marketing society scaleup slides 25 november 2015

BEYOND WHAT IS EXPECTEDCAN THE UK DELIVER ITS NEXT UNICORN?

Sherry Coutu CBE#scaleuphttp://www.scaleupreport.com

MARKETING SOCIETY25 November 2015

http://www.scaleupreport.com/

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

2000Floated second Start-up

1986 Came to the UK to attend the London School of Economics

1987Became a Computer

Programmer1991

Studied Business at Harvard

1994Joined my first

‘start-up’

1995Founded second Start-up

Sherry Coutu CBE < 2000

1997first ‘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 GrowUK businesses that started in 1998 – 10 years later and beyond

221,73183,165

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 thecompany 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 abouttheir previous job

#scaleup

SCALE-UPS ARE NOT START-UPS

Scale-ups have different needsROI 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.com How 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.

http://www.scaleupreport.com

#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

http://www.scaleupreport.com


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-UPS97% 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.


Closing The Scale-Up Gap: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


Closing The Scale-Up Gap: 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


Closing The Scale-Up Gap: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


Closing The Scale-Up Gap: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

Marketing