Whose tagline is it anyway?

For over a decade, our tagline has been “to make Britain the best place in the world to start and grow a business.” We’re not alone. In their manifestos released this week, both the Conservatives and Labour claim verbatim to want the same thing. And yet, in truth, none offer enough in themselves to really deliver on that. You can read them for yourself: Labour, Conservative, Liberal Democrats, Green.

Maybe we should be thankful that none of the mainstream manifestos are too radical though. As the excellent Dan Neidle shows, there is plenty to criticise, but ultimately most – though by no means all – of the promises are reasonable. No party was going to commit to more than they felt was necessary – they will want some room for manoeuvre. After all, a lot of what is announced doesn’t actually make it through to law anyway.

Just ahead of the last election, we hosted a roundtable on the topic of immigration with a crossbench peer. Based on the discussion, I asked him who should get the ‘entrepreneurs’ vote’. He gave the very reasonable reply that people shouldn’t just vote based on immigration; nor should they just vote based on what is best for their business. There are other considerations such as education, health and crime.

Fixing these are just as important. They’ll shape the extent to which people want to live, work and raise a family in the UK. Get them right and we can ensure that the country becomes a more attractive place to remain, as well as to attract others from around the world who would like to live the ‘British dream’. 

On this point, most politicians are currently missing a trick. Whether they like it or not, entrepreneurs are essential to delivering on nearly every area of policy: ed-tech entrepreneurs will deliver personalised learning, freeing up teachers’ time to mentor the next generation; health-tech entrepreneurs will increasingly create personalised medicine so that we can all live longer and healthier lives; and crime-tech entrepreneurs will ensure that the crime can be better predicted and combatted.

It’s not just about innovation though. More broadly, business owners of all sectors and sizes are the backbone of their communities. Their success reflects on all of us.

This is what’s missing from all manifestos. Yes, let’s make the UK the best place in the world to start and grow a business – but to what end? 

We can tell you. Making Britain the best place to start and grow a business is really about making the UK the best place in the world to live. That’s what entrepreneurs can deliver. If only we would let them.

AI Impact
Now for a bit of policy. We recently hosted an event at the House of Lords in collaboration with MDRx, a technology consultancy, on what a future Labour government’s potential approach to artificial intelligence (AI) might look like, and what its implications for productivity in both the private and public sectors could be. Attendees included top entrepreneurs innovating in AI, venture capital investors and policy experts.

In a blog post, our Derin Kocer says that “one of the key takeaways from the event was that neither Labour nor the Conservatives have a clear and coherent agenda on AI yet. This is largely because AI is a novel technology with still-unclear potential. However, overall, AI is an opportunity to enhance public services without significant increases in spending – an opportunity yet to be harnessed.”

Here’s MDRx’s write-up of the event.

Them’s The Breakthroughs

This week we were treated/subjected (delete as you see fit) to the first televised debate of the general election campaign. Prime Minister Rishi Sunak faced off against Leader of the Opposition Sir Keir Starmer, the man who all the polls suggest will be waltzing into Number 10 in exactly a month’s time. 

Not unsurprisingly, economic policy featured as a key battleground issue between the two men. Sunak repeatedly attacked his opposite number on taxation – claiming a vote for Labour was a vote to increase every family’s taxes by £2,000. Starmer hit back with an even bigger number, saying that the Conservatives have pledged to make £71 billion of unfunded tax cuts by abolishing National Insurance Contributions and Inheritance Tax. 

The veracity of both allegations quickly came in for scrutiny. The Prime Minister got a ticking off from James Bowler, the Treasury Permanent Secretary, who requested that the £2,000 figure should not be presented as civil service analysis. Starmer’s costings, meanwhile, rely on some pretty unlikely assumptions – such as NICs being junked from day one. Truly, there really is nothing inevitable in life apart from death and taxes (and dubious claims about them).

What is not up for debate, however, is that if the state is to pay its way without increasing the tax burden, meaningful economic growth is utterly indispensable. Even fractions of a percent can make a world of difference. Official forecasts currently estimate medium-term growth of 1.8%, but as noted in this week’s Economist, most analysts expect a figure closer to 1.5%. If the gloomier outlook proves correct, a £30 billion gap is left in the public finances. (What’s more, if we stick to the post-2008 growth trend of just 1.1%, that gap becomes a gaping £60 billion chasm.) 

