Marketing Society scaleup slides 25 november 2015

BEYOND WHAT IS EXPECTED
CAN THE UK DELIVER ITS NEXT UNICORN?
Sherry Coutu CBE
#scaleup
http://www.scaleupreport.com
MARKETING SOCIETY
25 November 2015

Agenda:
❖ The Scale-Up Report
❖ How do we deliver the next unicorns?
❖ Summary & Q&A
The Scale-Up Institute #scaleup Sherry Coutu CBE

|THE SCALE-UP REPORT ON UK ECONOMIC GROWTH Sherry Coutu CBE
ENTREPRENEURSHIP
2000
Floated second Start-up
1986
Came to the UK to attend the
London School of Economics
1987
Became a Computer
Programmer
1991
Studied Business at Harvard
1994
Joined my first
‘start-up’
1995
Founded second Start-up
Sherry Coutu CBE < 2000
1997
first ‘startup’ sold
#scaleup

THE SCALE-UP REPORT ON UK ECONOMIC GROWTH Sherry Coutu CBE#scaleup

“We want nothing less than to make the UK the technology centre of Europe.
This is the path we need to take to create new jobs, new growth and new
prosperity in every corner of our country.”
George Osborne, Chancellor of the Exchequer

The Department of Business Innovation & Skills (BIS) commissioned The
Scale-up report in 2014
I worked with business leaders, academics, entrepreneurs and professional
bodies in assessing the economic impact associated with closing our scale-up
gap and recommended a series of actions to bring about 255 BN additional
GVA and 150,000 additional jobs.

A ‘scale-up’ is an enterprise with average annual growth in employees or
turnover greater than 20 per cent per annum over a three year period, and
with more than 10 employees at the beginning of the period

We are doing very well on Start-ups...

Very Few Start-ups Survive and Grow
UK businesses that started in 1998 – 10 years later and beyond
221,731
83,165
8,649
5,934
All businesses that started
with at least 1 employee
Businesses that survived in
2008
Survivors with 10+ employees in
2008
Survivors that achieved at
least 1 year of high growth
100%
37.5%
3.9%
2.7%

Research by the academic David Storey has found that the
median annual sales of a six-year-old firm in the UK are less than £23,000
avg < £23,000
#scaleup

Research by the academic David Storey found that
Just one per cent have sales of more than £1 million six years after they star
1 % > £ 1m
#scaleup

But we are doing less well at growing them (!)

● The UK has a lower share of large
businesses than the US.
● Large firms with more than 250
employees account for 0.5 per cent
of firms in the UK but 0.7 per cent in
the US.
● This lack of ‘scale up’ means the
economy as a whole loses on
productivity and growth.
THERE IS A SCALE-UP GAP

The 3 year gross impact of moving 1% of businesses to HGF mode
(244% over 3 years)
£780 billion
+
£768 billion
Analysis by RBS to determine the economy wide
impact of one per cent of all businesses with
over 10 employees shifting from a stable growth
state into high-growth mode would see the total
population of HGFs in the UK increase from
10,200 to 12,440
At the end of year three this would result in
2,240 businesses making this shift and the
creation of 238,000 jobs and almost £39 billion
in additional turnover.

SCALEUPS DO CONTRIBUTE TO PRODUCTIVITY
BIS data show that in the UK average turnover per employee is:
• £170,000 for firms with 250 plus employees
• £164,000 for firms with 50 to 249 employees
• £134,000 for firms with between 10 and 49 employees39

Job Creation is linked to scaleups
In the UK, HGSBs created the equivalent of approx
4,500
new jobs every week
3 X as many new jobs as the FTSE 100
Source: Octopus investments – hgsb study released Oct 20 2015

SCALE-UPS HAVE HIGH QUALITY JOBS
Of the employees surveyed in these high-growth companies who had joined the
company from another employer, 80 per cent stated that they were ‘satisfied’ or
‘very satisfied’ with their current job compared to 46 per cent when asked about
their previous job
#scaleup

SCALE-UPS ARE NOT START-UPS
Scale-ups have different needs
ROI in Scale-ups has big pay-offs for Economic Growth
So we should focus some of our attention and policies on scale-ups

What percentage of your
resources and attention are
focused on scale-ups?
THE SCALE-UP REPORT ON UK ECONOMIC GROWTH Sherry Coutu CBE
QUESTION
#scaleup

GIVEN THAT ECONOMIC GROWTH COMES
FROM SCALEUPS AND NOT STARTUPS,
HOW DO YOU FEEL ABOUT YOUR ANSWER
TO THE PREVIOUS QUESTION?
THE SCALE-UP REPORT ON UK ECONOMIC GROWTH Sherry Coutu CBE
ANSWER
#scaleup

http://www.scaleupreport.comHow can you help the UK deliver the next unicorn ?

