By Eamonn Ives (Research Director, The Entrepreneurs Network).

Executive summary

Across a suite of technologies, different countries are vying to emerge as global leaders – with many national governments pivoting hard to incubate frontier industries inside their own borders.
Key to realising many of the objectives that governments around the world are now setting themselves will be accelerating the pace of scientific and technological innovation.
Innovation can spring from many sources, but entrepreneurs and the startups they launch are rightly recognised for their ability to supply uniquely paradigm-shifting contributions.
Enabling an environment that supports them requires an almost infinite number of things to go right – from the tax system, to the regulatory landscape, to the depth and flexibility of the labour market.
Of utmost importance too is the extent to which entrepreneurship is open to people from all walks of life, and at all stages of their lives. For young founders in particular, the barriers to entry can be especially acute. They are less likely to have deep financial reserves, established professional networks, prior knowledge of navigating regulation, or even just the experience of managing the daily trials and tribulations associated with being a business owner. And yet it is younger founders who so often bring to bear the freshest ideas, the boldest ambition and the greatest appetite for risk.
Earlier this year, we established the Young Entrepreneurs Forum to connect and empower young entrepreneurs who are building incredible things, and to harness their collective insights to intensify momentum for change.
In this report, we distill some of the key barriers to success as reported by young founders themselves. Across seven distinct policy themes, we dig into what is going right and what is going wrong, and explore what the Government can do to ensure Britain is a place where young founders feel inspired to build.
A summary of our headline findings and policy recommendations are set out in the table below:
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FOREWORD: Sean kohli — Chair, YOung Entrepreneurs Forum

It is an honour to introduce the inaugural report of the Young Entrepreneurs Forum. This project matters deeply to me. Although I have lived, studied and built companies abroad, the United Kingdom is my home and it is where I want to see entrepreneurship thrive. The next generation of founders should feel confident they can build world-class businesses here without believing they must move to Silicon Valley or Singapore to do so.

My time in California showed me what a supportive ecosystem looks like. Capital is abundant, risk is tolerated, regulation steps back, and support for founders is cultural. At Stanford, in Palo Alto, in San Francisco, every part of the system is geared towards turning ideas into reality. That is why young founders succeed there. It is not that they are more talented. The UK has some of the brightest minds in the world. The difference is that their system works with them, not against them.

Too often, the opposite is true here. Policy caters to incumbents, and young founders are held back by real barriers of cost, complexity and limited access to capital. On top of that, perception makes things worse. Many people believe starting a company is impossibly expensive, when in reality surveys show nonfounders wildly overestimate the cost. That myth kills ideas before they even begin.

This must change. If we want highgrowth startups, we need to compete properly. Tax must be competitive rather than burdensome. Trade ties must open new markets. Universities should act as launchpads rather than simply lecture halls. Youth mobility schemes should bring in new skills and ideas. Founders must feel supported at every stage.

The global race is already underway. The United States and China are accelerating, while India and the Middle East are moving fast. Every country is playing to its strengths. The UK has extraordinary potential, but potential is not enough if it is not matched with action.

That is why this Forum matters. We are not here simply to talk about challenges. We are here to change the rules, not just to navigate them. Young people are shaping the future, whether policymakers recognise it or not, and this is our chance to create the environment that allows that future to succeed.

The future will not be handed to us. It is ours to shape. With the right support and by implementing the recommendations set out in this report, Britain’s young entrepreneurs will be in a stronger position to build, to compete and to lead.

Sean Kohli is the Chair of the Young Entrepreneurs Forum

Introduction

Countries around the world are rapidly having to get to grips with a new and constantly changing state of affairs – characterised by mounting geopolitical tensions, overt international competition, pressing social issues, unrelenting environmental change and advancing technological disruption.

Across a suite of technologies, different countries are vying to emerge as global leaders – with many national governments pivoting hard to incubate frontier industries inside their own borders, with a hope of realising not just the economic gains from doing so, but also to bolster their national security and address other societal problems.

Britain is no exception amid all of this. Since the new Government came to power, pledges to boost spending on defence have been made, and strategies to accelerate its domestic artificial intelligence industry have been published. In its election-winning manifesto, the Labour Party promised “a new approach to economic management” – dubbed “securonomics” – and vowed to reshore various industrial capabilities.

Key to realising many of the objectives that governments around the world are now setting themselves will be accelerating the pace of scientific and technological innovation. Problems like climate change will only be adequately tackled by inventing new technologies to enable people to live the lives they expect to lead in a way that treads more lightly on the planet. Challenges prompted by an ageing population will only be addressed by better understanding medicine and developing novel treatments. Robustly defending our borders will require the military to adapt and embrace cutting-edge weaponry and novel defence systems.

Innovation can spring from many sources, but entrepreneurs and the startups they launch are rightly recognised for their ability to supply uniquely paradigmshifting contributions. Sometimes the only way for truly revolutionary ideas and technologies to come to the fore is for entirely new companies to force them into the picture – disrupting the established giants and bequeathing society with new and exciting goods and services. Beyond this, startups also stimulate innovation more generally by acting as a constant pressure on incumbents, ensuring they cannot afford to stand still.

