and somewhat surprisingly – animated about – as mentioned last week, there is a consultation on the topic. This is a technocratic enough issue that hopefully we will see continuity if Labour come to power.

There are nods to traditional Labour policies. The unions, who contribute over half the party’s donations and loans, feature heavily. As such, some of the language feels very 1970s, but it’s not inherently bad, and could be positive if they can, as the document suggests, carefully fix the awkward fudge on worker and employee status (without damaging flexibility for those that want it).

As the Labour Party needs to keep the unions onside, the Conservative Party is held hostage by its Nimby voters on one of the biggest issues of the day: planning reform (see here). Labour is promising to build. We can but hope.

One area that piques our interest is around data and IP reforms. Labour wants to: “ensure our world-class researchers and businesses have the data and computing infrastructure they need to compete internationally”, “ensure our intellectual property system is fit for the digital age”, “make it easier for public services to adopt innovative technologies by removing barriers to data-sharing and smart procurement”, “use new capabilities in data analysis and AI to deliver better public services”, and “introduce robust regulation that opens up data while enshrining consumer rights.”

This is potentially along the lines of what we’ve been calling for across numerous reports. If expanded out it could be genuinely transformative. We could make the UK the best place in the world for AI research while aping digital states like Singapore, South Korea, the Scandinavian and Baltic States, but with larger populations and an already more advanced entrepreneurial, financial and research ecosystem.

That said, according to the draft platform, Labour would “bring about the biggest wave of insourcing of public services in a generation.” While the UK has undertaken many failed procurement projects, it’s also failed on as many internal projects. The problem isn’t outsourcing, but the way procurement is undertaken. And while this document states it wants to “cut red tape and streamlining the bidding process to level the playing field for small businesses” it would also burden businesses with social, environmental and labour clauses. These are all worthy goals, but they are better pursued in ways that won't hold back the innovation and economic growth that will let us pay to achieve these same goals.

I could go on. But I’ll wait until future weeks. On Wednesday we’ll be speaking with Stephen Kinnock MP, the Shadow Minister for Immigration, so will hopefully be able to understand its business offer better then. Get in touch if this is a topic you care about – we might be able to squeeze you in.

Battle Royal

Whether you’re a flag-waving Monarchist or a dyed-in-the-wool Republican, we can (hopefully) all agree that those in a position of power should use it to promote the benefits of an entrepreneurial society.

That's why Dr Anton Howes and Ned Donovan made the case in our paper a few years ago to establish a new order of chivalry to encourage invention and raise the status of being an innovator in the eyes of the public; and that's why I sometimes recommend people from our network for the Order of the British Empire; and that's why I'm letting you know that the King’s Awards for Enterprise opens for applications tomorrow.

The King’s Awards was instituted by Royal Warrant in 1965 with the first Awards made in 1966 under the scheme’s original title: The Queen’s Award to Industry. They are for outstanding achievement by UK businesses in the categories of innovation, international trade, sustainable development, and promoting opportunity through social mobility.

Winners are invited to a Royal reception; presented with the award at their company by one of The King’s representatives, a Lord-Lieutenant; able to fly The King’s Awards flag at their main office and use the emblem on marketing materials; and given a Grant of Appointment and a commemorative crystal trophy.

I’m sure some of you reading this are thinking that Royal recognition is the last thing you want. But that’s not really the point. It’s clearly a big deal for lots of other people and because of this it sets the tone for what society as a whole values. We can (and do) have other incentives for those that don't like the Monarchy.

We think culture matters for building an entrepreneurial society, and as set out in the opening essay of our recent Operation Innovation collection, the second order effects of this have been incredible:
 
“The effect of accumulated innovations has transformed the world at a pace that would have been unimaginable to our not-so-distant ancestors. Even a rate of 2% growth per year – what is now considered slow – if sustained year after year, results in a doubling of measured living standards in just 35 years. The gap in living standards between 1423 and 1723 may have been noticeable to a typical fifteenth-century person, but the gap between 1723 and 2023 would have been beyond even an eighteenth-century person’s wildest imaginings. 

In 1723, the typical Brit would have spent a substantial portion of their wage on lighting and heating their home with sputtering candles and smoky coal. They would almost certainly have had no access to running water, been unable to afford to travel abroad, and only just about been able to fund some pastimes – some limited reading, if literate, and perhaps the occasional and expensive sip of a newly-imported luxury like coffee. Their work would have involved back-breakingly long hours, with little recourse for that broken back. They faced the constant threat of an early death from disease.

Thanks to the incremental and accumulated work of just a few thousand innovators in the intervening three centuries, we now enjoy the widespread availability of electricity, central heating, running water, toilets, cars, rail travel, literacy, television, restaurants, office jobs, and instantly effective treatments for many previously debilitating or life-threatening diseases – not to mention commonly available inventions that to the 1723 Brit would seem tantamount to magic, like human flight, impressively accurate weather forecasting, instantaneous communication with anyone in the world, and now machines that can reason and talk.”

Anton’s next report for us will elaborate on his plan to create a modern-day Great Exhibition. If you want to take a look at an early copy with a view to endorsing it (assuming you like it, of course), drop me an email. 

Right 'Round
We’re responding to the review of university spin-outs. Based on the evidence gathered, the review will provide recommendations for government policy and for institutions aimed at ensuring the incentives are in place to maximise the gains from university spin-outs, and increasing the economic contribution of spin-out companies to local areas and the UK as a whole. Get in touch with Eamonn Ives if you’re as passionate about this policy area as we are.

What a Corker
Over the years we’ve undertaken significant work on policies to support female founders. While we’re busy planning our next activity, check out the first ever National Women’s Enterprise Week from 19 to 23 June, and the Women’s Launch Lab, which is offering 12 free places on a boot camp from 20 to 22 June. Both are the work of our Adviser and entrepreneur Alison Cork MBE. Deadline for applications is 15 May 2023.

Inclusive Innovation Forum: Start-Up, Scale-Up

Welcome to the fourth newsletter of the Inclusive Innovation Forum. Following the roundtable led by the Government’s Chair of the Commission on Race and Ethnic Disparities, we crossed the House of Commons for our fourth roundtable to discuss the findings of the Labour Party’s recent Start-Up, Scale-Up review, which provides crucial insights on how the Party would aim to achieve one of the guiding ambitions of a potential future government: to make Britain the best place to start, and to grow, a business.

Roundtable Insights
The Start-Up, Scale-Up review includes data that reinforces the notion that investing in founders of colour has a substantial and positive economic impact. One respondent to their call for evidence calculated that if entrepreneurship among ethnic minority founders was increased to the average level, this could add a further £15-20 billion to UK GDP.

The discussion was opened by Tom Adeyoola, Co-founder of Extend Ventures, who sat on the panel of the Labour Startup Review. A central theme of the review and Tom’s talk was how to encourage growth. “There are only three ways to generate growth: more people, more productivity, and mining untapped resources. Untapped resources refer to communities and regions that have not been given fair access to funding opportunities. If it is possible to remove structural biases and systemic issues, then there could be improvements on the capability, capacity, and outcomes of UK PLC.”

But, how can we facilitate greater access to capital for entrepreneurs in the UK and ensure that this access is distributed more equitably? Adeyoola thinks we need to follow the money. One of those routes is pension funds: “Pension fund capital is probably the most diverse asset class of capital in the UK, yet Canadian pension funds invest more in UK start-ups than UK-based funds. This means that people in the UK do not receive stakes in the success. It reinforces the importance of connecting capital to broad and diverse sources of capital through the system, to get more alignment around where the money is going”. But convincing pension funds to invest in the venture asset class is challenging, says Amina Ahmad, head of community and content at Diversity VC. Pension funds are known to be more risk averse in the UK – they need a change of culture that enables them to take more risks into startups as an asset. 

According to Adeyoola, we also need to address the issue of equitable access to capital for entrepreneurs. He proposes government develop an Investing in Ethnic Diversity Code – similar to the Investing in Women Code – to bring to light the lack of equity in capital distribution and provide recommendations. It’s also important that the government commits to ongoing engagement with the topic and establishes working groups under each recommendation area to implement them quickly and create real tangible outcomes.

