Growth Stage Could Use More Support

The United Kingdom has established itself as one of the world's leading centres for technology innovation. Many of the world's most famous technology companies, such as Google and Microsoft, are based in London, making the city a global leader in tech. In addition to this, many of the innovations that have shaped modern life were invented in Britain. The invention of the telephone is perhaps the most famous, but there are many more examples: Britain is home to half of Europe's top 50 universities and produced some of the most important scientists in history, including Isaac Newton, Charles Darwin and Ernest Rutherford. The UK has also created some of the world's most significant breakthroughs in business and finance, including the founding of Reuters and Lloyds Bank. 

Today, this combination of innovative spirit and powerful financial sector has enabled Britain to become one of the biggest hubs for startup businesses in Europe—by far, and the world's leading centre for technology innovation. From the headquarters of giants like Facebook and Google to the clusters of startups in Shoreditch, London is home to some of the most advanced businesses on the globe.

The British government has begun to focus more and more on the importance of encouraging growth, innovation, and international cooperation in the tech sector, with companies such as Facebook announcing large-scale expansions into London, since 2015, there has been a significant number of foreign tech companies joining the UK market and investing in new projects. Hundreds of talented and ambitious entrepreneurs have come to the country from every corner of the globe, some of which are tech unicorns (startups valued at more than $1 billion).

More than half of the fastest growing companies in the UK are based in London, with the region accounting for over half of the country’s growth businesses.

These are some of the key findings from a new report released by London & Partners, which shows that scaleups contributed £1 trillion to the economy in 2018 - 50% of the total contribution from UK SMEs - and are 54% more productive than their peers.

The report also found that London’s tech sector is growing faster than any other major European city, with 12% annual growth since 2010 compared to 10% in Berlin and 9% in Paris.

The report also highlights that while London is home to many successful startups, there are still challenges facing those who want to start a business in the capital city. For example:

- 50% of new enterprises fail before their fifth year of revenue;

- Startups that are successful book a median revenue of $300 000 after five years and 5 % top-line growth thereafter;

- The average age of a chief executive is 42 years old;

- Only 20 % of CEOs have been promoted internally;

The authors of the report state that “creating a small business from scratch is a great accomplishment”. 

Scaleups and beyond could benefit from more support, and chief executives, in particular, need support to steer their companies forward.

The government's newly released Industrial Strategy contains many proposals to aid growth-stage companies. One of these is to support chief executive officers in growing their company. More than just providing financial assistance, this will include providing CEOs with access to networks, advice, and assistance with building a management team that can ensure sustained growth.

There's another type of support that could help these companies grow even more: leadership development. The majority of London's tech startups and scaleup CEOs have been in their roles for less than two years. As such, many are still figuring out how to run a business and what it takes to turn an idea into an international success story. They need people who can advise them. There’s a need for the government, and industry experts to work and develop tools that help company leaders navigate their way through the challenges of overcoming the "valley of death" and sustaining the growth beyond.

Author: Patrycja Maksymowicz