By definition, startups will only ever comprise a thin segment of the entire economy. Each one will either fail, stagnate and age out, or successfully manage to scale and become a larger, more mature firm. It is of course the role of policymakers to ensure that companies of all sizes and pedigrees have the best possible business environment in which to thrive. But given the particularly potent economic contribution that startups can make, it is especially important that conditions are such that their founders have the ability to launch and begin disrupting whichever market they are in.

Enabling that environment to emerge requires an almost infinite number of things to go right. From factors like an economy’s regulatory policy that literally determines what businesses can and cannot legally do, to the incentives for growth that its tax system either sharpens or blunts, to its immigration frameworks that control how easy or not it is to recruit talent – all will hold significant sway over whether a given country will flourish or flounder when it comes to incubating successful entrepreneurial ecosystems.

Of utmost importance too is the extent to which entrepreneurship is open to people from all walks of life, and at all stages of their lives. For young founders in particular, the barriers to entry can be especially acute. They are less likely to have deep financial reserves, established professional networks, prior knowledge of navigating regulation, or even just the experience of managing the daily trials and tribulations associated with being a business owner. And yet it is younger founders who so often bring to bear the freshest ideas, the boldest ambition and the greatest appetite for risk. Ensuring that Britain is a place where such individuals can translate their energy and imagination into thriving companies is therefore not just a matter of fairness, but a vital strategy for long-run economic growth.

Fortunately, Britain starts from a relatively enviable position to make good on this lofty goal. Many of the fundamental ingredients for economic success lie on our doorstep. Already, legions of innovative companies were either founded in Britain or have actively chosen to be headquartered within our shores. Whether by dint of careful policymaking or fortunate accident, there are plenty of individuals in other nations who look at aspects of our economy with green eyes. To name but a few of our advantages, we boast a deep and sophisticated investment landscape, a multitude of world-leading universities and research institutes, a stable and largely business-friendly legal system, and a startup policy agenda – nurtured by successive governments – that is widely recognised as being forward-thinking and internationally competitive. For all the ink that gets spilled about our shortcomings, Britain is far from the economic backwater some seem intent on believing it has become.

Moreover, much of what Britain gets right when it comes to economic growth are those areas that seem particularly challenging – if not impossible – for policymakers to simply magic out of thin air by virtue of legislative change. Much of our country’s allure to current and future founders comes not from discrete examples of deliberate, and therefore replicable, decision making. Our language, civil culture, system of law, currency, geography and timezone all positively conspire to make Britain a fertile place in which to grow a business. These features have either been hard-won over the course of centuries, or are an inherent advantage that Britain alone possesses – advantages which other nations cannot replicate at the stroke of a politician’s pen.

That is not to say we can rest on our laurels. To be sure, there are many areas where Britain could do better. Restrictive planning laws stifle agglomeration in our most productive cities by preventing ambitious and intelligent people from living in closer proximity to one another. Antiquated and unreliable transport networks sever opportunities, weaken labour markets and increase the underlying costs of doing business. Our seeming inability to quickly or inexpensively build new energy infrastructure keeps bills high for all businesses, and renders certain industries prohibitively uncompetitive. Aspects of our tax code create perverse incentives that discourage wealth creation at their best, and at their worst drive away talented individuals to other economies entirely. Parliament often fails to properly anticipate technological change, only to then move haphazardly in response. Meanwhile, the apparatus of government too often struggles to adequately engage with entrepreneurs, failing to understand the obstacles to their growth and understand how they may be able to assist the state in fulfilling its duties.

What’s ‘nice’ about these challenges, however, is that to a large degree, we know what they are, and how to solve them. The question we must therefore ask ourselves is how to bring about a movement which raises their salience as barriers to prosperity, and gives policymakers the motivation and confidence to dismantle them.

In this endeavour, we established the Young Entrepreneurs Forum earlier this year. It aims to connect and empower young entrepreneurs who are building incredible things, and to harness their collective insights to intensify momentum for change. What follows in this report is a distillation of what we heard from them – providing a comprehensive overview of young entrepreneurs’ perspectives on what it feels like to be an ambitious founder in Britain today.

STATE OF AFFAIRS

Flick through the business pages of any British newspaper on any given day and there’s a good chance you’ll come away feeling far from optimistic about our economy’s current state of affairs. Stories abound all too frequently of stock market decline, firms planning job cuts and investment decisions getting kicked into the long grass. Of course, journalists have every incentive to splash the negatives – but it is not as if their reporting is not based upon reality.

On many measures, Britain’s economic situation of late leaves little to celebrate. Real wages have scarcely grown since the Financial Crisis struck almost two decades ago. Investment has languished at far lower rates than in peer economies. Productivity among vast swathes of our business population is paltry. Our per capita GDP growth has stuttered along, and countries we were once comfortably ahead of are now nipping at our heels – if they haven’t surpassed us already.