Another way to promote more investment into ethnically diverse founders is to diversify who deploys capital. We should be looking at global tech hubs – like Tallinn, Estonia, for example – that have a founder culture of reinvesting into the ecosystem. As entrepreneurs and senior operators experience a liquidation event, they should be encouraged and incentivised to invest in UK startups. “We need the UK to recycle wealth from the older generation into turbocharging the younger generation — we need to create that virtuous cycle,” says Adeyoola. 

Alongside recycling cash, the roundtable discussed needing more visibility of diverse role models. Investing through a mirrortocracy lens – not on merit but in people who “mirror” other successful people – hinders investment into people of colour. Roundtable participants argued that, alongside increased data and awareness that illustrates the benefits and increased returns of investing in ethnic minority founders, investors need to see more success stories to further convince them. Role models also encourage future entrepreneurs to believe they can also build: “The importance of role models is crucial to show young people how and why they might want to consider, even in a recession, or because of a recession, the opportunities of entrepreneurship,” says Richelle Schuster, Head of Innovation Programme at Leeds City Council. 

Another suggestion raised was putting pressure on entities providing funding to ensure that they invest more equitably across the board. This could look like quotas, a code of conduct or key goals.

In addition, participants largely agreed that there needs to be improved guidance and support for founders to help them navigate more open and diverse funding sources. This isn’t to enable venture capital investors to ignore ethnic minority founders but to provide founders with greater options to increase chances of success.

Sanghamitra Karra, EMEA Head of the Inclusive Ventures Lab, welcomed the thoughtfulness and the research undertaken to provide a snapshot of the start-up ecosystem in the UK for the purpose of the report and the roundtable discussed ways to make the findings actionable irrespective of the party.

Operation Innovation

This week we launched Operation Innovation. The essay collection’s subtitle tells you what it’s all about (and what we’re all about): “How to Make Society Richer, Healthier and Happier.”

As we write in our opening, each essay addresses a key way in which the UK can improve its growth prospects, and all of them focus on how to do this by supporting and harnessing innovation. Some discuss the barriers that prevent people from innovating in the UK, looking at housing, transport, and childcare costs, as well as immigration and taxation policy. Others examine the way we support and fund science and innovation, how we regulate emerging markets, how we build a culture that supports innovators, and how we integrate the things they develop into both private and public services. A few essays deep-dive into specific sectors, such as artificial intelligence, food production, and energy systems. But in all cases we asked authors to push the envelope and point readers towards important ideas that have been overlooked.

This isn’t an impenetrable tome. Each essay is the length of a comment article, which is why others are republishing them, including our opening essay, Tom Westgarth’s essay on why we need to make AI a higher political priority, Dr Lawrence Newport’s essay on how to inspire a culture of innovation, Bella Rhodes’s essay on reforming the visa system, and Matt Clancy’s essay on how to think about science funding. Keep your eyes peeled for more in the coming days.

Taken together, the collection adds up to a serious agenda for innovation, but I’ll restrict myself to two recommendations for today.

First, Meri Beckwith, the founder of Lindus Health, which is an innovator in clinical trials, shares his company’s Kafkaesque experiences dealing with ethics committees, suggesting some changes to make the UK the best place in the world to run clinical research. 

Second, check out Harry Rushworth’s essay on how transport networks can support entrepreneurship through greater agglomeration. It’s one of a number of topics I expect we’ll delve into in more detail in a fuller paper – not least because it’s one of the more concrete ways to realise the ephemeral (in both meanings of the word) goal of levelling up the country.

You can read all the essays on our website here; read, reply, like and retweet our Twitter thread here; read, like and share my LinkedIn post here (also, feel free to connect with me); forward this email onto anyone who you think might be interested in the topic; and become a Supporter or Adviser – if you’re not so already – so we can continue to produce more unsponsored reports like this one.

Real Talk
The big news in business this week was undoubtedly the CMA’s decision to block Microsoft’s acquisition of Activision. Like most people, whenever a story of this nature drops I turn to Ben Thompson’s Stratechery to see what he thinks. It’s not great: “Microsoft is going to appeal this decision; if they fail, and pull out of console gaming entirely, the CMA will have … ensured Sony is dominant in consoles for a very long time to come.” Check out his article from last year on the history of consoles if you really want to understand why a lot of industry experts think this is a bad decision.

While the Government and regulators should be brave enough to stand up to big tech companies, it just as obviously matters if the regulators are making mistakes and if Microsoft and Activision are vehemently talking down the UK as a result. And as Ryan Bourne warns in The Times, with the creation of the Digital Markets Unit we can expect greater interventions. It goes without saying that competent competition regulators should protect consumers – but, as we have argued previously, overreach will be costly for both them and startups.

This is part of a bigger picture of decline though. In recent weeks I’ve had a table full of high-growth founders tell me that they’re planning to move their business abroad and heard anecdotes of the UK’s economic growth prospects being the butt of the jokes at international conferences. This was understandable after Brexit – in the same way that the US suffered reduced standing in the world following the election of Trump – but the US is having the last laugh with the gulf between our countries wealth per capita huge and widening. Eir Nolsøe points out in The Telegraph that back in 2008 forecasters were (reasonably) predicting the UK’s GDP per head would surpass that of the US. Jeremy Driver tells it straight: “The typical British family is now £6,800 worse off than a German family, £13,500 worse off than an American family, and, if we continue our current trajectory, is set to be poorer than a Polish family by the early 2030s.”

I don’t want to get accused of talking Britain down. We shouldn’t mock the ‘Unicorn Kingdom’ campaign as it is celebrating our genuinely incredible tech companies. This isn’t the 1960s and 70s, we aren’t the “sick man of Europe.” Just use Startup Genome’s great new tool for comparing startup ecosystems across the world for proof that we have incredible potential in our nation. It’s just there’s a great deal of ruin too. Too much.

Investors Ready

This week we launched Funding to Flourish in the House of Lords, with well over 100 entrepreneurs and investors listening to speeches delivered by Lord Leigh, the Shadow Business Minister Bill Esterson, and Will Fraser-Allen from the Venture Capital Trust Association (VCTA). As many of you will know – particularly if you signed our letter in The Telegraph backing it – the report was released last month, but this was an opportunity to take stock of what has been achieved in the interim, and what more needs to be done.

Most importantly, following our report the Chancellor committed to maintaining the Enterprise Investment Scheme and Venture Capital Trust relief past 2025, although we need the Government to set out a timeline and details of how it plans to implement the extension of the scheme.

Also, as the report recommends, the financial health requirements are still not fit for purpose. HMRC are increasingly rejecting exactly the sorts of companies these schemes are designed to target: loss-making companies with growth prospects. This needs addressing as a matter of urgency.

There is also an ongoing issue with SAFE Notes not benefiting from these tax breaks. SAFE Notes are commonly used by early-stage startups to raise capital from investors. A SAFE is a contract between an investor and a company that provides the investor with the right to receive equity in the company at a future point in time, usually when the company raises its next round of financing. Y Combinator invented them back a decade ago, but the regulators haven’t caught up.

While this report was driven by the views of entrepreneurs, it was also informed by conversations with investors, as well as the VCTA, EISA and others. That’s why alongside our friends at Fieldhouse Associates we’re launching an Investor Forum to ensure that the views of investors feed into policy in a more systematic way.

Fieldhouse is a public relations and communications agency working with many angel and venture capital investors, as well as with many fast-growth tech startups and scaleups. Many of you will know its founder Cordelia Meacher, who is one of our Advisers. 

We’re joining forces to provide a free forum for investors to have an impact on UK policy, ensuring investors are able to input into government through both The Entrepreneurs Network and APPG for Entrepreneurship, as well as established groups like the VCTA, EISA, BVCA, BAA and anyone else in this space.

It’s for investors in the broadest sense – both individual and institutional. The way this forum develops will be driven by you. So sign up today to let us know how we can work together – and please forward the opportunity on to any investors who you think might want to be involved.

The 25% 
While some policy areas are oversaturated with ideas, others remain remarkably unexplored. The intersection of disability and entrepreneurship is very much underexplored.

That’s why it’s pleasing to see a new report from Small Business Britain.