Clearly, whoever comes to power will need an ironclad plan to get the economy whirring again. As luck would have it, just yesterday we published our latest report, which includes more than a few ideas on how to do just that. 

The culmination of months of research, roundtables and digesting Call for Evidence responses, Backing Breakthrough Businesses looks at a particular segment of Britain’s business community – namely those businesses which have scaled to mid-size, and are now at a crossroads in their growth journey. They could either plateau, satisfied with what they’ve managed to achieve so far. Founders could sell up, and move onto something new. Or they could double-down, and have a crack at breaking through and becoming genuinely large in size, and a significant part of the domestic – and possibly international – economy.

It’s not for us to tell entrepreneurs what to do, but a lot do tell us that they often feel Britain doesn’t do enough to incentivise founders who want to choose the latter of those three options. Certainly, that’s the opinion of Steve Rigby, Chair and supporting partner of the Private Business Commission, which we set up specifically to oversee this research. As he writes in his foreword to the report, Breakthrough Businesses “have the potential to become structurally important in their region or industry. By focusing on removing barriers to business growth, we can support this critical but frequently overlooked cohort and help the UK regain its standing on the world stage.”

Our policy proposals focus on four distinct areas – access to funding, the state of our capital markets, tax incentives and employee ownership schemes. I won’t trot through all the recommendations, but to whet your appetites, here’s a couple we see as being particularly important. 

First up, whoever forms the next government should commit to increasing the independence of the British Business Bank. You might have seen this covered by The Times, with Sam Smith, finnCap founder and one of our Commissioners, saying: “Everything becomes more difficult, and you’re less able to really drill down into what private companies actually need, when it’s government owned,” and: “There is a nervousness around whether [capital] is going to the right places, and backing the right things.”

Second, the investment limits for the Enterprise Investment Scheme (EIS) and its seed-stage equivalent SEIS should be increased. On this point, Chris Hulatt, co-founder of Octopus Group and another Commissioner, notes: “Even if you simply adjusted the limits to reflect inflation, you could get to a higher figure and remove this cliff edge that businesses can face.” He goes on to say that fixing this would improve the environment for follow-on funding, which he argues is one of the reasons why many businesses fail to reach their potential in Britain, and feel they have to sell out to overseas investors where capital pools are larger.

You’ll have to read the report in full for the other recommendations, but suffice to say, we’d love to hear what you make of them. And to everyone who engaged with us on it along the way – thank you.

Red Letter Day?

This week we saw 120 business owners give their backing to the Labour Party. Among the signatories are some impressive names. But as Brent Hoberman pointed out, they weren’t all high profile figures, who understandably would want to see what’s in the manifestos before "blindly going with the flow". 

I would go a step further. Entrepreneurs would be better off not publicly backing political parties at all – but instead focus on backing or attacking particular policies. There is an important difference.

Putting aside the not insubstantial risk of alienating employees by backing a political party, business leaders would also be taken more seriously if they focused on the particulars of manifesto commitments. For example, a prominent retailer could explicitly back the policies of a party that had a coherent plan to regenerate highstreets or cut crime. Importantly, they have expertise in this area, and doing so would give critical information to the wider public about which party is best placed to solve a particular problem. It would also be helpful if they pointed out where the policy gaps were and caution about why similar plans might have failed in the past.

This cuts across many policy areas. The country can learn from entrepreneurs in the construction sector about which policies are most likely to ‘get Britain building’. We should hear from hospitality entrepreneurs about who has the best plan for dealing with their ongoing challenges around labour shortages. And tech entrepreneurs are well placed to tell the country which – if any – manifestos address their need for capital and top talent. 

While manifestos have got longer and more detailed over the years – check out the 1900 manifestos from the Liberal Party, Conservative Party and Labour Party for a window into a different age – when this year’s come out, they won’t include every area of policy relevant to every business or industry. Where there are omissions, there are future opportunities to influence the incoming Government. Famously, what’s not said during an election campaign matters more in government than what is. That’s why business groups and think tanks work throughout the length of a parliament, not just the relative sprint of an election campaign.

