Better Together: The Procompetitive Effects of Mergers in Tech

As part of its efforts to promote competition within digital markets, the government is considering major changes to the UK’s merger control regime. As currently proposed, the changes would make it significantly harder for digital platforms deemed to have strategic market status, to acquire British startups.

In Better Together, authors Sam Bowman and Sam Dumitriu explain how mergers in tech can enhance competition and why proposals to lower the burden of proof used by the CMA to block mergers involving digital firms with strategic market status risk harming the UK’s startup ecosystem.

The Way of the Future: Supercharging UK Science and Innovation

Innovation has the potential to transform almost every aspect of our lives for the better, from the healthcare we receive and the food we eat, to the way we travel and how we interact with public services. At the same time, many economists believe we have experienced a great stagnation – with growth in total factor productivity stalling.

A new joint essay collection from The Entrepreneurs Network and The Tony Blair Institute sets out 10 radical science and innovation policy ideas to meet the ambition of making the UK a science superpower.

Knocking Down Barriers: Empowering business builders in the UK’s most deprived communities

New business creation will play a vital role in the post-pandemic economic recovery and the wider levelling up agenda. It also represents a powerful opportunity to strengthen and support people in some of Britain’s most deprived communities and increase their earnings through more fulfilling work.

In Knocking Down Barriers, we surveyed people in some of Newcastle and London’s most deprived areas. While we found no shortage of entrepreneurial potential, we did identify financial and confidence barriers to success – and recommend the government focuses its attention on helping people to overcome these.

Honours for Innovators

Raising invention’s status and prestige was crucial to how Britain first got its reputation during the Industrial Revolution as the best place to innovate. Invention came to be seen as a viable and attractive career path, not just financially but in terms of the social standing that could result from it – something that was purposefully cultivated by those seeking to improve the country’s technological prospects.

In Honours for Innovators, authored by Anton Howes and Ned Donovan, the case is made for establishing a new order of chivalry, specifically designed to encourage invention and raise the status of being an innovator in the eyes of the public. The paper sets out the details of how the order might be organised, how its recipients might be chosen, and the costs of setting up and running the order.

Conflicting Missions: The risks of the digital markets unit to competition and innovation

At the end of 2020, the UK government announced plans to create a Digital Markets Unit (DMU) charged with implementing an ex ante regulatory regime for certain digital platforms. This paper evaluates the challenges that the DMU will face, and argues that without a clear vision for what success looks like and how to manage the trade-offs involved, the DMU could easily become a hindrance to competition and innovation, instead of a positive force. 

The authors – Sam Bowman, Sam Dumitriu and Aria Babu – provide a series of recommendations throughout Conflicting Missions to mitigate potential risks posed by the creation of the DMU, to ensure Britain can remain as competitive, innovative, and entrepreneurial as possible.

Making the UK the best place in the world for AI innovation

The UK is a world leader in AI innovation, and is home to top universities and cutting edge businesses. But there’s no room for complacency, and without further pro-innovation policies, we will miss out on the AI opportunity.

In our new report, former Office for AI Adviser Séb Krier sets out how the UK can do this – recommending, among other things, that the government opens up public datasets, permitting for-profit data and text mining, and working closely with the EU to improve GDPR.  

Fixing Copyright

Unlike other intellectual property rights, copyrighted works enjoy extraordinary privileges, and the advent of recent technological changes is now making it significantly easier for rightsholders to identify infringers and threaten them with prosecution. 

In Fixing Copyright, Anton Howes explains how the current copyright regime could have a chilling effect on the encouragement of creative work, and entrepreneurship more generally. He makes a series of recommendations which would strike a better balance between protecting individuals’ work while ensuring that creative freedoms prevail.

Green Entrepreneurship

Environmental sustainability has shot up the political agenda in recent years. Consumers are increasingly demanding greener alternatives, and innovative companies are developing them.

In Green Entrepreneurship, Eamonn Ives examines how entrepreneurs are helping to deliver not only a more sustainable tomorrow, but also economic growth, exports, and jobs. Throughout the report, he provides a number of policy recommendations which the government could adopt to accelerate the green transition and reap the opportunities it offers.

Resilience and Recovery

COVID-19 has posed significant challenges to most companies, but our new analysis of data from Beauhurst indicates that female-led, high-growth companies have been disproportionately impacted throughout the pandemic. However, despite this impact, more than 60% of female-founded, equity-backed businesses are now operating with minimal disruption to their business, showing that female-led businesses are fighting back.

Resilience and Recovery, a new report from The Entrepreneurs Network produced in partnership with Barclays, combines discussions with female founders and original data analysis, to identify the reasons why female entrepreneurs have been disproportionately impacted by the COVID-19 pandemic.

The Case for Remote Work

In the midst of the COVID-19 pandemic, the case for short-term remote work is obvious. But the case for long-term remote work is also much stronger than is typically thought. Remote work allows firms to hire from outside their local labour market, which may mean they can employ more productive workers, and the benefits of workers clustering together have shrunk or disappeared entirely. 

The Case for Remote Work, written by Matt Clancy, assesses the evidence base around remote working, before suggesting a handful of policies which governments could implement to capture the benefits posed by a greater shift to remote working.