This isn’t a niche issue. The FSB estimates that 25% of entrepreneurs are disabled or neurodiverse. For its report, Small Business Britain surveyed 500 disabled entrepreneurs from across the UK, specifically those with a physical or mental impairment that has a ‘substantial’ and ‘long-term’ negative effect on your ability to do normal daily activities, as defined by the Equality Act. 

Key findings include that: 37% report they have been discriminated against because of their disability; 33% of disabled entrepreneurs followed the entrepreneurship route out of necessity; 60% did not get any support when starting their business; 59% are worried to take on debt, whilst 48% don’t know the right type of funding; 70% lack appropriate role models; 84% feel that they do not have equal access to the same opportunities and resources as non-disabled founders; and 35% say their disability has positively impacted them as an entrepreneur.

I recommend reading it in full – or, at least, dropping it into Chatpdf (other software is available) and interrogating the paper through chat.

This should be a catalyst for more policy work in this area – including, I hope, through the APPG for Entrepreneurship. It’s something we touched upon in this webinar with Lisa Cameron MP during Covid, but it remains a hugely neglected area of research. 

Operation Innovation
Next week we'll launch a new essay collection that will make the case for the power of innovation to make us all richer, healthier and happier. It something of a manifesto on topics we plan to undertake more research. Eamonn Ives, our Head of Research, has an article out today to give you a taste for what to expect:

“The effect of accumulated innovations has transformed the world at a pace that would have been unimaginable to our not-so-distant ancestors. Even a rate of 2% growth per year – what is now considered slow – if sustained year after year, results in a doubling of measured living standards in just 35 years. The gap in living standards between 1423 and 1723 may have been noticeable to a typical fifteenth-century person, but the gap between 1723 and 2023 would have been beyond even an eighteenth-century person’s wildest imaginings.”

Join us to get a copy in your inbox on Tuesday.

Remote Possibilities

Mods Are Asleep. Well, the political equivalent: Parliament is in recess. To fill the void, here’s something I’ve been turning over in my mind for a while.

During the pandemic, we published a report by Matt Clancy making the case for remote work. Crucially, it didn’t suggest government should overtly incentivise working from home – but it did explain (and correctly predict) the economics of what factors might mean the forced changes would become permanent.

This was published at a time when many business leaders and their representative organisations were making the case – vehemently behind closed doors – that government should force businesses to open up their offices, despite Covid cases being on the rise.

Post-pandemic, many business leaders and politicians can’t seem to make up their minds about what the future of work should look like, with some now wanting to make ‘working from home’ an inalienable right, and others seeming to think returning to the office should be mandatory. They should get more comfortable living with the uncertainty most of us have about the pros and cons.

On an individual basis, everyone reading this will be familiar with the advantages of working from home. Equally, everyone will be familiar with the disadvantages. How we weigh them will depend on a multitude of factors, which is why it’s best that employers and employees continue to work this out for themselves.

As reported in The Times this week, the amount of vacant office space across the UK has increased by 65% over the past three years. It’s not hard to understand why – ONS data reveals we have gone from a country where working from home was a rarity, to one where 16% of working adults reported working only from home in the last seven days, and 28% reported they were hybrid working.

The insights of Friedrich Hayek are important here. Knowledge about what’s best for individuals and companies is so widely dispersed that it cannot be planned for centrally. We should let the employers and employees coordinate this, which means letting entrepreneurs decide what’s best for their business, and employees decide the offer that’s best for them. 

It’s not to say there is no role for government. But that should be in ensuring that infrastructure and regulation in areas like internet, transport, energy, domestic and commercial property, education and so on isn’t leaving people with no choice.

There is no better alternative.

Talking of Work 
Today is the last day to apply to join The Entrepreneurs Network as a Researcher. We’ve had plenty of applications, but if our growing pipeline of projects is anything to go by it won’t be too long before we will be going out to the job market again.

Find out more about the role here. (We won’t be checking the email until Monday so you won’t be marked down if you send it through a little late.)

Talking of Tight Deadlines
The Clinton Global Initiative (CGI) and Equal Innovation have got in touch to invite us to nominate startups that may qualify for CGI Greenhouse, "a unique showcase for path-breaking entrepreneurs at CGI in the areas of inclusive economy, climate resilience and global health."

The company/NGO should fall within CGI pillars of inclusive economic growth, climate resilience, health equity or refugee/humanitarian support. Secondly, the company/NGO should have raised some capital – Seed/Series A, major government grant or major philanthropic partnership.

The deadline is Sunday, so if this is of interest, drop us an email with the name of your startup/NGO, contact information, and a brief sentence about what you do, and we’ll pass on this information over the weekend.

OK, I'll Byte

As you all already know, it’s getting increasingly hard to distinguish between tech and non-tech businesses. And while software – and now AI – eats the world (hopefully not literally), the government has yet to put in the right policies to ensure we can capture all the benefits of progress.

That’s why we’re partnering with two top organisations to talk about the future. Alongside Enterprise Nation, we’ll host ​​Benedict Macon-Cooney from the Tony Blair Institute to discuss A New National Purpose. You may remember it hitting the headlines in February because Tony Blair and William Hague put aside political differences to posit a bold, optimistic policy agenda. Now is your chance to hear more and discuss it!
 
The following week we’ll be partnering with TxP to trail our upcoming multi-authored report on how technological innovation could make us all healthier, wealthier and happier. The event will feature three of its authors: Ben Southwood on corporate R&D labs (read this for background); Hermione Dace on the future of food (read this for background), and Dr Lawrence Newport on building a culture of innovation (watch, like and subscribe for background). I hope to see you there!

We understand that these topics may not be immediately relevant for all businesses (though they are for all of you as consumers and citizens). That's why I want to assure you that we are continuously looking at policies to best support all entrepreneurs, regardless of their size or sector. We have a lot in the pipeline to reflect this. As a recent report from the Adam Smith Institute made clear in making the case for focusing more policy attention on The Forgotten Middle, this isn't just about small versus big.

Now is the Time
Every once in a while I’ll put out a call for new Supporters and Advisers to join us in our mission. Today is such a day.

We want to keep an open, dynamic network, so there won’t ever be a paywall between us and your policy needs. Nevertheless, we wouldn’t be able to do the work we do without the support of our sponsors, Patrons, Advisers and Supporters.

We’re driven by a desire to make the world a better place and we think entrepreneurs have played and will continue to play a critical role in this. If you agree, join us on this journey by becoming a Supporter or Adviser. If you want to chat about this or other ways of partnering with us, please feel free to book a time in my diary.

For those of you already supporting us: thank you.

Pause for Thought

“Should we let machines flood our information channels with propaganda and untruth? Should we automate away all the jobs, including the fulfilling ones? Should we develop nonhuman minds that might eventually outnumber, outsmart, obsolete and replace us? Should we risk loss of control of our civilization?”

These aren’t the ravings of a lunatic, but a public letter signed by many of the world’s leading entrepreneurs and AI researchers – including Apple co-founder Steve Wozniak, former US presidential candidate Andrew Yang, and, of course, Elon Musk – calling for a pause on artificial intelligence research.

For many, these concerns will seem a million miles away from their harmless dealings with ChatGPT. But as I wrote back in here back in 2018, AI technology is a risk worth taking seriously.

It’s instructive to return to that 2018 newsletter – not least because the current pace of progress suggests that AI experts were actually too conservative with their predictions:

“On average they believe AI will outperform humans in many activities in the next ten years: translating languages by 2024, writing high-school essays by 2026, driving a truck by 2027, working in retail by 2031, writing a bestselling book by 2049, and working as a surgeon by 2053.”

It’s only 2023 and GPT-4 can already perform complex tasks close to human-level performance in everything from mathematics, coding, medicine, law and psychology without special prompting.

So what’s the policy response to the incredible innovation, disruption and hard-to-quantify risk of AI? Assuming it’s not the opening gambit of a policy game of 4D chess, it’s not to call for AI research to be paused, which is a simply unworkable idea (unless you’re willing, like some, to risk nuclear war with China to enforce it). Or to ban ChatGPT, as Italy has just done over privacy concerns.