If you can’t wait for the manifestos, check out this policy tracker that our friends at Public First have created.

The Future Once
Entrepreneurs and the wider ecosystem aren’t just in it for themselves. I’ve been overwhelmed by the number of entrepreneurs who want to ensure the next generation are given entrepreneurial experiences and skills – both in the education system and more broadly – to prepare them for the future.

After all, you can't be, what you can't see.  As reported in The Times this week – quoting data from our recent report with American Express – 71% of current business owners say they knew a friend or family member who owned a business while growing up, compared to less than half of the general public.

To that end, with Youth Business International (YBI) we’ll soon release a pithy briefing paper on what we think the next Government should do to empower the next generation. But this is just going to be the beginning. We have ambitious plans on how we can effect policy and practical change for the next and future generations. 

This isn’t something that will be solved over the course of an election cycle, nor is it something that is just about policy change. Charities and the private sector are already doing incredible work here and will be vital for much of the delivery.

Join us in the House of Commons to find out more (yes, we can still hold this in the House of Commons even though Parliament is prorogued).

All About It
Next week we’ll release the first report of the Private Business Commission. We can send you a copy fresh off the press (or when the embargo is released), but we only send these out to those who have signed up. Joining us also helps us know what you’re interested in. Becoming a member is free, but we won’t complain if you sign up to support us while you’re there.

King’s Ransom
The Department for Business and Trade has asked us to promote the King’s Awards for Enterprise. Categories include innovation, international trade, sustainable development, and promoting opportunity through social mobility. Among other things, winners get invited to a Royal reception and are able to fly The King’s Awards flag at your main office, and use the emblem on marketing materials (for example, on your packaging, advertisements, stationery and website). Find out more.

Voting Blocks

If proof were needed that a week can be a long time in politics – this was it. On Thursday, Parliament will be dissolved and then we’ll jump headfirst into the carnage of a General Election.

I don’t have any unique insights on the politics of the decision to call an election now. Nor will we be recommending which way you should vote on 4th July. But I would like to reiterate what I think should come next and state something we can all do to make politics a bit better.

It’s trite to write, but whoever wins needs to harness the power of entrepreneurs to innovate, create jobs and grow the economy. Luckily for whoever wins, our recent publication Building Blocks sets out how to do just that.

First, and arguably foremost, an incoming Government must address under-agglomeration, namely the housing and infrastructure crisis in our big cities. Agglomeration is the basis of all productive economies, and will only become more important in a world increasingly characterised by intangible capital. But a wealth of evidence shows that Britain falls short of its potential, with political incentives making it harder to build entrepreneurial hubs, connect them with one another, and allow them to grow.

In fact, if you’re equally passionate about ‘getting Britain building’ then request a place for this private dinner we are co-hosting with Britain Remade on Thursday. Their policies have been backed by politicians across the political spectrum and they will continue to have influence whoever wins.

Building Blocks also calls for the next Government to rationalise the tax system, get innovative around innovation funding, and double down on attracting and training top talent.

Getting all this right will create the wealth to upgrade our public services, but it goes deeper than that. Our public services themselves could be revolutionised by entrepreneurs and innovators. Whether genomic medicine and diagnostics for healthcare; AI-driven personalised learning for education; or autonomous vehicles for travel – we could see huge changes to the way we live over the course of a Parliament. Or we might not. A lot comes down to politics.

This brings me to what I think you could do about it. It’s easy to be cynical about politics, but this doesn’t get us anywhere. Whether you have a party affiliation or not, you can make a difference by seeking out candidates and supporting them. This support doesn’t need to be financial or involve knocking on doors (though it could). It might just be a matter of acknowledging publicly when they are doing admirable things.

We all know that many very good people are being put off going into politics because of the toxic environment of being a politician. We all have a role to play in making that environment more conducive to good policymaking.

You will be able to find the names of your Prospective Parliamentary Candidates here. And while I don’t expect you to read Hansard, you can subscribe to our All-Party Parliamentary Party Group for Entrepreneurship digest, where we update you from the Commons and the Lords on speeches relevant to entrepreneurs.