6 main gaps to focus on…
THE SCALE-UP INITIATIVE Sherry Coutu CBE#scaleup
1. The Evidence Gap: public and private sector organisations identify, target and evaluate
their support to scale-up companies.
2. The Skills Gap: improve the ecosystem so scale-ups can find employees with the skills
they need
3. The Leadership Capacity gap: building their leadership capability
4. The Export Gap: accessing customers in other markets / home market
5. The Finance Gap: accessing the right combination of finance
6. The Infrastructure Gap: navigating infrastructure

|THE SCALE-UP REPORT ON UK ECONOMIC GROWTH Sherry Coutu CBETHE SCALE-UP INITIATIVE Sherry Coutu CBE#scaleup
The Evidence Gap: public and private sector organisations
identify, target and evaluate their support to scale-up companies.

KEY RECOMMENDATIONS
Recommendation 1:
RELEASE the names of scale-ups
 Gov’t already holds the information
so that local public and private stakeholders
can identify, target and evaluate their support
to scale-up companies, and evaluate their
impact on UK economic growth.
#scaleup

8,923
Scale-Ups in England

Scaleups per 100,000 of population (per local cluster)

SCALE-UPS per LEP
Scale-ups are found in each of the 39 LEP
areas in England and 6,659 (75 per cent) of
the total 8,923 scale-ups are located outside
of London.
On average a LEP will have approximately 228
scale-ups in their area.
These in turn can be grouped into the Number
of scale-ups companies that employ between
• 10 and 49 employees,
• 50 and 250 employees,
• >250 employees
#scaleup

http://www.svc2uk.com/the-royal-society-science-50-index/
“The Science 50”
Royal Society’s list Illustrates the extent to which
science-based scale-ups are a nationwide
phenomenon.
36 (72 per cent) of the top 50 fastest growing science-
based companies are located outside of London.
These 50 science-based companies increased their
revenues by an average of 92 % between 2012 and
2013, achieving a combined annual turnover of more
than £1.3 billion.
Adding more than £600 million to national output last
year.
SCALE-UPS and SECTORS
#scaleup

Scaleup TRACKING… http://www.scaleupreport.com

Are You in favour of the Government INTERNALLY sharing (with other
government departments or agencies) the fact that your company is one the
fastest growing companies in any sector?

97%OF 163 SCALE-UPS
97% WERE IN FAVOUR

The Report identified 6 main gaps to focus on…
The Skills Gap: improve the ecosystem so scale-ups can find
employees with the skills they need

“I would be able to
grow my company
faster
if
university graduates
had the skills needed
to meet my customer
demand”
82%
OF 163 SCALE-UPS AGREE
ATTRACTING TALENT, SKILLS AND BUILDING LEADERSHIP

|THE SCALE-UP REPORT ON UK ECONOMIC GROWTH Sherry Coutu CBETHE SCALE-UP REPORT ON UK ECONOMIC GROWTH Sherry Coutu CBE
Closing The Scale-Up Gap:
Human Capital – Schools & Universities
• Entrepreneurship in curriculum?
• Entrepreneurs on board of Governors?
• Local Scale-up leaders in the class-room as role-models?
• Proportion of Local Scale-up companies featured in careers fairs?
• Proportion of work experience features local scale-up companies?
• Extra-curricular student entrepreneurship activities / clubs?
• Proportion of students visiting scale-ups on ‘open days’?
#scaleup

The Leadership Capacity gap: building their leadership capability
The Sales Gap: accessing customers in other markets / home market
The Finance Gap: accessing the right combination of finance

81%
OF 163 SCALE-UPS AGREE
PROCUREMENT
I would be able to grow
my company faster if it
were easier to attract
larger corporates as
customers in the UK.
Attracting overseas customers more important than overseas investment.

Local Government
• Celebrate scale-up growth events in your city with the media
• Invite scale-up leaders to share their experience with students
• Celebrate new customer wins and help create new ones
• Encourage local universities to offer courses to scale-up leaders
• Meet with a selection of scale-up leaders every month (3 hours)
• Persuade real-estate leaders to offer scale-up friendly terms
#scaleup

Media
Shine a light on our most successful scale-up leaders and their
companies rather than only start-ups.
Profile successful scale-up entrepreneurs at key mile-stones to inspire
others (especially the next generation)
Review and hold to account initiatives and policies in entrepreneurship:
• Are they about starting or growing businesses?
• Are they actually providing evidence to support their claims?
• What is the cost per job created?
• Are they collaborative?
#scaleup

Lawyers, Accountants, Bankers:
• Identify mentors with experience and find effective ways to
share their knowledge
• Publish the the amount you procure from scale-ups
• Offer infrastructure / co-working spaces:
#scaleup

Large Corporates
Short Term:
Publish the the amount you procure from scale-ups
Long-term:
Support existing initiatives that help teachers and schools
develop future business skills in our students
#scaleup

We are doing very well on Start-ups...

Let us start today:
We can Reverse The Scale-up Gap
2014 2020 2034
#scaleup

Marketing Society scaleup slides 25 november 2015

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Marketing Society scaleup slides 25 november 2015