Educating Future Founders

Entrepreneurship education has traditionally taken place at universities, but there is strong evidence that earlier interventions can develop non-cognitive skills that are key to entrepreneurial success, such as creativity, persistence, and communication.

In Educating Future Founders, we recommend that governments invest in randomised control trials to gather evidence on interventions to boost entrepreneurship, and use the results to promote entrepreneurship education at a secondary level.

Upgrade

Digital technology has enabled businesses to continue trading in the most difficult of circumstances. As the UK economy recovers and reopens, increasing the rate of digital adoption by SMEs will be vital.

Although Britain is a world-leader in innovation, too often best practices are not spreading to all SMEs. In Upgrade, we argue that poor take-up of digital technologies by small businesses is a central element in our pre-COVID productivity crisis, and that increasing uptake will be vital to the economic recovery. We also quantify the £16.6bn cost to the UK economy of this digital gap and show what closing that gap would mean in terms of increased productivity.

Unlocking Growth

Access to capital is vital for most businesses to realise their growth ambitions. Yet navigating the array of funding options can be challenging. Polling suggests almost one in 10 entrepreneurs are discouraged from seeking external finance, even though their businesses have real funding needs.

In Unlocking Growth, we evaluate the funding options open for SMEs and propose key reforms to boost access to capital – from simplifying Research & Development Tax Credits, to experimenting with lottery-style funding to channel more grant-funding to start-ups, to liberalising rules around investments from defined-contribution pensions by reforming the fee cap.

Cashing Out

New technologies mean it has never been easier to avoid having to use cash, and the transition to a ‘cashless economy’ presents interesting opportunities – for individuals, businesses and the government. But parts of the press have decried the thought of cash vanishing from daily life, and in certain places around the world, attempts to slow the move away from cash are gaining traction. 

In Cashing Out, Fred de Fossard looks at the rise of cashless commerce, argues that politicians should embrace the phenomenon, and recommends efforts to enable going cashless would be a better way to allay any existing fears around a cashless economy. 

The Startup Manifesto

Startups are a key source of dynamism in the economy – bringing new goods and services to market, while experimenting with innovative business models. Ensuring the conditions are right for entrepreneurs to start new companies, and scale them once they have, is therefore critical.

In collaboration with The Coalition for a Digital Economy (Coadec), we have produced a manifesto to help create those conditions. The Startup Manifesto proposes 21 specific policies across three key areas: access to talent, access to investment, and regulation. 

Here and Now

Though women make up just a fifth of business owners, we are seeing increasing numbers setting up companies, and receiving a growing share of investment. In Here and Now, we reveal that while 11% of startups that raised equity investment for the first time in 2011 were female-founded, by 2018, that figure had nearly doubled. We also show that, once funded, the percentage of female-founded startups that raised additional rounds of capital was similar to non-female-founded firms. 

In order to close the gender gap for good, our report makes recommendations for the government, schools, the media, and venture capitalists – from shining a light on female entrepreneurs, to tackling the STEM drop-off rates among girls in education.

Future Founders

In Future Founders, we set out to understand how young people think about entrepreneurship. Through polling of 14-25 year olds, we gained an insight into the aspirations, intentions, and motivations of the next generation of potential entrepreneurs. We found that over half have thought about, or already have, started a business – and only 15% said they had no intention of starting one. We also found that respondents who have a friend or family member who have started a business are more likely to do the same – suggesting that exposure to entrepreneurship is infectious. 

The results of our polling allow us to conclude that the ability to solve social problems might be a more persuasive reason to start a business than getting rich quickly, that more needs to be done to promote relatable entrepreneurial role models, and that simply not knowing where to start remains the single biggest barrier to founding a business.

Job Creators

Immigration is critical to the success of the UK. While just 14% of UK residents are foreign-born, 49% of the UK’s fastest-growing businesses have at least one foreign-born co-founder. These dynamic, innovative businesses bestow jobs and growth opportunities, and are vital to the strength of Britain’s economy. 

In Job Creators, Sam Dumitriu and Amelia Stewart analyse Britain’s fast-growing, immigrant-founded companies, and suggest a handful of visa reforms to allow the UK to retain its status as a top destination for entrepreneurial talent.

Management Matters

Too often, viable companies fail due to bad management, even when the fundamental idea behind the business is sound. Good management, however, is linked to stronger productivity, faster revenue and employment growth, and a higher chance of firm survival. Improving the management of Britain’s businesses is no small matter – evidence suggests that management explains nearly a third of the gap between the top and bottom performing 10% of companies in the UK.

In Management Matters, Sam Dumitriu recommends practical reforms, including tax breaks for self-funded work-related training, to encourage greater investment in management capability to reduce the rate of unnecessary business failure.

APPG for Entrepreneurship: Enterprise Education

To thrive in the modern world, Britain’s next generation must be adaptable to change. Up until relatively recently, a job for life was both possible and preferable. It’s increasingly neither. Universities have been central to many of the great intellectual revolutions across history – now they must embrace enterprise education to imbue students with the necessary enterprising skills to flourish in the twenty-first century.

Government has a role to play. Political action — or inaction — has significant repercussions for how enterprise education is delivered. This report aims to inform the government about the successes, challenges and opportunities for delivering enterprise education at universities. Its recommendations are based on responses to a Call for Evidence and aim to work with the grain of the latest thinking and practice.