Annual ScaleUp Review 2018

Nov 13, 2018 | Publisher: Techcelerate Ventures | Category: Technology & Engineering |  | Collection: Startups | Views: 6 | Likes: 1

November 2018 @Scaleupinst Annual ScaleUp Review 2018 ACKNOWLEDGEMENTS Our thanks to our partners, supporters and contributors to this document. Report design by NEO and StudioTM This work contains statistical data from ONS which is Crown Copyright. The use of the ONS statistical data in this work does not imply the endorsement of the ONS in relation to the interpretation or analysis of the statistical data. This work uses research datasets which may not exactly reproduce National Statistics aggregates. Published by the ScaleUp Institute 101 Euston Road, London, NW1 2RA Any enquiries relating to this Review or the work of the ScaleUp Institute should be sent to: This document can be accessed at: @scaleupinst THE ANNUAL SCALEUP REVIEW NOVEMBER 2018 The ScaleUp Institute is a private sector- led, not-for-profit organisation focused on collaborating with policy makers, corporates, finance players, educators and government at a local and national level. Our mission is to help the UK to become the best place in the world to grow a business as well as start one, and enable our existing high- growth businesses to scale up even further. 1 SCALEUP INSTITUTE | | @scaleupinst | #scaleup Forewords 4 Kelly Tolhurst MP Small Business Minister and Scale Up Champion for Government 6 Sherry Coutu, Chair, ScaleUp Institute Executive overview 12 Irene Graham, CEO, ScaleUp Institute Chapter One 28 Scaleup business landscape Including update on numbers and 2018 survey analysis Chapter Two 68 Leading programmes breaking down the barriers for scaleups How national and international ecosystem actors are leaning in to engage with scaleups leading case studies and insights. Chapter Three 130 The local scaleup ecosystem Driving UK economic growth through scaleup ecosystems Chapter Four 190 Shaping policy to foster UK Scaleups: Breaking down barriers Chapter Five 230 Looking forward Annexes 234 1. Local Area Summaries 276 2. The ScaleUp Institute Contents 3 SCALEUP INSTITUTE | | @scaleupinst | #scaleup SECTION TITLE Kelly Tolhurst MP Small Business Minister and Scale Up Champion for Government Introduction 4 High growth businesses are a critical part of our economy and make a significant contribution to economic growth and national productivity. The number of scaleups is increasing, driving job creation and growth right across the country. The UK is home to c35,000 scaleups, making us one of the leading OECD countries for our share of high growth businesses. Through our modern Industrial Strategy this Government is taking forward a package of measures to help businesses to scale up and improve their productivity, with a dedicated action plan to unlock over 20 billion of investment in innovative and high potential businesses, including a 2.5bn investment fund incubated in the Government- owned British Business Bank. Our network of 38 Growth Hubs provides a local point of access to the range of support available to help businesses overcome the barriers to growth. Having run my own business, I am acutely aware of the challenges fast growing businesses face and I am determined to use my role as Scale Up Champion to create the right conditions for businesses to succeed. The ScaleUp Institute is a key partner for us in this endeavour, helping drive forward this work and making a real difference to scaleups across the country through their research and education programmes. I look forward to continuing to work with the ScaleUp Institute on this exciting agenda. Kelly Tolhurst MP 5 SCALEUP INSTITUTE | | @scaleupinst | #scaleup SECTION TITLE Foreword Sherry Coutu Chair, ScaleUp Institute 6 As this 2018 Review demonstrates, the evidence is clear for the UK economy, scaling companies are the engine of growth: creating high quality jobs and new tax receipts; leading business investment and innovation; and providing an important answer to the UK's great productivity puzzle. Scaleups have the potential to give the UK a competitive advantage for generations to come. And it will be scaleups that lead any export drive; they are already twice as likely to be international, hungry to expand further overseas and expecting to grow in the next 12 months by expanding into new markets. Just four years ago I kicked off the debate in the Scaleup Report on UK Economic Growth, using evidence from several different sources. This showed that a one per cent boost to the UK scaleup population would create an additional 238,000 jobs and 38bn in Gross Value Added (GVA), and over time generate an additional 225bn in (net) GVA. In the intervening years, the ScaleUp Institute has become the foundation for a growing body of evidence and proposed solutions to the challenges that scaling companies face. Year on year thanks to the work of the Institute, our ambassadors, partners and collaborators more and more private, education, and public sector organisations have mobilised to focus on scaleups and to realise the potential of these 'growth heroes'. This 2018 Review demonstrates that we are making good progress, but that there is still much more to be achieved. Scaleup leaders may be global in their ambitions, but they want solutions and programmes delivered locally, in the communities in which they are based. To this end, I was delighted that earlier this year the Institute convened its third executive education course at Leeds University on 'Driving Economic Growth through Scaleup Ecosystems' (DEG) involving Babson College and supported by Goldman Sachs 10,000 Small Businesses UK, Innovate UK and the British Business Bank. The course brought together over 60 local leaders, including scaleup businesses, from around the country to understand the ingredients that can foster a world class scaleup environment in their locality. This means that over the past two years we have trained over 200 ecosystem leaders, covering many localities of the country and we are excited by the progress