About the report

  • David Schwimmer, CEO, London Stock Exchange Group

Small and medium-sized enterprises (SMEs) are the backbone of the UK economy. They drive growth, lead innovation and provide a critical source of jobs. It is vital that we continue to support UK SMEs as we rebuild a post COVID-19 economy. London Stock Exchange Group (LSEG) is committed to championing these companies and playing our part in helping them succeed.

SMEs account for around 60% of employment and over 50% of turnover in the UK private sector. Many of the companies featured in this report now face new challenges due to the impact of the pandemic, so supporting these businesses and shining a light on their stories is crucial.

LSEG is proud to publish the seventh edition of our 1000 Companies to Inspire Britain report, which identifies the UK’s most dynamic and fastest-growing businesses.

On behalf of LSEG, I congratulate all of the companies selected for inclusion in the 2020 edition. I hope these companies inspire you, as they have inspired us with their stories of resilience, growth and entrepreneurship.

Key findings from the report

This year’s report highlights the regional and sector diversity of the UK’s SMEs and the entrepreneurial spirit shown by these companies. The top five industries represented by this year’s companies account for over 40% of the list, led by Engineering & Construction, Manufacturing, Food & Beverage, Retail and Technology. Food & Beverage is also one of the top three sectors for jobs created, following Professional Services and Employment Services.

Companies in this year’s report have together created 42,606 jobs in the two years to the end of 2019, further demonstrating the contribution SMEs can make to the recovery from the COVID-19 pandemic. Supporting these businesses is beneficial for both local employment and local economies. The leading regions for job creation include London, North West England, South East England, Yorkshire and the Humber and the West Midlands.

London and South East England continue to contribute the greatest number of companies, followed by East of England, North West England, and Yorkshire and the Humber. Scotland and the East Midlands have recorded the highest increase in representation compared to the 2019 report.

Overall, the average revenue growth of the companies featured in this report is 41.2%. Companies from London, Wales and South East England are among the regions that have recorded revenue growth above the UK rate.

As well as their contribution to the UK economy, companies featured in this year’s report have inspired us through their ability to respond to the challenges presented by the global COVID-19 pandemic. We have seen companies adapt their operations to manufacture and distribute personal protection equipment and COVID-19 testing kits, including TRB Lightweight Structures, Oxford Nanopore Technologies and LumiraDx. They have also supported their local communities and the NHS through monetary and in-kind donations, with MADE donating sofas, sofa beds, and other items to the NHS, Community Windpower setting up funds and BrewDog producing and donating over £1m worth of sanitiser to healthcare charities, key frontline workers and NHS hospitals.

Supporting growth

As businesses across the UK continue to navigate the impact of COVID-19 on their operations, the importance of accessing finance efficiently has never been greater. The UK Government has announced a number of supportive measures for SMEs, including business rates relief, grants, and wage and loan support. Listed companies across all growth stages have been able to turn to the public markets, not only to raise capital to strengthen their balance sheets, but also to fund research and growth. In addition to financial support, scenario planning and the sharing of best practices remain vital to business stability and long-term growth during these unprecedented times.

Access to capital is crucial for high-growth companies to reach their potential. The variety of capital available to companies across all stages of their development continues to expand – from traditional debt and equity to newer platforms such as crowdfunding and peer-to-peer lending. Recent reports show that while bank lending to small businesses has remained relatively flat, the volume of equity investment, asset finance and peer-to-peer lending has continued to rise. In addition, 73% of businesses surveyed would rather forgo growth than take on debt, which illustrates the importance of choice and awareness of financing opportunities in enabling companies to reach their potential.

Together, the UK Government, financial advisers and the wider financial community can do more to ensure SMEs across the UK can access the best financing options available to them to fund each stage of their development. Tax can play a key role in this. While debt is tax deductible, it may not be suitable for smaller businesses who have to prioritise payments and interest over innovation and growth. Equity finance is taxed several times in the form of corporate income tax, capital gains tax, dividend tax and stamp duty. What growing firms often need to finance their potential is long-term patient equity capital, with options available through individual investors, private equity or public capital markets.

LSEG has worked with the UK Government to ensure that fiscal incentives such as Enterprise Investment Schemes, Venture Capital Trusts and Business Property Relief support long-term growth and enable companies to transition from private ownership to the public market as seamlessly as possible without facing funding gaps. Similarly, the eligibility of AIM shares for Individual Savings Accounts and their exemption from stamp duty have improved market efficiency, making it more attractive for both retail and institutional investors. This in turn has increased the availability of capital for companies. These changes have contributed to the ongoing track record of AIM as Europe’s most successful growth market, accounting for 60% of the total equity capital raised across all of Europe’s growth markets in 2019. We welcome the Government’s continued support for SME growth markets in the UK through public policy and the tax system, and we look forward to continuing our work with policymakers to facilitate access to patient capital for the next generation of the UK’s most inspiring companies.

Celebrating its 25th anniversary in June 2020, AIM has not only adapted and evolved to meet the needs of growth companies and their investors, it has also remained resilient through economic cycles, and has a vital role assisting business with the recovery from the COVID-19 pandemic. Recent research from Grant Thornton found that, in 2019 alone, AIM companies contributed £33.5bn gross value added (GVA) to UK gross domestic product and directly supported more than 430,000 jobs, an increase of 35% and 22%, respectively, over the past five years. Since March 2020, AIM-quoted companies have raised over £3.2bn in further capital. This underlines an important function of public markets: enabling issuers to access capital at all stages in their development and raise repeat rounds of permanent capital.

We are also proud to partner with PrimaryBid, which enables public companies to access additional capital and liquidity via a wider investor base including retail investors, and improves retail investors’ access to equity transactions.

As well as raising awareness of financing options and easing access to capital, non-financial support is also crucial for the development of growing companies. Our ELITE platform provides business support, mentoring and access to finance for fast-growing businesses. Through ELITE, we are helping companies assess the impact of COVID-19 on their businesses and adjust their operations to devise resilient growth plans. Across LSEG, we remain passionate about supporting companies across the country, working in collaboration with large and small businesses, capital providers, stakeholders and partners to help rebuild and reopen the UK economy.

Our supporters

On behalf of LSEG, I would like to thank the sponsors of this report. The British Business Bank continues to support the development of the UK’s small businesses and has played a key role in facilitating greater access to finance for SMEs during this pandemic. Cenkos has now supported this report for the seventh year and remains dedicated to championing UK growth companies. Our research partner, Beauhurst, has been instrumental in identifying the companies of this year’s report and measuring the impact they have had on the UK economy; and our media partner, The Telegraph, continues to highlight the critical role entrepreneurship plays within the UK economy.
We are also grateful to our expert contributors, providing their insights on the UK SME and growth finance landscape – British Chambers of Commerce, the UK Business Angels Association, Tech Nation, Scottish Chambers of Commerce, the UK BioIndustry Association, the ScaleUp Institute, BVCA and Quoted Companies Alliance.

Finally, I would like to extend my personal thanks to the Economic Secretary to the Treasury, John Glen MP; the First Minister of Scotland, The Rt Hon Nicola Sturgeon MSP; and the Shadow Chancellor of the Exchequer, Anneliese Dodds MP. This cross-party recognition of the need to champion our dynamic SMEs in scaling up will be crucial to the UK’s economic future.

I hope you enjoy reading our 1000 Companies to Inspire Britain report and join us in championing the UK’s SMEs.