By Richard Herridge, Project Manager at the ScaleUp Institute
The UK is a great place to start a business. It needs to become an equally great place to scale a business – and our mission at the private sector led not-for-profit ScaleUp Institute is to help to make that happen.
We also want to increase the number of female founders of scaling businesses.
The ScaleUp Institute was actively engaged with the Rose Review and is a supporter of its goals. We work with many other partners and initiatives to champion female-led scaleups – such as Innovate UK’s Women in Innovation programme, BGF’s UK Enterprise Fund in partnership with Coutts, Goldman Sachs 10,000 Small Businesses UK, London Stock Exchange ELITE programme, and the finance hub of the British Business Bank.
The ScaleUp Institute publishes our annual Scaleup Female Founders Index to spread awareness of successes and identify role models. While there are some encouraging signs – the number of £10m-turnover-plus scaleups with at least one female founder doubled last year – there is still a long way to go. We remain focussed on addressing the challenges faced and closing the ‘scaleup gap’.
What is a scaleup?
The OECD definition of a scaleup is an enterprise with an average growth rate of 20 per cent or more in its turnover and/or number of employees over a three-year period – and which had ten or more employees at the start of its scaling journey.
Our recent analysis of the latest ONS data from 2018 showed that there were 33,860 scaleups in the UK. That number is 25% higher than it was in 2013. It also compares favourably with GDP growth which was just 11% over the same period.
Scaleups are the powerhouse of the UK economy. Our research has shown that scaleups contribute £1trn to the UK economy and account for half the turnover generated by all UK SMEs. They employ 3.5m people and are 54% more productive than other businesses. They are twice as likely to operate in international markets. Even through 2020, they continued to invest in R&D, innovation and job creation.
Our third ScaleUp Female Founder Index, published in March 2020, showed that the number of visible scaleups with at least one female founder continues to increase – up nearly 10 per cent from 2019. They collectively generated nearly £10bn and employed over 71,000 people, with an average turnover of £51m.
The ScaleUp Institute works closely across the private sector, academia, local areas and government departments to provide expert insight based upon our research. We also work closely with the devolved nations, the metro mayors, Local Enterprise Partnerships, Growth Hubs and government agencies to help every scaling business achieve its full potential and can access the support it needs in a timely and local fashion.
The key barriers faced by scaleups
Each year, we conduct our Annual Scaleup Survey which provides detailed and comprehensive insights about the challenges and barriers faced by scaleups. Scaleups face five main challenges to their continuing growth.
Of these, access to markets – both domestic and international – is the single biggest issue with which scaleups are grappling. Access to talent and skills, and also to finance, are critical challenges. These are followed by the other challenges cited by scaleups which are leadership capacity, and infrastructure.
More than eight in ten scaleups say that access to domestic and/or international markets is a vital or very important factor in the future growth. Domestically, scaleups want to forge more partnerships with government and large corporates yet the complexity of the procurement process, the difficulty of finding out about opportunities to bid, and the time it takes to win a contract are seen as the most significant barriers to working with them.
Gaining access to international markets presents a variety of challenges. Scaleups cite limited access to overseas customers, lack of talent to make overseas sales and Brexit-related uncertainties as the biggest barriers to exporting more.
More than seven out of ten scaleups say that access to talent is vital, or very important, to the continued scaling of their business. The talent challenge can range from attracting and recruiting young people to securing international talent – one in three scaleups say it is very important or vital to have a fast track visa for hiring overseas.
Scaleups are far more likely to use external finance than their peers – in 2020 eight in ten of scaleups had used external finance – but despite the broad range of forms of external finance used, 40% did not feel they have the right amount of funding in place for their current growth ambitions. There are persistent perceptions of regional disparities, with four in ten scaling companies continuing to feel that the majority of funding resides in London and the South East.
Building the leadership and management capacity within their senior teams has always been a focus of scaleup CEOs. However, through the support provided by the ecosystem to address this challenge, this demand is now showing signs of being a demand more fully met. There remain gaps in provision particularly when accessing support from networks of peers, mentors and non-executive directors. Scaleups most value support when it is delivered at a local level.
The fifth barrier for scaleups is infrastructure; having access to the right physical space to grow, fast and robust broadband, and hubs in which to work, meet and collaborate, are all vital for scaleups.