the first three cohorts are making and the learnings being exchanged with each other. If delivery is local, we must also be able to assess our progress through a local lens. To truly become a Scaleup Nation, senior leaders from every scaling business in every part of the UK should have the tools and support they require. This year with our direct access to detailed datasets from the Office for National Statistics (ONS) we are able to further analyse in depth the diversity of scaleup growth across the country; we can see where communities are forging ahead in scaleup development and where scaleup 'cold spots,' remain. In Chapter 1, we analyse the developing landscape right down to local authority level. Looking at our map on page 33, we aspire to work together to achieve the dark green colour throughout, yet there are some cold spots where urgent action needs to be taken. Some areas, such as the West of England, Cornwall and Enterprise M3, are doing terrifically well. Other areas are lagging, but introducing initiatives, such as in the Tees Valley where Teesside University As the UK faces an increasingly competitive and uncertain economic outlook, the need for communities to be able to drive their economic growth remains mission-critical. There has never been a more important time to focus on scaling businesses. 7 SCALEUP INSTITUTE | | @scaleupinst | #scaleup launched its LEAP 50 this year to tackle their local scaleup challenge. The development of thematic programmes to address scaleup barriers is covered in Chapter 2. I am very excited that we are now able to make available an enormous body of evidence which can be used by all stakeholders in the UK about 'what works' that to respond to the common barriers that prevent companies from scaling in their communities. In Chapter 3 we highlight new local initiatives, emerging from the Institute's education activity, such as ScaleUp Ashford, ScaleUp Berkshire, ScaleUp North East, CanDo Scale Scotland, Scaleup Enablers and Generator Initiatives such as these give me cause for optimism. We are on the right path to close the scaleup gap even if it is clear from the data that much more can be done. Government policy at national, regional and local levels has also shifted. Scaleup companies are increasingly being included as specific components of local and national strategies. In 2018, we have seen 'scaling up' embedded into the Government's Industrial Strategy and Export Strategy, into the Patient Capital, LEP and Productivity Reviews, and into the recent 2018 Budget announcements. I have no doubt that the creation of a Ministerial Champion for Scaleups has helped coordinate this national policy direction and ensure the needs of scaleups are fully considered in the UK's economic and industrial agendas. The first Ministerial Champion, Margot James MP, has subsequently taken her enthusiasm for scaleups to her new role as Minister of State for Digital and the Creative Industries. Kelly Tolhurst MP, Minister for Small Business, has eagerly taken up the mantle and is driving forward the agenda working closely with the Scaleup Taskforce, co-led by my fellow serial entrepreneur and Board member, Sahar Hashemi. The ScaleUp Institute will continue to monitor the impact of policy decisions and other stakeholder interventions, to ensure that they deliver practical, on the ground solutions for scaleup needs at a local level. We have always said that the first obstacle to supporting scaleups, and high potential companies, is identifying them. The pursuit of an open 'scaleup register' remains a primary goal which will be extremely powerful in unlocking our full scaleup potential and I am pleased that we are making inroads on this. The ScaleUp Institute has forged valuable partnerships with ONS and HMRC and over the past year has engaged in cross-Government work to help develop innovative ways of using data to segment businesses. The current ScaleUp Institute / HMRC pilots aligning scaleup identification to bespoke scaleup services is very exciting. I look forward to the outcomes of these pilots culminating in a solution that can work across all areas of the country, and public and private sectors. With this data we can fast track scaleup actions and engagement to greatest effect, unlocking new talent, markets and finance. As part of this Review the ScaleUp Institute continues its role in putting scaleups on the map with the 2018 Scaleup Index including AIM companies for the first time and the inaugural Visible ScaleUp Public Procurement Index. My thanks go to Beauhurst and Tussell for their collaboration on this. The UK continues to be an attractive place to start a new company. As I said in the original ScaleUp Report, we also have the talent and basic foundations to become the best place in the world to scale up a company. It is undoubtedly true that over the past four years we have seen more people, more initiatives, more political will, and critically more money, We will continue to ensure that the needs of scaleups remain high on the political agenda " 8 SHERRY COUTU, CHAIR, SCALEUP INSTITUTE FOREWORD This Review has more new datasets, more information and more analysis than ever before. It is a testament to a vibrant and growing ecosystem of public and private sector organisations who themselves have recognised the power of the UK's scaleup companies. " focused on making that happen. This is evidenced by having seen the growth rate of scaleups overall across the UK increase, to 4 additional scaleups per 100,000 population per annum with the latest ONS data, compared to 3 as reported in our 2017 Annual Review. In the coming months and years, as Brexit unfolds, there will be many new and some unforeseen pressures on the UK economy. And, of course, there will also be opportunities. At the ScaleUp Institute our focus will continue to be on identifying, praising and promoting what works; helping to ensure that impactful initiatives and programmes continue to be funded and good practice reaches every company, sector and region. We will continue to ensure that the needs of scaleups remain high on the political agenda, and we will work with larger corporates to help them understand the benefits of working and collaborating with fast- growing companies. And, of course, we will relentlessly pursue the release of more data. That said, this Review has more new datasets, more information and more analysis than ever before. It is a testament to a vibrant and growing ecosystem of public and private sector organisations who themselves have recognised the power of the UK's scaleup companies. We are our on our journey to be the best place on the planet to scale a business let's make sure this becomes a reality. Do make good use of the 2018 Review and its findings to guide actions into 2019. 