Your involvement in politics need not be confined to voting. By getting involved in our work you can have an influence. We regularly host events with MPs and Peers where you can be heard. But we are not alone – there are plenty of other think tanks you can get involved with. Sign up for their newsletters too and you’ll be invited to events like the ones we put on (although I can’t guarantee they will all be as good as ours).

If you Build it
Another way you can get more involved is by becoming an Adviser. We are busy growing our base of supporters and this week Raphael Dennett has joined us. He is a Senior Lecturer in Entrepreneurship and Innovation at the University of Exeter and Deputy Director of the Centre for Entrepreneurship there. 

His areas of expertise are focused on regenerative and sustainable entrepreneurship, intrapreneurship and the application of entrepreneurship education to inspire a new generation of entrepreneurial and innovative graduates. The Entrepreneurship and Innovation Programmes that Raphael delivers at Exeter now have thousands of students per year with graduates delivering impact in every sector imaginable. 

Find out about becoming an Adviser here.

Lilac Review
The Lilac Review was launched earlier this year to understand the key changes required to make the world of entrepreneurship more equitable to disabled entrepreneurs. I sit on the steering board and am delighted to share that its interim report has been published. Let me know if you have any feedback. I'll be writing more about it in due course.

Hit For Six

This week Keir Starmer set out the ‘six steps’ Labour would take if it wins the next general election. They’re understandably focused on things like cutting NHS waiting lists and recruiting more police officers and teachers, but the fallout has been all about how we would pay for those promises.

Jeremy Hunt hit back, releasing a dossier claiming Labour had a £38bn black hole in its costings and would have to increase taxes as a result. He then hinted at another cut to National Insurance before the next election. Labour then returned fire, claiming that the Conservatives had their own £46bn unfunded tax plan in their promise to scrap National Insurance altogether.

We don’t have a horse in this race, but I mention it to remind our intelligent readers (who are no doubt already aware) that when it comes to elections, it really is the economy, stupid.

A few years ago, Sam Bowman and Stian Westlake made the case in Reviving Economic Thinking on the Right that the Conservative Party needed to refocus its efforts on economic growth. The lessons of that excellent paper are as relevant today as when they wrote it, and their policy prescriptions as applicable to people of all political persuasions.

As they stated (and the current polls attest): “Slow productivity growth is not just economically toxic but politically toxic too: it leads to a sense of malaise and that the system is not working for ordinary people. Conversely, strong productivity growth cures all sorts of problems. Faster productivity growth would lead to higher wages, better returns for savers and pensioners, lower taxes, and lower deficits with higher public investment. And, perhaps, more confidence in the liberal economic model.”

In many ways, running a country is very different to running a business. However, the best politicians are similar to the best entrepreneurs in their ability to focus on what really matters. Whoever wins the next election will be pulled in many directions – many superficially worthwhile. But nothing is more important than raising productivity, as without this there will be no money for spending pledges or tax cuts.

In our own report Building Blocks we took a step back to share what we think is needed: addressing under-agglomeration, alleviating fiscal headaches, accelerating innovation and acquiring new skills. On Tuesday 4 June we’ll get back into the weeds, launching the first report of the Private Business Commission. But, once again, it’s all about raising productivity.

Of course, no political party would say they’re against increasing productivity. But to actually deliver, the next government must ruthlessly pursue it from day one. Both for our benefit, of course; but also so the fruits of their labour are realised by the time of the next election. 

All Aboard
This week we held the AGM for the All-Party Parliamentary Group (APPG) for Entrepreneurship, which we are the Secretariat of. Seema Malhotra MP was re-elected as Chair; and Lord Bilimoria, Lord Leigh of Hurley and Jo Gideon MP were re-elected as Vice-Chairs. We also have a growing list of Members too long to mention.

Seema, who is the shadow skills minister, was also interviewed in FE Week this week. It’s worth reading in full, but I want to just focus on a policy mentioned in the article: “Training providers are desperate to understand the nuts-and-bolts of Labour’s biggest and most controversial skills policy: replacing the apprenticeship levy with a growth and skills levy that businesses could spend on non-apprenticeship training.”

I don’t think this is controversial at all.