Better to focus on real issues and workable solutions – i.e. the less dramatic part of the letter calls for AI developers to work with policymakers to dramatically accelerate development of robust AI governance systems. And I don’t just mean “AI ethics”, of which there has been plenty of research. I mean work on actual alignment.

Leopold Aschenbrenner puts the case well, setting out the potential problem and solutions. In essence, governments should be spending a lot more money on this. The need for scalable AI alignment is such that the ambition of our efforts should rival Operation Warp Speed or the moon landing.

If all goes well, before too long we’ll be catching crumbs from the table.

Boxed In
Perhaps we should have got ChatGPT to plan UNBOXED. Despite claims to the contrary, Theresa May’s ‘Festival of Brexit’ has failed. The evaluation numbers have been fudged – relying on three television broadcasts, including claims of “meaningful engagement” with over 6 million people by being included in an episode of Countryfile – to claim success.

As Damian Green, Conservative chairman of the Commons’ Culture Select Committee, has said in response: “As a proposed great national festival, it clearly did not engage mass public enthusiasm, partly because of its lack of an obvious focus.”

This was entirely predictable. In fact, we did exactly that back in 2021. More’s the pity as it gives ambitious festivals a bad name. The Great Exhibition of 1851 inspired wonder in a generation of inventors, makers, creators and entrepreneurs. In contrast to people watching a short segment on a TV programme, almost a tenth of the entire population of Great Britain attended it in person, most of them returning again and again.

Building on a previous essay, our head of innovation research Anton Howes is in the process of putting the finishing touches of a report on how we could put on a Great Exhibition for the modern world. We’ll soon be going out to people for feedback and endorsements, so get in touch if this is something you’re keen to read.

Researcher, The Entrepreneurs Network

Details

• Location: London

• Salary: £28,000-£32,000 depending on experience

• Duration: Permanent

• Application closing date: 14 April 2023

The Entrepreneurs Network is a think tank which champions Britain’s most ambitious entrepreneurs. We are an independent, non-partisan organisation, and support entrepreneurs by:

• Producing cutting-edge research into the best policies to support entrepreneurship;

• Campaigning for policy changes that will help entrepreneurship flourish;

• Hosting regular events to bridge the gap between entrepreneurs and policymakers;

• Updating entrepreneurs on how policy changes will impact their business;

• Making the case in the media for entrepreneurs’ contributions to society.

We are also the Secretariat of the All-Party Parliamentary Group (APPG) for Entrepreneurship, which was set up to encourage, support and promote entrepreneurship and to ensure that Parliament is kept up to date on what is needed to create and sustain the most favourable conditions for entrepreneurship.

We are a small team that punches well above its weight in the think tank scene. Through their written output, events work, and other networking, the successful candidate will have opportunities to quickly rise up, establish a public profile and engage directly with the UK’s leading entrepreneurs and policymakers.

Role

• Assist the Founder, Head of Research and Head of Innovation Research on shaping The Entrepreneur Network’s policy agenda;

• Author briefing papers, op-eds, newsletters, and blog posts on key policy areas;

• Represent The Entrepreneurs Network at events – including delivering speeches and briefings to policymakers;

• Proactively attend events of similar organisations to build a network of policymakers, journalists, entrepreneurs and sponsors;.

• Support and lead in organising events, creating descriptions, researching and inviting speakers, attendees, and sponsors.

Skills

Necessary

• Ability to write persuasively to a high standard;

• Strong understanding of economics and public policy, plus ability to explain complex concepts to a non-specialist audience;

• Excellent attention to detail and ability to work quickly and meet deadlines.

Desirable

• Past experience of writing policy reports;

• Proven knowledge and interest in a policy areas important to The Entrepreneurs Network;

• Relevant connections who could be useful to The Entrepreneurs Network (e.g. policymakers, journalists, potential sponsors etc.)

The ideal candidate will be highly self-motivated with a strong interest in public policy. They may be a recent graduate, have previously worked in a similar role, or have a proven interest in policy. Outside of their job, they will have shown an active interest in entrepreneurship policy.

The ideal candidate will not simply wait to be assigned tasks, but proactively identify new opportunities to drive the policy agenda. Most importantly, their values will be in strong alignment with the values of The Entrepreneurs Network.

How to apply

To apply, please email your CV, a 150 word cover letter, and a list of three blogs/articles/reports you believe every policymaker should read to info@tenentrepreneurs.org.

Tricks for the Trade

“You can’t be what you can’t see.” It’s a neat phrase that highlights how other people often define what we think is possible. Not only does it rhyme and probably reflect your intuition, there is evidence that it’s true.

And what’s true for individuals is also true for businesses.

This week we released a report with Enterprise Nation on Access to Markets. One of the key facts underpinning the report is that businesses that report goods exports or imports are around 21% and 20% more productive respectively than businesses that don’t trade. Why? Well, for a number of reasons. But as the author Eamonn Ives writes in an article on his report:

“A leading theory is that firms which export are generally more ‘receptive’ to innovations – both in the extent to which they can innovate, and because there are more pressures on them to innovate, in order to stay competitive against global competition. Some have argued that the act of exporting also allows firms to learn from each other in how to boost productivity.”

In other words, businesses – i.e. their founders and employees – need to see it to be it. This was certainly something echoed by the entrepreneurs we brought together at the report’s roundtable launch in Parliament (just down the hallway from where ‘f-business Boris’ was being grilled). They talked about how they learned from their international competitors and responded to the increased competition. 

So, how do we get more SME exporters?

First, the report argues that the government should be unstinting in its promotion of free trade around the world. Free trade might be a lite passé these days, but we shouldn’t forget the lessons of our forebears like Adam Smith who demolished the mercantilist worldview in the Wealth of Nations, and Richard Cobden, who tirelessly campaigned for free trade for the good of the poorest and to broker peace between nations.

The second recommendation may seem trite, but it doesn’t make it any less necessary. We must improve the information available to SMEs that are ready to export. At present, so much about exporting is confusing. It’s maddening to hear about the bureaucracy, complexities and contradictory advice stymying wannabee exporters.

There is also clearly a role for the private sector here, which is why it is heartening that to coincide with the launch of the report Enterprise Nation announced its Go Global scheme. With support from Santander, Deloitte and An Post Commerce, this aims to offer targeted guidance to 100,000 SMEs.

Over the years I’ve heard some good things about UK Export Finance (UKEF), so I’m sure it’s deserving of the title of ‘Best Export Credit Agency of the Year by Trade Finance Global in 2021’. But I’ve also heard from entrepreneurs that think there’s room for improvement. Indeed, by its own admission, awareness of UKEF among even its ‘target audience’ of SMEs stood at just 31% in 2020. And more broadly, only around one in 10 SMEs have even heard of it and understand what it does.

The report has further recommendations, but I’ll leave you with a fresh statistic that shows how big a deal this is: “if UK exports had rebounded as strongly as Germany’s following the pandemic, it would be exporting $111bn more than is currently the case.” 

This is the first time we’ve looked at policies around exporting – it won’t be the last.

Change the UK (and the World)
As trailed last week, we’re looking for a new researcher to join us. As the job description states: “We are a small team that punches well above its weight in the think tank scene. Through their written output, events work, and other networking, the successful candidate will have opportunities to quickly rise up, establish a public profile and engage directly with the UK’s leading entrepreneurs and policymakers.”

You'll also have the questionable joy of copy editing this newsletter every week to weed out my inevitable errors!

Find out more here, and please share far and wide.

Inclusive Ventures Lab
Our friends at the Morgan Stanley Inclusive Ventures Lab are accepting applications for their 2023 cohort. The in-house startup accelerator, formerly known as the Multicultural Innovation Lab, promotes financial inclusion and provides access to capital and connections for early-stage technology and technology-enabled companies led by underrepresented founders.

On the Hunt

A week can feel like an awfully long time. Last Friday, Silicon Valley Bank (SVB) was collapsing. Following a sleep-deprived weekend for Ministers, Treasury officials, and a fair few entrepreneurs, a deal was struck with HSBC for SVB UK. Anyone reading this who helped hammer a deal together before the market opened on Monday deserves a huge pat on the back. Speed was critical – credit where credit is due.