9 SCALEUP INSTITUTE | | @scaleupinst | #scaleup 10 SECTION TITLE CHAPTER THREE 11 SCALEUP INSTITUTE | | @scaleupinst | #scaleup Executive overview 12 SECTION TITLE CHAPTER THREE Executive overview Irene Graham CEO, ScaleUp Institute Our core focus is to turn evidence and data, gathered through research and analysis, into robust practical actions, to remove the challenges encountered by scaling businesses in talent, leadership, markets, finance and infrastructure. From the outset we have built alliances and co-operated with the diverse range of ecosystem players, including large corporates, financiers, educators, entrepreneurs, policy makers and local leaders. Together we are working to break down the barriers faced by our scaling companies in their local communities, so they can seize opportunities to scale further and faster, without obstacle. It is clear from our 2018 Review that through this collaboration we are making tangible progress. However, the scaleup race is not yet won. With further economic uncertainty ahead including concerns around Brexit expressed in our 2018 survey the positive momentum we have built, must be maintained and accelerated. The UK economy needs more scaleups to realise their ambitions of domestic and international growth. Securing these ambitions will benefit all of UK society, helping to boost productivity. Now is the time to double down on our collective efforts to address our scaleup challenges. At the heart of this must be a scaleup segmented, relationship-oriented approach at all local levels with initiatives developed, and policies identified, fully implemented. Where we are now When we started out, the ScaleUp Institute's imperative was to make sure that the scaleup challenge was reflected across the country in local solutions and services that made a measurable difference to our scaling community. Across 2016 and 2017, through research, data and education, we developed the route map for local ecosystems to come together to overcome their scaleup barriers and we brought a a scaleup lens to the national policy agenda. We galvanised actions through our education programme "Driving Economic Growth through ScaleUp Ecosystems" (DEG), supported by Goldman Sachs 10,000 Small Businesses UK and Innovate UK.1 This in turn, led to the inclusion of scaleups in local Strategic Economic Plans, and in the core strategies of our devolved nations, notably Scotland and Northern Ireland. As outlined in this Review, 2018 has seen the tangible results of this work in: the development of dedicated scaleup services across the country such as: ScaleUp North East; ScaleUp Berkshire; Scotland CAN DO Scale; ScaleUp Ashford; Scaling Services, Northern Ireland; ScaleUp D2N2, with universities, business schools and science parks playing a key role in emerging initiatives. In 2018 these solutions continue to expand through our ongoing regional engagement, including the running of our third DEG course in May, which was an opportunity for local leaders to share what had worked and gain new inspiration for their local scaleup actions. the realisation of the Government's Industrial Strategy Building a Britain Fit for the Future with growth and scaling up as a core foundation, with data recognised as a core enabler and The ScaleUp Institute was established by the private sector with the practical mission to make the UK the best place in the world not just to start but scale a business. 13 SCALEUP INSTITUTE | | @scaleupinst | #scaleup 1 And in 2018 joined by the British Business Bank localities at its heart with further investment into local infrastructures. the development and launch of the Department for International Trade's new Export Strategy placing high potential scaleup businesses as a clear segment within it and the evolution of Innovate Uk's scaleup services. data pilots progressed with Government, including HMRC, to identify scaling companies and their characteristics, as well as to inform, in pilot areas, the businesses of their scaleup status, and make them aware of services which they can be fast tracked into at a local level. The pilots will inform next steps in 2019. the implementation of HM Treasury's Patient Capital Review with the setting up of British Patient Capital, a 100m angel fund and a network of dedicated regional managers to foster a healthy ecosystem of scaleup finance at a local level including a growth capital finance hub. the private sector's growing focus on identifying scaleups among their client base, and creating more tailored solutions for scaling companies; this is most notable in the banking, advisory and tech community. the 2018 Budget announcements investing in peer-to-peer networks, mentoring and Business Leadership. bespoke sector specific scaleup solutions emerging, such as that recently announced in the creative sector and the recognition of the importance of scaleups to the UK economy in the recent formation of the Prime Minister's Business Councils. Through 2018 we have continued to work closely with the Government at local and national levels on how these policy initiatives are effectively implemented for scaleups to deliver practical outcomes. This includes our continuing work with the Industrial Strategy, ScaleUp Taskforce, Productivity and LEP reviews. Politicians and parliamentarians