Expert commentary by Irene Graham, CEO, The Scaleup Institute
Scaleup businesses are truly inspiring and significant contributors to UK plc. This report is vital in celebrating our growth heroes.
Scaleups are twice as innovative as large firms, twice as likely to be operating in international markets and are significant UK employers – indeed more likely to offer apprenticeships than their counterparts. Scaleups exists across all sectors and areas of the UK and on average are 42% more productive than their peers.
The good news is that there are more of them than ever before.
Our recent analysis of the latest ONS data from 2017 shows that the number of high-growth, scaleup businesses in the UK increased to 36,510 – a 3.7% increase over the previous year. This means that the economy added 1,300 companies going through a period of rapid growth and that overall there are 35% more scaleups than in 2013.
Strikingly, these scaleups generate £1.3trn in turnover to the UK economy – 68% of the overall £1.9trn turnover generated by almost six million SMEs in 2017. They are also an employment powerhouse, accounting for approximately 3.4 million jobs across all sectors and areas of the UK economy.
This is why it is so important that we treat scaling businesses as a segment in their own right and tailor interventions to their growth needs.
While these increasing numbers are encouraging, the rate of growth has slowed from its average annualised rate of 9.3% between 2013 and 2016. Regional disparities also continue to persist – those regions growing fastest in their density of scaleups are doing so at almost five times the rate of others. This reinforces the imperative for local intervention and action.
Scaleups continue to face major challenges on five fronts: gaps in talent and skills; access to markets both at home and overseas; opportunities to develop leadership capacity; a need to access finance, notably, patient capital; and a lack of flexible infrastructure.
It is also essential to increase knowledge and awareness of the right kinds of finance to support a business’s growth, which is why we are working closely with the British Business Bank on its finance hub and regional network, as well as with Innovate UK ‘s scaleup services.
A critical part will be the ongoing work to harness existing Government data sources and facilitate greater data sharing across government in order to identify scaling businesses effectively and in a timely manner. More real time information will enable more effective private and public sector engagement with scaling businesses at a local level. This in turn will increase the capacity for local ecosystem stakeholders to collaborate and ensure that scaleup leaders flourish.
Only through collaboration can we make the UK the best place in the world to scale a business, enabling companies to achieve their export and innovation potential.