Then we had the Spring Budget, which was very pro-business – just not for all businesses.

First and perhaps foremost, we’re big fans of full expensing, which we think will incentivise productivity-boosting investments. It’s an idea that’s been pushed by economists across the political spectrum for years – everyone from Obama’s adviser Jason Furman, to Dan Neidle (more famous for recently bringing down Nadhim Zahawi over his tax affairs), to Sam Bowman (who back in 2017 described it as “the best idea in politics you’ve never heard of”), to our 2018 report with the All-Party Parliamentary Group for Entrepreneurship. Our only criticism on this front is that Jeremy Hunt shouldn’t have limited it to three years.

Coming into the Budget, many of the country’s most innovative startups were braced for the worst on the changing tax treatment of R&D. As Eamonn Ives wrote for CapX: “For the most research-intensive businesses – those defined as firms for which R&D spending constitutes 40% or more of total expenditure – they will be able to benefit from a new higher rate of tax relief. For eligible businesses, this will return 27p in the pound on all R&D investment. Before the Budget many of Britain’s innovative startups, which plough their budgets into R&D, feared having the rug pulled from underneath them on R&D Tax Credits – so this will be an extremely welcome relief. (It must be noted, however, that this measure will provide little comfort for founders of companies that just fall short of the eligibility criteria.)”

The Chancellor’s ambition to build 12 potential Canary Wharfs across the UK is a weighty challenge. I was quoted in ConservativeHome on this: “Tax breaks and subsidies are all well and good, but critical to Canary Wharf’s success was bold planning policy – building quickly at density. In 1990 the first tower built was the 244m Canary Wharf skyscraper at One Canada Square – then Britain’s tallest building for two decades. This is the sort of ambition we need to see if this policy is going to be a success, but one that recent governments have failed to realise at scale.” As we have argued, it’s time to build.

Our research has also shown how red tape around informal care drives childcare suppliers out of the market, as does confusion around planning permission. As such, aligning staff-to-child ratios in England with Scotland is a positive and common-sense first step, but such is the scale of the problem that further reforms will also surely be necessary.

In general, it’s great to have seen the policy turn towards our agenda of entrepreneurship and innovation. However, as I wrote for Startups.co.uk, I think at the same time we (in the broadest sense of the word) need think more about what can be done to help all businesses. This isn’t about handouts and protecting businesses from necessary failure, but making sure that we have a truly dynamic economy.

Patience Please
Well below the headlines, the Chancellor announced the extension of British Patient Capital’s mandate until 2033. Across three programmes, British Patient Capital now manages assets with a total value of over £3 billion, making it the largest domestic investor into UK venture capital. A consultation on the Long-term Investment For Technology and Science (LIFTS) initiative was also announced. It aims to establish new investment vehicles to crowd-in investment from institutional investors, particularly defined contribution (DC) pension funds. 

It’s great to see successive governments take this seriously. We think it’s vital too, which is why we are partnering with the CBI to investigate the problem of why the UK sees comparatively little institutional investment (from pension funds and insurers) flow into companies through equity, and science and technology startups in particular. Drop our Head of Research an email if you want to have your say.

Aria(vederci)
A byproduct of working with some of the UK’s smartest and ambitious policy experts is that at some point they will want a new challenge.

After a slew of incredible reports, covering everything from early stage investment, procurement, and competition policy, our Head of Policy Aria Babu is moving on to her next chapter. Aria also ran our Female Founders Forum, boosting the number of high growth founders, and writing three significant reports covering the disproportionate impact of Covid-19 on female founders, the state of female entrepreneurship in the high-growth sectors such as e-commerce, fintech, and greentech, and most recently a detailed survey some of female founders who have raised over £1 million in equity.

If I had to recommend one report it would be Strong Foundations, which reveals how our rigid planning system leads to expensive housing, office space and lab space, and how this impacts entrepreneurs. By placing limits on agglomeration, we see fewer of the benefits it can bring for innovation, productivity, jobs, and more.

You can follow Aria on Twitter or connect with her on LinkedIn.

We’ll soon be sharing a job description for a new role, but any smart, ambitious policy people are welcome to get in touch now to express interest, or if you know anyone who might be interested put them in touch.

Quarterly Meetings
Alongside our dinner programme, we’re planning to start hosting quarterly meetings with our Advisers. Whether you’re already an Adviser or just an admirer of our work, drop me an email if you’re keen to host us.

To-And-FRO

This week the government released the Science and Technology Framework, or in current lingo its “plan to cement the UK’s place as a science and technology superpower by 2030.” It covers a lot of ground, but I want to focus on one announcement which we’ve been working on.

As part of the smorgasbord of plans, Rishi announced the government will be “testing different models of funding science, to support a range of innovative institutional models, such as Focused Research Organisations (known as FROs), working with industry and philanthropic partners to open up new funding for UK research. For example, this could include working with a range of partners to increase investment in the world leading UK Biobank, to support the continued revolution in genetic science.”

We’re particularly heartened by this, as we helped popularise the concept of FROs in A New Model Science – a report we produced last year with Convergent Research and the Tony Blair Institute. As our Adviser and former Research Director tweeted in a useful thread: “FROs are a new way of doing science. In effect, they apply the startup model to scientific research.” And as I wrote last year:

“FROs are designed to fill a gap in the market, solving problems too big for a single academic lab to take on, too complex for a loose, multi-lab collaboration to solve, and not directly profitable enough for a venture-backed startup or industrial R&D project to fund. 

Though nonprofits, FROs are entrepreneurial, being run by full-time technical founders who oversee 10-30 employees. They pursue specific, quantifiable technical milestones for a finite-duration (5-7 years). And as they near completion, they translate what they have built into longer-lived nonprofits or venture-backed startup spinouts.

Because these are bigger undertakings than most academic labs handle, and are focused on a very tangible, focused goal, entrepreneurs are as critical a part of FRO founding teams as scientists. As Tom Chivers put it in his first-rate article on our report: ‘If it’s not profitable, the private sector won’t fund it; if it’s too big and complicated, universities can’t do it.’

Three FROs have been launched so far, all in the United States. E11 Bio is building the key tools needed to map the connections between neurons in a mammalian brain. If successful, it could make new treatments for brain disorders possible. While Boston-based Cultivarium is building an end-to-end toolkit for cultivating currently unculturable microbes. This will accelerate the study and engineering of microorganisms for purposes such as medicine and carbon removal, which will be vital if the world is to keep global temperatures stable.”

FROs aren’t the answer to everything. But as Stian Westlake – who backed our report alongside pioneering geneticist George Church – argued in the Guardian this week, ​​the government should run more experiments – including in funding.

Y–EIS!
Following the long-term efforts of many, including Christiana Stewart-Lockhart at the EISA, Will Fraser-Allen and Justine Dugan at the VCTA, Chris Elphick at the BVCA and many more, including all of you who backed our campaign and the APPG for Entrepreneurship’s report, the Chancellor has confirmed that it is the government’s firm intention to extend the Enterprise Investment Scheme and Venture Capital Trusts beyond the current sunset on 6 April 2025.

Unlocking Investment
We are partnering with the CBI to investigate the problem of why the UK sees comparatively little institutional investment (from pension funds and insurers) flow into companies through equity, and science and technology startups in particular.

This is far from an unacknowledged issue, but most research to date has focused on regulatory issues which are barriers to more investment going to these sorts of businesses. We’re especially interested to better understand other reasons for the (lack of) supply of capital – for instance the idea that there is a cultural conservatism against equity investment.

To help inform our research, we want to speak to experts and people working in the industry for their views and opinions. Interviews can be on or off the record, and will only take 30 minutes, conducted virtually. The final output of the research will be a short policy paper which we and the CBI will use to highlight the issue and influence policymakers accordingly.

Get in touch with Eamonn Ives if you want to get involved. And we would be grateful if you could share with others in your network.

We Need to Talk About
Kevin Hollinrake, the Small Business Minister, will be joining EX23 – a Small Business Roundtable event we’re supporting with Enterprise Nation, MSDUK and the FSB. There are also lots of distinguished speakers coming over from the US too. Register for free here. I hope to see you there!