generally, are looking for solutions to our scaling challenges. We have seen increasing interest from overseas in the ScaleUp Institute's work. The 2018 Review once again draws on the thematic work of the ScaleUp Institute and the results of the recent survey of scaleup leaders, to present a complete picture of the national landscape for scaleups. For the first time it also contains a Public Procurement Index, identifying total public expenditure with visible scaleups, and a Map of ScaleUp Support, highlighting what support purports to exist for scaling firms, where the gaps are and consequently what more needs to be done. Our partnership with the Office for National Statistics is proving extremely fruitful. This year we have analysed detailed datasets that lay bare the relative scaleup performance of different areas and highlighting where local authorities need to take more and urgent action. Combined with other research undertaken during the course of the year, extensive meetings and engagements with scaleups and local business ecosystem leaders, and the results of the 2018 survey and Scaleup SME Finance Monitor, the data findings confirm a consistent pattern with key insights and learnings for us all to take forward through 2019. Now is the time to double down on our collective efforts to address our scaleup challenges. At the heart of this must be a scaleup segmented, relationship-oriented approach at all local levels with initiatives developed, and policies identied, fully implemented. " 1 Department for International Trade: Export Strategy: supporting and connecting businesses to grow on the world stage 14 IRENE GRAHAM, CEO, SCALEUP INSTITUTE EXECUTIVE OVERVIEW Our key conclusions for 2018 are: Scaleups numbers and growth rates are generally rising but local disparities remain ONS data continues to show a growing scaleup population in the UK. The total number of scaleups increased from 31,440 in 2015 to 35,210 in 2016, a growth of 12 per cent. Using sectoral data from the ONS, we have also shown that scaleups are much more productive across almost every sector of the economy averaging 275,000 turnover per employee. This trend in ONS data is also evidenced in our latest ScaleUp Index with Beauhurst, which shows a 15% increase in number of scaleups achieving Companies House reporting threshold levels. However, regional disparities persist. Our maps of scaleup density highlight the geographic variation while some areas exhibit high growth, others are lagging. This reinforces the imperative for local intervention and action. These datasets increase our understanding of scaleups, and also reinforce the need for more real-time information to enable more effective private and public sector engagement to scaling businesses at every level. This is work we continue to progress with Government. Scaleups remain ambitious, confident to scale further, highly innovative, and global Scaleup leaders again evidence the fact that they are twice as likely to be innovative and international than any other business segment. The majority of scaleups are globally focused and hungry to seek out international markets. As the Export Strategy recognises, they are crucial to our future trading success and they are looking further afield than the traditional markets in Europe and the USA. The Pacific region, Middle East, Asia, and India are on their horizons. It is vitally important that the commitments made in the Export Strategy are put into practice to help them grow their access to overseas customers. The Government and private sector must help open doors for scaleups with better buyer connections and bespoke trade missions. This is especially important when more than half of all scaleups surveyed are worried that Brexit will have a negative impact on their businesses with one in eight believing it will have a very negative impact. The core challenges stand, but Access to Markets is significantly on the rise In 2018 our scaleup CEOs continue to say that they need the most help with securing talent, but rising up in importance to be almost on a par is access to markets, including overseas customers, and opportunities for procurement and collaboration with Government and large corporates. Challenges in leadership development, finance and infrastructure also remain significant and can dial up depending on locality. Scaleups are keen to see better access to R&D innovation funding and growth finance options delivered locally, along with access to the infrastructure that supports their innovation drive. Finance and infrastructure remain vital components to scaleup success. This year four in ten scaleup leaders still perceive no relevant support available for a company like theirs and two-thirds want much better coordination of national services in their local areas through some form of relationship management. Scaleup initiatives to break down the core scaling challenges were sparse in 2014, but are now emerging at pace, with 1 in 3 EU co-funded. However, coverage of the country is not uniform; some areas lack local scaleup solutions; markets access is under-served. Quality not quantity is vital. For the first time this year working with Innovate UK, the London School of Economics and Arup, we have mapped the available business support that purports to exist for scaleups across the UK. This has provided some critical insights which we will be following up in 2019. Notably of the 219 programmes mapped, 60% have been established in the last three years; 1 in 3 are currently co-funded by the European Regional Development Fund (ERDF) and only 10% of programmes provided assistance with corporate collaboration, despite this issue being cited as a key barrier to growth by scaleups in our survey. While many programmes state they aim to support scaleups, many have yet to be 15 SCALEUP INSTITUTE | | @scaleupinst | #scaleup endorsed by the ScaleUp Institute, and scaleups do not have the time to assess their quality. This reinforces the ongoing role for the ScaleUp Institute in assessing which programmes work