The work of the ScaleUp Institute – and how we can help female business leaders
The annual Scaleup Female Founders Index
Our annual ScaleUp Female Founders Index reveals, celebrates and promotes the number of “visible” scaleups – those filing full accounts at Companies House – with at least one female founder. The list is extremely diverse spanning geographies, generations, and sectors.
Identifying and endorsing programmes for scaleups
Our Scaleup Support Finder identifies local and national programmes that are truly making an impact for scaleups and have been endorsed by the ScaleUp Institute. We set a high hurdle of evidence from these programmes to demonstrate their measurable impact. No programme is endorsed without the ScaleUp Institute having researched and verified that evidence and reviewing it through a series of expert committees. The ScaleUp Institute is keen to hear suggestions of further well-evidenced and high impact initiatives.
You can find all of our endorsed programmes here.
These endorsed programmes include leadership programmes such as Goldman Sachs 10,000 Small Businesses UK, London Stock Exchange ELITE, Strathclyde Business School’s Growth Advantage Programme, Tech Nation’s Upscale, the British Library’s Innovating for Growth, Cranfield’s Business Growth Programme, Vistage, NatWest Entrepreneur Accelerator, The Supper Club and MIT Venture Mentoring Service.
In the area of talent and skills are programmes such the Careers & Enterprise Company, which links schools and colleges to employers, and F4S (formerly Founders4Schools) which gives children and young people the opportunity to meet the people who are creating the jobs of tomorrow in their classrooms today. Other programmes include Google Digital Garage and Lifeskills created with Barclays.
For scaleups with international growth ambitions, there are programmes such as Mayor of London’s International Business Programme and the Global Scaleup programme run by the Growth Company in Greater Manchester.
The ScaleUp Institute endorses a range of financial instruments and financial institutions who give attention to scaling businesses and their need for patient capital; these can be viewed here from banks, to VCs, to crowd platforms, to bespoke growth capital funds. These institutions offer often not just money but support on talent, markets and customers.
From innovations such as the FCA’s Regulatory Sandbox to national networks such as Barclays Eagle Labs, and to extensive centres of life sciences research such as Alderley Park and Babraham Research Campus, there are several examples of ‘hubs’ that help to support scaleups in specific sectors or more broadly.
There are not only national programmes to help female founders and CEOs aiming to scale their businesses;the SUI has run ecosystem education sessions to ensure establishment of local programmes close to our scaleup community. These are detailed here [local area initiatives] and in our Support Finder tool. It is vital we have local initiatives, as scaleups consistently tell us that they want to be able to access solutions locally to help overcome their barriers to growth. So in Lancashire for example, where the ScaleUp Institute has collaborated on the development of the bespoke and targeted Two Zero programmes, there is a tailored 12-week programme of mentoring, practical working sessions and panel discussions for ambitious female leaders.
Celebrating women leading scaleups
In our ScaleUp Stories you will find inspiring female scaleup CEOs and founders from around the country, telling their story – please be inspired by them and get in touch if you would like to share your thoughts with clare.facey@scaleupinstitute.org.uk
- 4EI, where Mariam Crichton is CEO, providing applied earth intelligence, delivering deep expertise in geospatial intelligence, specifically remote sensing and Geographic Information System (GIS) mapping.
- Beauty Kitchen, created by Jo and Stuart Chidley, is scaling up its business and is totally committed to sustainability and circular economy principles.
- Click Travel, the Birmingham-based business travel management company with Jill Palmer as its CEO.
- Consilia Legal, the pragmatic and straight-talking Yorkshire law firm co-founded by Marie Walsh.
- Doris Jones, where Caroline Southgate’s Southend-based domiciliary care company Doris Jones provides 800-1,000 hours of care per week.
- Frog Bikes, fast-growing business run by Shelley and Jerry Lawson that’s putting children and the planet at the centre of their product designs.
- Genius Foods, founded by Lucinda Bruce-Gardyne and which now exports to Europe, Australia, and North America from its sites in East Lothian and Scunthorpe.
- Juggle, where Romanie Thomas is set on changing the business leadership landscape.
- The Strings Club, Amy Cunningham’s business has welcomed nearly 500,000 children on Ofsted-registered holiday camps in seven locations.