Make the CaSE

The Windsor Framework agreement is good news for entrepreneurs and innovation. While Boris Johnson will find it hard to vote for Sunak’s deal, he’s feeling increasingly isolated. Even Steve Baker MP – the self-styled “hard man of Brexit” – is exhausted.

Britain’s innovators were in a buoyant mood for the Campaign for Science and Engineering’s (CaSE) annual lecture. Despite news that the Treasury was taking back £1.6bn promised for science, this was overshadowed by the prospect that the UK would soon be back in the €95.5bn (over six years to 2027) Horizon Europe research programme.

The CaSE lecture was to launch a thorough report on Public Attitudes to R&D. Entrepreneurs should take heed – whether directly and indirectly, the whole ecosystem relies on taxpayer funded schemes to support them. While it would be naive to think that all policy can – or even should – be subject to the will of the people (that’s why we live in a representative rather than direct democracy), if we want science funding to continue, public consent and engagement is important.

Over half, 52%, of people either haven’t heard of the acronym “R&D” or have but don’t know what it means. The Government’s “Science Superpower” tagline hasn’t cut through, people seem to respond better to the Department for Science, Innovation and Technology’s idea of R&D delivering “stronger growth, better jobs and bold new discoveries”. 

Just over 60% of people either agree that “R&D doesn’t benefit people like them” or feel neutral or unsure about R&D’s impacts. Surprisingly – to me at least – younger age groups are less likely to feel R&D benefits them, or think it can create local jobs in their area, and are more likely to say that we cannot afford to invest in R&D at the moment.

But perhaps there is hope for the next generation. In a report packed with a smorgasbord of interesting findings, young people are engaging more than their elders with R&D activities – whether that’s reading research, discussing research, or watching research documentaries. 

This TV example is particularly interesting in light of recent evidence on the effects of TV content on entrepreneurship following German unification   (I’m not joking). Western TV was available since the 1960s in some East German regions and conveyed images and attitudes conducive to entrepreneurship. It shows that TV content affects individuals’ decisions to start businesses and shapes attitudes and value orientations conducive to entrepreneurship. This ‘entrepreneurial mindset’ is passed on across generations with long-lasting cultural effects.

In other words: you can’t be what you can’t see.

(My colleague, Dr Anton Howes, will be particularly interested in the fact that just 3.29% of people have visited a science festival or science fair in the last year, given his ongoing dream of putting on a new ​​Great Exhibition.)

Funding to Flourish
I didn’t lead today on our All-Party Parliamentary Group (APPG) report, as the odds are that we’ve already emailed you about it at some point in recent weeks. But you can finally read Funding to Flourish: The Case for Tax Relief on Early Stage Investment.

It should be pointed out that the Seed Enterprise Investment Scheme (SEIS), the Enterprise Investment Scheme (EIS) and Venture Capital Trusts (VCTs) already have cross-party support. In the Autumn Statement, the Chancellor made all the right noises, and as a successful serial entrepreneur he understands the ecosystem. Equally, Labour’s Startup Review showed how seriously they take these vital tax breaks. But crucially, legislation is needed for them to continue, which is why we put out a letter that already has over 300 signatories from entrepreneurs (the first 200 of which you can find here). It’s not too late to sign the letter here, and please feel free to share far and wide.

While kindly supported by the Venture Capital Trust Association (VCTA), this project is very much an independent and entrepreneur-led report. It does three things: it makes a clear and coherent economic case for why these tax breaks exist; it gives voice to entrepreneurs who tend to be too busy to share their views with government; and it makes the case for what needs changing, specifically we want the Government to provide clarity about the future of EIS and VCTs, expand the generosity of SEIS, amend the financial health rules for startups, and give SAFE notes equal tax treatment.

As Aria Babu concludes in the must-read article on her report: “There are plenty of deep, complex reforms we could introduce to make the British economy more dynamic. From planning reform to sharper procurement, better childcare and smarter science funding. All of those however, take time and care to put into place. Rolling over a few tax breaks really is the kind of low-hanging fruit governments crave: as the Budget approaches, it would be a shame if the Chancellor passed it up.”

This House would prioritise economic growth over everything else

I spoke at the Cambridge Union in a debate with the motion “This House would prioritise economic growth over everything else”. You can watch the debate here. The post below is a blog post written from my notes.

I think the concept of growth can be very abstract. It’s easy for our eyes to glaze over amid all the chatter of percentage point changes and figures with varying amounts of zeros after them. And, don’t get me wrong, there will be numbers in the blog post. But I’d like to humanise it for a moment.

My mum was raised in absolute poverty. She never talks about it in those terms, but she has stories about what her childhood was like that make it clear. She lost an infant brother to typhoid. She says that her mother was an early feminist because, when there wasn’t enough food, she fed all her children the same amount and didn’t divert calories to her sons. This kind of life is unimaginable, not just to us in the UK, but also to most people in India today.

Hospitals cure tuberculosis and typhoid more often than they don’t, my cousins are all software developers, and – like in the UK – lots of Indians now struggle with too much food, not a lack.

Virtually all of this is down to economic growth. The story of India since the 1960s is one of increasing GDP. In 1960, it had a GDP per capita of about $83, a literacy rate of only 20%, and a childhood mortality rate of about 16%. Nowadays, those figures are $2000, 77%, and 2.7%. Why? A steady project of open trade, education, and institution building has turned India from a country of illiterate agricultural workers to a country with a young and well educated population, ready to join the global economy.

It is important not to mistake growth for GDP. GDP is to growth what positive LFTs are to Covid cases, or a map is to a physical territory. When we talk about increasing growth, we are talking about increasing the amount of stuff people have, and how easily they can get that stuff. It’s a measure of how well humans have been able to bend the natural world to our desires. We know that for most of human history almost everyone worked in harvesting and finding food, policing and war, or child rearing, and that the surplus after those necessary tasks was very small. But something happened in the Industrial Revolution that made all those tasks much more efficient and freed time up to pursue art, science and leisure. Growth is, to an extent, a measure of that surplus.

We also recognise that Spotify giving us access to all the world’s music is more valuable than a library of CDs. And the fact that our GDP statistics fail to value Spotify more than those CDs is a clear failure of the measurement of growth, as opposed to the concept of growth. Let us not mistake a conversation about prioritising economic growth for a conversation about prioritising GDP.

I reject Maslow’s hierarchy of needs – I think you can still enjoy music even if your parents don’t love you. But it describes a key human phenomenon, which is that when we are able to, we satisfy our basic needs.

Take child mortality as an example. In the year 1800, about half of all children who were born died before the age of five. Now, 96% of children survive to the age of five, and the four per cent who die live mostly in the poorest countries in the world. It’s clear that when people have the resources to do so, they’re better able to keep their children alive. Similarly, as economies grow, we see countries spend more on education. And we also see that economic growth is linked to women’s empowerment, democracy, and other things most people view as social goods.

Now you might say, if you care so much about child mortality or education, why not prioritise them instead?

Well you can only have one priority, and I think if we actually prioritised low levels of child mortality or CO2 emissions our world would look pretty dystopian. Say we prioritised low child mortality? Well we could do this by prohibiting new babies – if there aren’t any to begin with, there can’t be any to pass away. Or, we could take control of expectant mothers, banning them from anything unsafe or pleasurable in life, and then seize the children and make sure they are raised in pristinely clean and safe environments.

As Sam Bowman – my debating partner on the night – said, in his opening speech, economic growth is a Swiss Army knife, which gives us the ability to cope with our problems much better. It gives us the ability to make the tradeoffs that suit our situations, be they at the level of the family or nation.

I’m very keen to assert that this should not be a left/right debate. I lean to the right and I believe all my opposition is on the left, but almost every significant political thinker on either side of the political spectrum is pro-growth and has built their economic platform around it. Thatcher cut taxes and spending because she thought that would grow the economy. Stalin, similarly, used gulags and quotas as a means for making the soviet people better off. Even Scandinavian Social Democracies target economic growth and then redistribute it later.

So let me throw off all my scepticism about taxes and propose a thought experiment. What happens if we take all the wealth and resources in the world, stop growing, and redistribute it?