and which do not and raising awareness of the most impactful initiatives. EU funding for support to scaleup initiatives through EIB/EIF, ERDF, COSME and others is substantial. In leaving the EU we need to make sure no 'scaleup chasm' emerges by failing to have domestic policy routes to absorb past EU support for UK scaling businesses. Access to these facilities must be continued or appropriately replaced. Procurement and collaborative opportunities need to be increased and simplified Our inaugural Visible Scaleup Public Procurement Index, developed in collaboration with Tussell and published with this Review, highlights the further work that the public sector needs to do to engage effectively with scaleups, as well as the government bodies which are already benefiting from these interactions. Public sector bodies awarded 1.5bn worth of contracts to 397 scaleups in Q3 2017 Q2 2018, but more remains to be done as scaleups only account for 2.1% of the total value awarded. Central Government, in particular, has room to improve. It is currently only responsible for 10% of awards given to scaleups by value. Scaleups continue to cite difficulties in discovering opportunities to bid, as well as finding the process too complex. More can be done to raise awareness and simplify procedures in the public sector sphere but also significantly in the corporate world. People and Place matter most Scaleup business leaders most value locally- rooted resources and services to foster their growth. They are looking for local solutions that are easy to navigate and tailored to their specific needs. These include peer- to-peer networks where they can discuss solutions to common challenges with counterparts, stronger access to schools, universities and collaboration partners in the public and private sectors. While scaleup leaders recognise that there are national Government initiatives, they want these delivered locally in a manner much easier to navigate. THE INFRASTRUCTURE GAP Navigating infrastructure THE MARKETS GAP Accessing customers other markets / home market THE FINANCE GAP Accessing the right combinations of finance THE TALENT AND SKILLS GAP Finding employees to hire who have the skills they need THE 5 KEY GAPS THE LEADERSHIP CAPACITY GAP Building their leadership capability So, what does the scaleup ecosystem need to do now? 16 EXECUTIVE OVERVIEW IRENE GRAHAM, CEO, SCALEUP INSTITUTE As an ecosystem we must: Act at a local level to overcome continuing disparities and act in a targeted manner with greatest emphasis on converting scaleup 'cold spots' to 'hot spots'. Scaleup needs and solutions must be high on the agenda of every local area and authority. Detailed ONS datasets demonstrate where the challenges are and where action needs to be taken. In 2019, the ScaleUp Institute will carry out further research using these datasets and others to get behind the figures and help focus action on local needs and local areas that most need attention. Unleash the most up-to-date data so that we can be ever more effective in our engagement with scaleup businesses and leaders and to harness our resources with more effect, impact and investment. In 2019 we will continue our work with Government and HMRC in piloting the use of data to identify and communicate with scaleups and in driving forward a verification solution including further analysis on a central opt-in or self- identification service. Develop better segmented scale-up centric and hubbed solutions. An effective segmentation of the UK business population and a client-centric approach to solutions for scaling firms must be at the heart of ongoing intervention and developments. All Local Industrial Strategies should have a clear scaleup component. Local Account Managers should be put in place to curate relevant activities and help scaleup business leaders to better navigate impactful private and public sector initiatives tailored to meet their needs. In 2018 scaleup leaders have cited such roles as valuable to them, which we have also evidenced in Denmark and Scotland. Local communities in the UK are now seeking to emulate this model and in 2019 the ScaleUp Institute will continue to monitor progress in this area. We have also recognised the positive impact of the Scaleup Enabler role in the West of England, where much has been done to galvanise the ecosystem towards scaleups, and we encourage replication of this elsewhere. Collaborate better and more effectively across markets. Large corporates, business schools and universities can still do more with local scaling businesses, working alongside local authorities to foster talent, extend research and development facilities and open up opportunities to enter markets. Both public and private sectors can be more transparent, making their procurement processes simpler and easier to navigate for scaling business and joining up better with local scaleup initiatives to promote the opportunities. We have refreshed our corporate collaboration checklist with Nesta and recommend it as a tool for improved engagement with scaleups in the supply chain. In 2019 we will continue to monitor progress and highlight best practice as a part of our ongoing work. Link scaleups to capital and local spaces to enable them to grow faster. A series of new initiatives will provide promising opportunities for scaleups to access investment. It is vital that scaleups are aware of these opportunities and are given support to access them. In 2019 we will continue our overall work with the British Business Bank including the finance hub launched in June this year. Ensure no gap in scaleup solutions emerge as a result of leaving the EU. The Shared Prosperity Fund and Comprehensive Spending Reviews must take account of scaling businesses needs as the growth engines of the economy. It is imperative that the public and private sector in every locality respond to these findings and continue their scaleup focus. Our recommendations for action For the ScaleUp Institute, 2018 has been a year of building upon the good work already