As we wrote with Enterprise Nation in Access All Areas: People: “Apprenticeships in all age groups have fallen considerably despite the Apprenticeship Levy. To increase uptake, the government should widen the scope to include other forms of accredited training. Consequently, as suggested by others – including the British Retail Consortium, CIPD, and the Learning and Work Institute – the Levy should be reformed into a broader Skills Levy and better focused on younger people.”

Metro Elite
In case you missed it, Eamonn Ives, our Head of Research, wrote a cracking May Digest for the All-Party Parliamentary Group (APPG) for Entrepreneurship, setting out why localism matters.

Eamonn thinks there are strong grounds to believe metro mayors can have a meaningful economic impact: “the OECD suggests that cities with fragmented governance structures have productivity levels that are up to 6% lower than those that do not, while polling data from the think tank Centre for Cities shows that people living under a metro mayor support further powers being devolved down from central government.”

Winds of Change

Perhaps it’s just the change of weather, but let’s talk up Britain. After all, this week a British company secured Europe’s largest ever AI funding deal, with Wayve raising $1 billion. This is great news for the UK, but it’s also another nod to the potential of the AI revolution.

This is clearly a big bet on driverless cars, which Matt Yglesias thinks are underhyped, but more broadly it’s a bet on other robots, so-called ‘embodied AI’, which Wayve will help drive. Robot workers, humanoids, robotics animals and bio-inspired robots are already here and will become increasingly commonplace, but it may turn out that speculative forms like swarm, soft, nano, modular or biohybrid robots are more useful.

All of this is going to have a profound impact on every aspect of our lives. The potential upsides are genuinely mind blowing – as are some of the risks, which can’t be ignored. (This article by Benedict Evans on ways to think about AGI does a good job of articulating how hard it is to weigh up the risks and benefits.) 

Whoever wins the next election is going to face completely new policy challenges. We’re not affiliated to any political party; nor are we pollsters. Nevertheless, the polls still suggest Labour are going to win (our survey with Mishcon de Reya showed that the Party was most trusted among entrepreneurs too), which is why we’re hosting a roundtable with MDRx and led by Benedict Macon-Cooney of the Tony Blair Institute, who we’ve worked with on a number of reports.

Be Our Guest
Your country needs you. More specifically, we need you. 

First, come to our meetup with Growth Hub Global and LSE IDEAS on 21 May 6.30pm to 8.30pm at the London School of Economics. You don’t need to be an entrepreneur; you just need to be supportive of our aims of making the UK the best place to start and grow a business (request a place here). We’ll be hosting a similar meetup on 27 June at mccglc (request a place here). Advisers and Supporters get priority but there should be space for more, so feel free to share it with colleagues, friends and anyone who you think will be interested.

For any entrepreneurs who have views on the UK’s planning system we’re hosting two events with Britain Remade. First, in Quo Vadis on 30 May from 6.30pm to 9.30pm (request a place here), then at The Brasserie on 19 June from 6.30pm to 9.30pm (request a place here). One of Labour’s five missions is to ‘get Britain building again’. Britain Remade is setting the agenda on this topic, so you will be in the room with the people who matter. If you or your business would benefit from building more, this is your chance to change Britain.

There are lots more events on our website. We’re also planning events around the country through our Female Founders Forum, but we’re keen to do a lot more. Any partners who are keen to host us for these events should get in touch.

Culture Shock
Gordon Hurst, the chairman of Darktrace, the cyber security company that recently sold to US private equity, thinks: “the UK has a culture problem with business. It is just not talked about positively enough. I don’t think it is given the support and the accolades it should be given.”

We also think culture matters. And while acknowledging that politicians don’t have all the levers to change culture – it has a few. That’s why we think the Crown should give more honours to innovators and why the state should back (but not necessarily pay for) a new Great Exhibition. 

Formal and wider education is another lever. To that end, we’re partnering with YBI (Youth Business International) on a short paper setting out what we think is needed on this front from whoever wins the next election. Get in touch if you would like to get involved in this project.

Kein Vorsprung Ohne Technik

This week John Barstow of the Union of Shop, Dis­tributive and Allied Work­ers wrote to the Financial Times calling for the restriction of Sunday trad­ing online, and not just for bricks and mor­tar. Barstow was responding to another FT letter by Daniel Lidón, who argued that Sunday trading bans have no place at all in Germany’s secular society, which in turn was a response to an FT report where it was revealed that Germany had banned retail robots from working on Sunday. (Yes, you read that correctly.)