Global GDP per capita is about $12,000. In that scenario we would all be slightly poorer than the average person in Iraq, where child mortality is 2.5 per cent. That would be a very good start. Assuming that we don’t destroy any useful institutions in the process, the world would certainly be a better place. With Iraq’s infant mortality made global, we’d save about 2 million babies in total.

But in the rich world, we’d experience a real shock as we became less like a rich western country and more like a middle income country. Our infant mortality rate would go up by an order of magnitude and our adult life expectancy would fall by about a decade.I think, in that scenario the issue of economic growth would be of vital importance to us

Okay, so what if we say that poor countries should prioritise economic growth but that in wealthy countries we have done enough. Maybe you think there is very little to be gained if the UK gets as wealthy as the average person in Norway or Switzerland, and that it isn’t worth the effort.

I have two key responses to this. First is that a large part of the way countries get wealthier is by selling things to people from abroad. China would have struggled to get wealthier if they weren’t able to sell consumer goods to the west. By getting wealthier and being open to trade, saying nothing of the foreign aid and charitable spending that people in rich countries do, we make the rest of the world better off too. By deprioritising growth we would, effectively, be sacrificing the wellbeing of people abroad. 

My second response is that I don’t think people in the UK are as wealthy as I would like us to be. If we distributed all the money in the UK evenly, and government spending stayed about the same, we would have a post-tax income of about £18,000, which is about the same as a PhD stipend. I would struggle to live a full adult life on the income of a student. As a nation, we are already struggling to afford many of the things that we believe people in the modern world should be able to access – like heating and childcare.

So maybe you respond by saying that the opposite of prioritising growth isn’t the same as stopping it. We can choose to allow growth to happen, maybe make it our second or third issue, and but prioritise something else.

I argue that we actually make a huge difference by just choosing to prioritise growth. In rich countries economic growth is standardly between about one and three per cent.

If the UK had sustained economic growth of about one per cent, in a generation, about 30 years, a person on minimum wage would go from earning about £18,000 to earning about £25,000. Not a massive difference, but better than nothing. At three per cent growth, they would be earning £45,000, similar to an average professional today. At five per cent growth, which is what America managed during their period of major growth, they’d be on about £80,000 – a salary for a senior doctor or software engineer.

On a global scale this is even more impressive. Let’s go back to India, because it is close to my heart. Indian GDP per capita is $2,000. At a rate of one per cent growth, they would be as wealthy as someone from Lebanon, with an infant mortality rate of about one per cent. That’s fantastic. At three per cent, they’d be as wealthy as Thailand, with a child mortality rate of about 0.6%. That’s even better. At five per cent growth, they would be as rich as Greece. That’s almost unimaginable. 

The reason we want to prioritise economic growth is because there are hundreds of trade offs we have to make for economic growth – decisions about where to build houses, which taxes to raise,cut, or reform, and where to prioritise spending. By effectively prioritising growth, we can move from our sluggish one per cent growth up to two, three or maybe five per cent growth.

In truth, there are lots of things that I value more than economic growth. However, there is only one thing that I can think of that makes all other problems that bit easier to solve. Economic growth gives us the resources to tackle climate change, to feed the hungry, and heal the unwell. The surplus created by a modern economy is the reason that so many of us are now able to dedicate to anything other than survival. Survival is a given – now we can turn our minds to art and science. We’ve seen miraculous progress over the last few hundred years, but we shouldn’t be content when so many people sill go without the luxuries we have come to think of as every-day convenience. For that reason, I say that we should prioritise economic growth.

Cambridge Photo by Chris Boland

Budget It

With the Budget now just nineteen days away, regular readers will know we put out a letter to entrepreneurs making the case for why the Chancellor should extend and enhance the Enterprise Investment Schemes, SEIS and EIS, and Venture Capital Trusts (VCTs).

This isn’t a big ask. After all, at the Autumn Statement last November, Jeremy Hunt confirmed the Government would be expanding the generosity and availability of SEIS, and the government “sees the value of extending” EIS and VCTs. But legislation needs passing and the longer the Government delays the more uncertainty entrepreneurs and the investment community face.

Many of you have already signed the letter, which is why The Telegraph reported on it this week. The article notes the support of some of the UK’s most successful entrepreneurs – like Hiroki Takeuchi of GoCardless, Giles Andrews OBE of Zopa and Chris Hulatt of Octopus – but the letter is for entrepreneurs at every stage of their journey.

We have some heart-warming quotes. For example, Catherine Bedford, the CEO of Dashel Helmets: “My company which manufactures solely in the UK, in areas of economic deprivation, has only managed to raise funding due to the SEIS and EIS schemes. The schemes are crucial to the survival of viable start ups.” I know where I’ll be buying my next cycling helmet from!

There’s still time to sign the letter and tell your story for the press release, which will be released alongside a report from the APPG for Entrepreneurship next week. Join us as a Member, Supporter or Adviser if you would like me to email it to you when it launches.

Union Busting
This dovetails nicely with a debate that my colleague Aria Babu took part in at the Cambridge Union yesterday. As is the way with these things, the motion was purposely provocative: “This House Would Prioritise Economic Growth Over Everything Else”.

While I’m sure we can all think of higher priorities, economic growth is often aligned with these – whether that’s ending poverty or protecting the environment.

We’re true to our policy priorities: “Entrepreneurial endeavours have taken humanity from subsistence to relative affluence and it is entrepreneurs who will raise long-term living standards of future generations.”

You can watch the debate here or read Aria's arguments on our blog.

Upon A Time
In David Cameron’s first ever appearance at Prime Minister’s Questions, he quipped to the then Labour Prime Minister Tony Blair: “He was the future once”. It is therefore ironic that this week Blair, with Cameron’s predecessor William Hague, offered a more coherent vision of our political future than many of our present politicians seem able to.

The Tony Blair Institute’s (TBI) A New National Purpose covers some familiar ground, integrating some of our research – including Way of the Future, our joint report with them.

Chris Haley’s essay on using public procurement more effectively to drive innovation is referenced in relation to the requirement for a significant cultural change towards risk tolerance, as well as greater diversity in “alternative” procurement processes. (Read our Procurement and Innovation report and our Access All Areas: Government report with Enterprise Nation for further reading.)

But the TBI report adds another idea that the government should explore, suggesting government departments “publish and maintain a ‘Request for Startups’ list, like that used by American tech startup-accelerator Y Combinator, to signal to and incentivise innovators to work on relevant product ideas.”

In our Honour for Innovators report, we suggest that new public honours for innovators should be considered. It would be an easy (and cheap) win for the new government. John Petrie OBE, who has helped design national honours and decorations for other countries, even mocked up some potential designs, which you can see in the report.

The TBI report also recommends including the earning potential of graduates in the selection criteria for the High Potential Individual visa, as we did in True Potential. In addition, it calls for the creation of a High Potential Student visa for those studying in strategic science and technology priority areas: “This should count as time towards an individual’s indefinite leave to remain while also being more lenient in terms of working restrictions to enable these students to more easily work for innovative companies or build their own startups.”

This latter point about getting indefinite leave to remain is a critical point that many non-immigrants, including politicians, fail to prioritise. How can we expect people to take on the risk of starting and growing a business with the additional risk of being chucked out of the country? This is something we will be exploring in an event with Lord Bilimoria next month. 

There is a lot more to unpack. If you’re time poor, I would just search the document for “Technical recommendation”, read all forty-three and let me know which you think we should be helping to push.

For my part, I particularly like the idea of creating a new ministerial position to attract expert leaders to run programmes in an executive fashion, similar to how the Vaccine Taskforce was run. Anything that convinces more elite figures, like Kate Bingham DBE, from the UK’s entrepreneurial ecosystem into public service can only be a good thing – or more like an absolutely necessary thing according to Bingham in last year’s Romanes lecture.

What Reliefs?

What do you think of the Enterprise Investment Schemes or Venture Capital Trusts? If you were a Member of Parliament back in 2017, odds are, you wouldn’t have heard of them: 61% weren’t aware of the ​​Seed Enterprise Investment Scheme (SEIS), 54% were clueless about Venture Capital Trusts (VCTs), and 43% didn’t know their Enterprise Investment Scheme (EIS) from their elbow.