underway and ensuring that this is translated into effective outcomes. We continue to advance a national scaleup action plan through education and significant local engagement, monitoring what exists and sharing insights on impactful actions around the country to ensure we have a joined up ecosystem for addressing the barriers to scaling up. 17 SCALEUP INSTITUTE | | @scaleupinst | #scaleup Progress is underway against many of the recommendations made in prior years. We are beginning to create the dynamic environment that our scaleups need to flourish. But our job is far from done and we must continue to drive forward. Here, we refresh and recommend a further set of actions. These recommendations are not a menu to choose from, but a comprehensive series of actions all actors can take to tackle the issues that hamper scaleup growth. Taken together, we are confident that we will make the UK the most attractive place in the world for scaleups. Throughout the rest of this report, we examine: Chapter 1: The national and local scaleup landscape, as regards numbers, sector and growth trends, including new data sources on scaleup support and what our scaleup leaders are telling us. Chapter 2: Impactful programmes that work to overcome the barriers faced by scaleups and insights for local leaders to incorporate into their own efforts. Chapter 3: The progress made and lessons learned by new participants of our Driving Economic Growth programme, as well as updates on previous participants. Chapter 4: A review of progress on our previous policy recommendations, the work of the ScaleUp Taskforce, and what is needed in 2019 if we are to substantially break down barriers to scaling faster and more effectively. Chapter 5: A look forward to 2019 and the work that we need to support and promote to further grow scaleup businesses in the UK. This is followed by our "Local Scaleup Briefings" which draw together various sources to provide insight into the local picture. We share evidence on the numbers of scaleups in each LEP and region; the scaleup sectors and top 5 local scaleups growing in employees or turnover, including a local 'snapshot' of scaleup leaders' views, to help illustrate what locally most needs to be addressed. In summary Scaleups are essential to a vibrant UK economy, but we need to continue to step up our game if we are to surpass our international competitors and climb to the top of the OECD rankings. While we have reason to be optimistic, we cannot be complacent when barriers to scale still exist in many local areas and when scaling businesses are signalling concern that the UK may become a harder place to grow and see a lack of resources targeting their needs. We must act now to remedy this. Challenges to UK scaleups predate the current 'Brexit' focus; Brexit simply makes the prize of reducing the scaleup gap, even more significant. These challenges are within our power to fix. In 2019 the ScaleUp Institute will continue its mission to drive forward understanding, action and outcomes to ensure scaling business leaders are 'top of mind' in every local community. We will continue to undertake more sector specific work, and build on the creative industry and social business work commenced in 2018; we will continue our education focus with more detailed practical guidance to local areas in most need; we will continue to progress understanding of well evidenced impactful programmes (including analysing further the mapping of the scaleup 'support' ecosystem with Innovate UK and an online scaleup hub) and insights on what works. As a priority we will progress our work on access to markets and with Government to expand the timely availability of datasets to ensure better interventions, investment and alignment of resources tailored to scaling businesses requirements. Closer engagement with the education sector will also be a high priority with specific attention to sharing of practice and solutions to the talent and leadership gaps. Strong engagement across the national and local, public and private sectors will be maintained. We will continue to work closely with Innovate UK and the British Business Bank on their specific scaleup solutions. We look to all members of the ecosystem to join us in driving the scaleup agenda forward with pace and passion, to make the UK the best nation in which to scale a business. 18 EXECUTIVE OVERVIEW IRENE GRAHAM, CEO, SCALEUP INSTITUTE 1. IDBR, 2013-2016, and associated confidentiality protections. 2. ScaleUp Survey 2018 and UK Innovation Survey 2017 3. IDBR, 2013-2016, and associated confidentiality protections. 4. Octopus High Growth Small Business Report 2018 5. Beauhurst Visible Scaleup Index 2018 6. ScaleUp Survey 2018 and Employer Perspectives Survey 2016, Department for Education Where not otherwise referenced, all statistics are taken from the 2018 Scaleup Survey SCALEUPS ARE PRODUCTIVE Scaleups are more productive than their peers, generating an average of 275,000 turnover per employee.1 SCALEUPS ARE INNOVATIVE 4 in 5 scaleups have introduced or improved a product/service/ process in the last three years, twice the rate of large firms.2 SCALEUPS ARE INTERNATIONAL Two thirds of scaleups are involved in international trade, in a range of markets across the world. They are looking to expand further internationally despite Brexit. SCALEUPS ARE ACROSS ALL SECTORS Scaleups span the economy: the majority of them operate in sectors outside of technology. SCALEUPS CREATE HIGH QUALITY JOBS Scaleups help create high-quality jobs with more satisfied employees employing 3.6m workers3 and creating c. 3,000 new jobs per week.4 SCALEUPS ARE DIVERSE 40% of all scaleups have at least one female director5 SCALEUPS ARE GOOD CORPORATE CITIZENS 64% of scaleups offer opportunities to young people through work experience, internships or apprenticeships. They offer apprenticeships at twice the rate of typical firms.6 SCALEUPS DON'T STOP GROWING 80% of scaleups expect to scale again in the coming year. 62% expect to achieve 20%+ turnover growth. 