Barstow’s letter claims that banning Sunday trading – including online – makes commercial and entrepreneurial sense: “More goods would be bought before Sunday clos­ure and thus feed into pro­ductiv­ity. Ger­many has the repu­ta­tion of being a highly pro­duct­ive eco­nomy — and their respect for Sundays through retail clos­ure could be deemed a factor in that.” 

I don’t even know where to start with this. Back on planet earth, while banning Sunday trading would no doubt see some spending shift to other days, we would expect to see less spending overall due to the added inconvenience, leading to less economic efficiency and certainly less consumer satisfaction.

The suggestion that Sunday closure is somehow connected to Germany’s overall productivity is beyond parody. Forget its historically strong industrial base, its dual education system, its labour relations, and dozens of other orthodox reasons. Nope. Barstow claims it’s because shops are closed on Sunday.

And the idea that this should be extended to e-commerce leaves me speechless.

Defend Sunday closing in Germany – and the many restrictions that still exist in the UK –  for religious, conservative and paternalistic reasons if that’s what you believe. But you need to account for the fact that these restrictions aren’t good for the economy, and most certainly not for productivity – quite the opposite.

Planning Eh!
Building in the UK is prohibitively expensive, mostly due to the wall of bureaucracy that policymakers have, instead, managed to construct. We know these regulations are unnecessarily complex because our good friends at Britain Remade compared them with other developed economies like France, Germany and Japan. Check out Ben Hopkinson giving damning evidence to the House of Commons Transport Select Committee this week.

For our part, we’ve argued for a long time that shortages of housing, office space and infrastructure are holding back Britain’s entrepreneurs. It was a major block in our recent Building Blocks report.

But policymakers don’t just want numbers. They want to hear from people at the coalface: the businesses. That’s why we’re hosting a couple of events with Britain Remade. The first will be a dinner at Quo Vadis on 30th May. If you’re a business that has had challenges with the planning system, request a place. If you can’t make this one but would like to attend another, do let us know. Britain Remade works around the country, so get in touch no matter where you are.

Spin Doctorates
Beauhurst and the Royal Academy of Engineering have just released their Spotlight on Spinouts 2024. It reveals that the stake taken by a university during spinout formation increased from 19.1% in 2022 to 22.2% last year. 

We think this is a big problem. So much so that we investigated it in our paper Academic to Entrepreneur, making the case for academics, rather than universities, to have ownership of the intellectual property they create.

The Government also knows there’s a problem. That’s why they launched a spinouts review. But although it made encouraging noises, the final report lacked teeth. The recent rise in university stakes, despite the report calling for more standardised agreements with lower ones, means it’s already showing its gums. I increasingly think the best model for understanding the actions of universities is to see them as long-established businesses in a highly regulated industry, rather than learning institutions devoted to the public good. Nothing is going to change unless change is forced upon them. 

Take Your Advice
A few new Advisers have joined us. From the law firm Fragomen, we have Partner Louise Haycock and Shuyeb Muquit who is a barrister and UK Government Affairs Strategy Lead. We’re going to be undertaking an exciting piece of research with Fragomen on immigration policy.

Dr Eren Kocyigit, Founder of NBT (Next Big Thing) has also joined as an Adviser. Eren supports us because: “The Entrepreneurs Network provides crucial support to entrepreneurs and also plays a vital role as a bridge between politicians and the business community. This function is particularly critical, considering that entrepreneurs are the lifeblood of the UK economy. By supporting startups, The Entrepreneurs Network not only sustains current employment but also seeds the creation of future job opportunities. Thus, my support for their work stems from a profound appreciation for their ongoing contribution to economic growth and innovation in the UK.”

If you’re considering getting more involved in our work join us in the evening for a drinks event at the London School of Economics on 21st May.

Deep Impact

It’s understandable that regulation isn’t a fit topic for dinner parties, but there is no excuse for the lack of scrutiny it gets from politicians and policymakers. Perhaps it’s because the costs are so widely distributed and often unseen. To quote, ahem, Wikipedia, “concentrated minor interests will be overrepresented and diffuse majority interests trumped, due to a free-rider problem that is stronger when a group becomes larger.”