I’m not sure what percentage of the current crop of MPs would have heard of the schemes, but we’re acutely aware of how important they are to entrepreneurs.

That’s why we’ll soon put out a paper through the All-Party Parliamentary Group (APPG) for Entrepreneurship on growth investment. To coincide with the launch, we’ll release a public letter highlighting the importance of these tax breaks to founders in the UK, while calling on the Government to pass the necessary legislation to continue and update the SEIS, EIS, and VCT schemes.

You can read the letter and join the hundreds of signatories by clicking here.

Dividend Payments
The economist Jonathan Haskel has calculated the cost of Brexit. The Professor of Economics at Imperial College Business School and external member of the Bank of England’s Monetary Policy Committee has worked out that without Brexit, GDP in 2022 would have been 1.3% higher, which is equivalent to a £29bn shortfall. “There are roughly 28m households in the UK, so that’s equivalent to about £1,000 per household.”

This isn’t an attempt to reopen Brexit wounds. Whatever side you were on, you should be hoping that the Prime Minister is successful in striking a deal on the Northern Ireland Protocol. Yet, reality is biting hard. Perhaps it’s time to put the long-forgotten EEA (‘Norway’) Option back on the table.

Inclusive Innovation Forum
Morgan Stanley, who are our partners on the Inclusive Innovation Forum, have just opened up applications for their Inclusive Ventures Lab. It’s their in-house startup accelerator promoting financial inclusion that provided underrepresented entrepreneurs of tech and tech-enabled startups with much-needed access to capital. Importantly, it comes with £250,000 in cash from Morgan Stanley.

Launched in New York in 2017, and expanded to London in 2021 with participants from all over the world, it has helped raise in excess of $150m additional funding for the 69 companies that have participated.

Find out more here.

Drop the BEIS

This week the Prime Minister disrupted Whitehall, creating four new departments: the Department for Energy Security and Net Zero (DESNZ); a combined Department for Business and Trade (DBT, or DBaT if you prefer); the Department for Science, Innovation and Technology (DSIT); and a “refocused” Department for Culture, Media and Sport (DCMS).

Given where the Conservative Party stands in the polls, some have called it rearranging the deckchairs on the Titanic. But this is unfair. Everyone says they want politicians to look beyond the election cycle – we can’t have it both ways.

Particularly as these changes are long overdue. Other countries around the world have a focused department for energy for the obvious reason that it needs focus. As I previously argued, “tech policy would fit better within BEIS (or whatever they decide to call it next).” And splitting business and trade creates unnecessary silos.

The most exciting announcement is the creation of DSIT. Being at the cutting edge of innovation policy often puts our ideas at odds with the structure of government. Giving science, innovation and technology a space at the top table is – to namecheck our report – the way of the future.

That said, it should be acknowledged that there is no perfect way of splitting up the cross-cutting functions of government. And more and more, technology and innovation has and will upturn every aspect of policymaking – whether that’s the way we work, the way we learn or the way healthcare is delivered. In time, the state will become increasingly dominated by funding and procuring, regulating and banning technological innovations.

Critically, these technologies are much more complex than anything past governments have had to deal with. As things stand, government, regulators and the state at large aren’t up to the task. This isn’t a reflection of the people who work there – many of whom appreciate the challenge – but baked into an increasingly sophisticated set of problems.

To take the most in vogue example, ChatGPT has shaken everyone out of the great stagnation, alerting everyone to what’s possible – both on the upside and downside.

Governments are trying. The creation of the Advanced Research and Invention Agency (ARIA) is a case in point. As Matt Clifford tweets, it’s looking for Programme Directors: “This might be the most exciting R&D job anywhere in the world: ‘imagine your version of the future, then create it’.” Check out this video from Works In Progress for inspiration. I hope some of you apply – and spread the word.

And others outside government are trying to improve the inputs. We’re particularly encouraged by the ambitions of Civic Future. This week they opened up applications for their fellowships to attract more talented people and prepare them for public roles. Once again, I hope some of you apply – and spread the word.

Easy Does It
Governments across the world used to care a lot about the World Bank’s Ease of Doing Business Index. That was until Paul Romer, its former chief economist, revealed that before his tenure the methodology had been manipulated to attract funding and penalise certain countries.

Nevertheless, I think it’s fair to say that the UK wasn’t being unfairly penalised when year in year out we scored low on our ease of registering property – that is the procedures, time, and cost to register commercial real estate. In the background, this is something successive governments have tried to fix.

This week the Ordnance Survey got in touch to share an open call for applications onto its Geovation Accelerator Programme. Startups will get a £20,000 grant (no equity taken) and access to geodata from OS and property data from HM Land Registry. Find out more here.

Got Wise

As regular readers will know, I’m what you might call an "Estonia stan". I’ve visited the country many times to meet their politicians and entrepreneurs, to better understand how they built their self-styled "digital society" out of the horror of communist occupation.

But even I couldn’t object to Aria Babu’s swipe at the Baltic state in the Telegraph this week:

"[Estonia] boasts the highest number of billion-dollar start-ups founded per capita. But while Estonia clearly has enviable levels of entrepreneurship its population is too small and too remote from other tech centres to provide the ecosystem necessary to sustain its start-ups. As a result, many of them move to scale. Looking at the ten Estonian start-ups valued at over a billion dollars, only two of them, Bolt and Veriff, are still based in the country. Skype is now based in Luxembourg, Gelato has moved to Norway, and Playtech to the Isle of Man. Zego and Wise (formerly TransferWise) are now based in London and ID.me, Pipedrive and Glia are in the USA."

Over the years, the UK has benefited from being able to poach capital and talent hungry startups from Europe – including Estonia. After all, when we last looked, half of the fastest growing companies had at least one foreign-born founder. But we’re also on the receiving end of this process – particularly with the lure of Silicon Valley’s cash, talent and ethos (or even New York’s). And we’re not just losing out to America. Since Brexit, European funding bodies are still giving money to UK companies, but asking that they move operations to an EU country to continue their growth. As Aria’s article makes clear, we need to make greater efforts to hold onto our startups: 

"Of particular concern to some of our nation’s most innovative entrepreneurs are planned cuts to the generosity of R&D tax credits. These incentivise investment in developing new goods and services, and have been integral to fostering cutting-edge innovation. Scheduled to take effect this April, research from Coadec suggests the reform will cost the average start-up £100,000. Combine this with rising corporation tax, general Government hostility to tech companies, and the poor outlook for domestic investment, and it isn’t surprising that companies are leaving."

Along these lines, Ayming’s UK Innovation Barometer 2023 recently found that 69% of businesses moved R&D activity abroad in 2022 and 70% are planning to move activity abroad in 2023. At least 63% of businesses have moved activity to EU countries, primarily due to our exclusion from Horizon Europe, the EU’s key funding programme for research and innovation, and HMRC’s R&D tax delays. We estimated that the delays to processing claims were costing UK startups and small businesses at least £132m.

All is not lost. The UK is undoubtedly the best place in Europe to scale your business. But there could come a point when it’s not. As the Silicon Valley exodus shows, resting on our laurels is not an option.

Visa Vacillation
It’s sad to see Tech Nation close. The formidable founding CEO Gerard Grech has shared his views on Twitter and LinkedIn.

But as Elli Graves from Kingsley Napley writes, it’s not clear what Tech Nation’s closure means for the Global Talent visa: "the removal of Tech Nation’s funding has been planned for some time now, it feels extremely short sighted that the Home Office have allowed us to reach this stage without even the vaguest of plans for the continuity of the visa programme or a successor to Tech Nation being announced."

I wasn’t joking when I wrote last year that we should consider abolishing the Home Office.

Pay Up
In response to the recently announced Prompt Payment and Cash Flow Review, our friends at Enterprise Nation are running a series of roundtables. 

In the extreme case, late payments can cause businesses to fail, but they also have a negative impact on employment, exports, international expansion, investment, profitability, access to finance, borrowing costs, and much else besides.

Sign up below to feed into the response, and have your say on what needs to change to ensure smaller companies are paid faster.