41% expect to achieve 20%+ employee growth. We will continue our education focus with more detailed practical guidance to local areas in most need; we will continue to progress understanding of well evidenced impactful programmes " 19 SCALEUP INSTITUTE | | @scaleupinst | #scaleup The ScaleUp Institute's core purpose is to: Ensure scaleups are a national priority embedded into the local fabric of the communities in which they operate, with solutions delivered across the private and public sector to break down the barriers they face. Engage as a national data observatory, providing insight on the scaleup ecosystem across the UK, disseminating and analysing the most recent data, ensuring scaleup businesses are on the map and providing benchmarks for the landscape each year to see where more can be done. Acting also as an international barometer and assessor. Educate on what is needed to create and foster a local ecosystem 'match fit' for scaling businesses at every stage of their growth journey, and to highlight well- evidenced impactful programmes and practices from which others can learn, emulate and improve. Enhance knowledge of scaleups through research, data, policy and analysis, to understand their needs and which localities of the country have the greatest requirement for private and public sector engagement, resources and investment to propel scaleup business growth. 3 Key principles guide our work: 1. Data and evidence building upon what works: We will rigorously assess interventions and programmes based on data and evidence of measurable impact. 2. Segmentation: Businesses are not homogeneous scaling business must be treated as a separate segment with bespoke solutions. 3. Client centric and local: Scaleups value locally delivered solutions even when a programme is national. In a growing company, time is a scarce commodity and community level engagement is essential, alongside active relationship management. These principles we believe should be at the heart of efforts to overcome the challenges which scaleups have continually identified to their growth. We will continue to champion them. 20 EXECUTIVE OVERVIEW IRENE GRAHAM, CEO, SCALEUP INSTITUTE 21 SCALEUP INSTITUTE | | @scaleupinst | #scaleup Recommendations for 2018 1 A verification process with Government should be created to allow for local and national stakeholders to verify the 'Scaleup status' of a business, building on the recent work of the ScaleUp Institute with Government. This should tap into datasets that combine ONS, Companies House and HMRC data points to enable stakeholders to fast track solutions to scaleup leaders. If necessary, legislation should be passed to introduce such an enquiry capability. 2 A 'Scaleup Visa' should be made available in communities where there are 100+ scaleup companies to enable scaleup leaders, across all sectors, to recruit the staff they need to increase their capacity to grow. The Government should make the international skills needs of scaling businesses a priority. Local authorities, education establishments, advisory and finance companies should be able to be sponsors of such. 3 Funding for local communities should continue to be tied to the effective deployment of initiatives that close the scaleup gap as well as the results and impacts that they have on the number of scaleup businesses in their area. Every Local Industrial Strategy should have a scaleup pillar, including a markets access strategy and a scaleup cluster map based on currently available datasets. 4 All local communities should appoint a Scaleup Champion and develop a relationship management structure for scaleup businesses. 5 The outcomes of the Productivity Review, Shared Prosperity Fund and Comprehensive Spending Review should ensure that funding for impactful business support (whether it be mentors, leadership or networks) has a significant focus and segmentation towards our scaleup businesses, which are generators of wealth, exports and productivity to the UK economy. These Reviews should collectively ensure no gap in scaleup support provision is allowed to arise in light of the UK's changing relationship with the EU. 6 Central Government when implementing its Export Strategy should allocate a significant portion of resources to scaleups, including supporting dedicated trade missions for scaleups. All local areas should be encouraged to set up a local exchange programme for scaling businesses, such as that developed by the Mayoral 'Go to Grow' campaign in London. 22 EXECUTIVE OVERVIEW IRENE GRAHAM, CEO, SCALEUP INSTITUTE 7 Public bodies should use the inaugural Visible Scaleup Public Procurement Index to further improve their understanding and reporting on the procurement involving UK scaleups, including scaling businesses not yet visible at Companies House. All public bodies should improve the way opportunities are promoted to scaleup companies by significantly raising the visibility of procurement champions and ensuring their roles have objectives and measurements. The Government should continue the evolution of Contracts Finder to become a smart platform and continue to develop more scaleup specific 'meet the buyer' events working with local areas and build on the current work underway as regards sandbox environments. 8 Large companies should report on the level of collaboration and procurement they source from scaleup companies. Any procurement contracts with Government should require an increase in the amount of business undertaken with scaleups as part of the contracting process which should be monitored. 9 The Department for Education, Local Enterprise Partnerships and the Careers & Enterprise Company should use their convening and promotional power to ensure that students at schools, colleges and universities come into contact with business leaders and that APIs to the National Pupils database and the destinations database (with suitable protections) are made available so that the impact of these interventions can be measured. The public, private and education sectors should continue to work together to close the gap on provision of high-quality flexible scaleup leadership programmes, including mentoring, peer networks and matchmaking of non-executive directors who have scaled businesses before. Better connections should also continue to be made between national programmes and local ecosystem leaders. The Small Business Charter, and other such mechanisms, should integrate an assessment of 'scaleup engagement' into their performance analysis. 