A new report from the Centre for Policy Studies makes the case for why we need to tackle this. As Robert Colvile writes in an article summarising the report:

“Think of the biggest obstacles to growth this country faces. Why can’t we build houses in sufficient numbers? Why does it take so much time and money to build new power plants, roads or railways? Why is so much of the money from our pension funds locked up in bonds, rather than being reinvested into the productive economy? All of these issues matter far more for our national future than whether we take a few pence off a given tax, or pour a few more million down the maw of the NHS.”

The report chastises Regulatory Impact Assessments as insufficient, and calls for: a beefed-up Regulatory Audit Office; a senior minister who can challenge and veto new regulations; a full audit of the regulations that are already in place; a system of regulatory monitoring that covers every measure introduced; and full reviews after a set period to see whether they are working properly.

Also, following the former head of the Office of Fair Trading John Fingleton CBE, the report suggests bringing existing regulatory sandboxes together into an economy-wide innovation agency and exploring the idea of replacing sector-specific regulators with a new generation of regulators focused on core, economy-wide objectives.

In their contribution to our Operation Innovation essay collection, John and David Stallibrass – now Deputy Chief Economist at the FCA – set out how regulators need to be ‘innovative by design’. One thing I would emphasise is their call to reduce the number of objectives we give our regulators. It cites the example of Ofcom, whose objectives have ballooned from two primary and six secondary objectives in 1984 to two principle objectives, ten other duties, and six principles of community obligation, many of which are in tension with each other and require delicate discretionary balancing.

It’s not about rhetoric and gimmicks like bonfires of red tape and red tape challenges. And it’s not about shouting into the void that all regulations are bad – good regulation can create certainty and markets. It’s is about getting the apparatus of the state right, reducing rent-seeking and ensuring incentives point in the direction of innovation and competition.

Founders’ Fuel
Adviser to the network Christina Richardson is looking for founders to contribute to the largest study yet on founder resilience. This research, led by Imperial College London and weare3Sixty, aims to influence policy and inform how our whole startup ecosystem can better support and fuel founders to achieve sustainable growth​. 

We will be convening a roundtable on the topic with Christina as we think there are going to be policy implications to her findings. So once you’ve responded, drop me an email so I can make sure you are invited. It took me about 10 minutes to fill in, but it was worth it. The questions are also great for taking stock of your life as an entrepreneur. Fill in the survey here.

Class Act
In August, our friends at Works in Progress are hosting a week-long residential seminar in Cambridge for people aged 18-22 years old. Classes will be led by our Head of Innovation Research, Dr Anton Howes, as well as Saloni Dattani and Stuart Ritchie. Topics covered will include: how the world got rich; what is going wrong with science today; and how to design public policies so they have a chance of being implemented. Find out more here.

Essential Toil
The Department for Business and Trade has launched the new Help to Grow: Management Essentials course, a short online course with practical tips and resources for small business leaders. The course is developed by experts from accredited business schools. We’ve argued in the past that there needs to be a more flexible option for Help to Grow, so this is good to see. Find out more here.

Your Call

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

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

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

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

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

Engineering Biology

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

Further Thoughts

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

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

Be Our Host

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

Take AIM

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

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

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

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

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

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

Message from this Week's Partner

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

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

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

You can read the full report here.

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

Britain's Lost Talent

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

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

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

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

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

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

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

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

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

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

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

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

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

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Open Letter to the Home Secretary

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

Dear Home Secretary, 

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

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

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

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

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

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

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

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

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

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

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

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

The Entrepreneurs Network

Startup Coalition

Britain's Superpower

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

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

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

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

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

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

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

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

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

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

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

Back to Basics

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

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

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

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

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

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

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

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

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

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

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

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

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

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TEN More Years

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

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

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

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

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

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

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

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

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

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

A Degree of Uncertainty

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

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

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

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

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

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

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

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

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

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

Two Pennies' Worth

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

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

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

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

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

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

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

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

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

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

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

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

Take Back Control

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

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

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

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

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

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

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

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

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

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

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

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

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Need for Speed

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

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

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

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

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

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

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

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

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

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

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

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

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What Would a Labour Government Mean for Entrepreneurs?

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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