10 Government and industry should ensure progress is made closing the finance gap for scaleup by continuing the work to implement the Patient Capital Review. Growth finance should be included as core curriculum in all local scaleup leadership programmes, enabling them to seek out and secure the most appropriate funding at each stage of their company's growth. The status of current EU sources of funding needs to be monitored, and replaced as appropriate. 23 SCALEUP INSTITUTE | | @scaleupinst | #scaleup 24 EXECUTIVE OVERVIEW IRENE GRAHAM, CEO, SCALEUP INSTITUTE 2018 Highlights of the year From London to Silverstone to Newcastle to Manchester a day on the road with the SUI as we impart insights on scaleup corporate collaboration and leadership development with Silverstone Technology Cluster; host a thought leadership roundtable on Social Scaleups with Barclays; launch Manchester Business School's Scale-Up Forum peer network; and head to Newcastle to kick off ScaleUp North East. Innovate UK's ScaleUp Pilot Advisory Board, chaired by SUI, kicks off. JANUARY The economic value of scaleups is discussed at the inaugural Colne Valley Business Conference And we join the Scottish Ecosystem to assess the status on their scaleup plans. (Twitter: @3mbic) Peer-to-Peer with the Vine Club in Beaulieu discussing scaling pains with Smith & Williamson. FEBRUARY First ScaleUp Female Founder Index is published to coincide with International Women's Day, highlighting the diversity and variety of our female-led scaling business. Nordic Scaleup Summit invites SUI and Innovate UK to share UK insights on scaleup initiatives and to foster cross border collaboration: the first of many international insights imparted in 2018 with our core partners. SUI participates in Downing Street roundtable with SME Crown Rep Emma Jones and Minister for Implementation Oliver Dowden to discuss announcements geared to enabling more Government business to be contracted with SMEs and scaling firms, many align with SUI and ScaleUp Taskforce recommendations. MARCH SUI participates at Thames Valley Berkshire Local Industrial Strategy workshop and Northern Powerhouse Growth Hub Network. SUI helps shape Innovate UK's Scale Up Peer-to- Peer Summit at the Belfry. SUI gives testimony to Lords EU Internal Market Sub-Committee on Startups, Scaleups and Brexit. APRIL The third DEG course takes place at Leeds University with 64 ecosystem leaders from across the UK. SUI hosts 2018 Scaleup Taskforce meeting at Digital Catapult; participates in Growing Women's Enterprise in Scotland with Strathclyde University; and continues to work with the Creative Industries on the sectoral challenges of accessing finance and scaling up. MAY SUI hosts and gives evidence to BEIS Parliamentary Select Committee inquiry into business and productivity. BBB soft launches Finance Hub focussed on growth capital working with SUI and finance ecosystem. SUI joins Liverpool LEP at International Festival of Business to discuss Scaling in today's World (12/6) with the Entrepreneurs' Network and The Supper Club and meets with all UK chairs of Vistage to discuss the UK scaleup challenge and relevance to their UK wide peer-to-peer networks. London Stock Exchange, ELITE, SUI, Nesta and Mind the Bridge host SEP ScaleUp corporate collaboration and investment summit London. JUNE Aiming Higher Innovate UK & Enterprise Europe Network Scaleup Programme 25 SCALEUP INSTITUTE | | @scaleupinst | #scaleup ELITE and Sage go on the road around the UK to inspire future scaleups working with the SUI and launch of the British Business Bank's equity tracker in Manchester. (photo credit: Saffron Blaze, via SUI participates in Oxford Local Industrial Strategy Trailblazer Workshop and hosts with Engine Shed Bristol the IUK ScaleUp Strategic Advisory Board and visit TasteTech, a local manufacturing scaleup participating in the pilot programme. JULY UK Government launches its Export Strategy with a range of SUI recommendations and a focus on how government will use advanced data science techniques to identify businesses with the highest potential to export so that they can be approached with targeted support. This will include high export potential, high growth firms and scaleups. (Twitter: @LiamFox) AUGUST SUI participates at the first O2 Blue Door Conference for fast growing businesses. Somerset Chamber and Lloyds Bank invite SUI to present on Scaling for Infrastructure at Hinkley Point as they evolve their scaleup hub for suppliers. Inspiring to hear JJP Holdings' growth journey as part of this initiative. SUI presents to local ecosystem leaders at the Kent & Medway Growth Hub Steering Group, bringing together all county councils to learn from ScaleUp Ashford and replicate it across Kent. Discussing with Lord Smith of Kelvin, chairman of British Business Bank, access to growth finance in Scotland and how BBB is working with the local ecosystem to enable Scottish businesses to scale up with patient capital and long-term investment. SEPTEMBER Coast to Capital Scaleup Escalator Programme launches following participation on DEG. Launch of the HMRC and SUI data pilot (see page 198 for insights). SUI hosts a reception for Ambassadors of the scaleup ecosystem. OCTOBER Launch of the Scaleup Annual Review Follow

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As the UK faces an increasingly competitive and uncertain economic outlook, the need for communities to be able to drive their economic growth remains mission-critical. There has never been a more important time to focus on scaling businesses.

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