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For anyone born at the turn of the millennium, the average quarterly growth rate they have experienced during their working life – pandemic years exempted – stands at a meagre 0.3%, and the last time we experienced quarterly GDP growth of more than a single percentage point was over 15 years ago in mid-2010.

Things do not need to be this way. While the economy has always fluctuated between booms and busts, average decadal growth rates have steadily trended downwards. Indeed, politicians now seem content to merely see growth rates on the positive side of the ledger, even if we’re only dealing in fractions of a single percentage point. Though it may not feel like it at the time, for low growth figures to be posted year after year after year is nothing short of a catastrophe in slow motion.

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This slowdown in growth is borne out by more than just the raw headline economic data. Several economists have presented convincing arguments that suggest innovation – by which we mean the process of devising and developing new and better goods and services, or ways of producing existing things more efficiently – has decelerated. This phenomenon can be clearly seen considering the technological advances witnessed over different timespans in our recent history.

A person born in 1900 who lived to be 70 years old would have seen the dawn of the automobile, and the improvement of them almost beyond recognition. Aviation would go from being an impossibility to commonplace in their lifetime. They would have witnessed the revolution of consumer goods and household appliances such as washing machines and television sets – on which they might have watched humans go first into space, and then land on the surface of the Moon. The fossil fuels which powered the Industrial Revolution in the 19th Century would begin to give way to cheap, clean nuclear energy. Breakthroughs in drug discovery and other pharmaceutical innovations gave us the tools to methodically eradicate horrific diseases for the first time in human history.

Compare this to someone born in the 1980s. Without doubt, they too have experienced and benefited from the fruits of innovation. This is most apparent in improving digital technologies and the rise of the internet, which have enabled us to work more productively, and experience new and better forms of entertainment. Many inventions developed in previous decades may not be radically different nowadays, but they are likely cheaper, safer and less polluting. But by and large, it is hard to argue that the pace of truly groundbreaking innovation has mirrored that of the first half of the 20th Century.

Of course, there’s still time to go in the latter scenario. In the next couple of decades, something might come along which makes the gains seen in the early-to-mid-20th century pale in comparison. It may even be with us, just nascent in its diffusion. Candidates such as ever more powerful artificial intelligence, leaps forward in numerous healthcare technologies or the commercialisation of nuclear fusion, might just be that hope.

We cannot, however, simply assume these breakthroughs will be gifted to us on a plate. Throughout our species’ history, all meaningful advances have been deliberately fought for. Individual innovators – whether entrepreneurs, scientists, investors, other visionaries, or indeed policymakers themselves – have had to come together to initially create new technologies and subsequently enable them to spread throughout the economy.

Empowering this set of actors to flourish is therefore paramount. And when it comes to envisioning a better, more exciting and innovative future, few are finer placed to do this than young people. Not only do they literally have a greater stake in the state of the future world than their older counterparts, but their inexperience can be an asset – in terms of thinking without limits or being burdened by orthodoxy.

On this point, it’s worth noting that the popular conception of the dynamic, successful prodigy entrepreneur does not always tally with reality. Research suggests that the median age of a successful founder – as defined by an entrepreneur who employs at least one other person – is actually 42 years old. Looking at firms with the highest growth records, this increases further still – to 45 years old.

Yet, in terms of truly paradigm-shifting innovation, there is counter evidence which suggests that younger people really are especially predisposed to achieving it. For example, economists have shown how, on average, papers and patents of older scientists and inventors get fewer citations, and the citations they do receive come from a smaller range of fields. And certainly, it isn’t hard to reel off a list of names of founders who started companies at a tender age that have revolutionised the lives of billions of people.

Thus, just as we earlier contended that while policymakers should seek to create a business landscape that is hospitable for companies of all shapes and sizes, special attention should be paid to helping burgeoning startups – so too should more be done to harness the ambition and raw potential of younger founders and would-be young founders.

In the next section, we will consider a handful of policy areas which stand out as being especially important to young founders and the startups they launch – whether positive or negative. While each individual entrepreneur will face unique challenges or benefit from distinct headwinds, these stood out as the most common that they encountered.

Case Study: Mark Golab — co-founder, cambridge surgical models

“There was never a predetermined plan to go into entrepreneurship,” admits Mark Golab, Co-Founder of Cambridge Surgical Models, “although entrepreneurship was always something that I was interested in.” Despite having been exposed to running an architectural practice when growing up, Mark embarked on a resolutely academic path, spending a decade working his way through undergraduate and Master’s degrees, three years in research, another Master’s, and finally a PhD.

It was towards the end of his PhD that Mark and his two other co-founders started Cambridge Surgical Models. The company is producing the next generation of surgical training tools – synthetic human organs that “look, feel, and bleed like real human organs” and AI evaluators for surgeons and medical students to practice on. With surgical training becoming increasingly limited over the past decade, and conventional methods such as cadavers or operating theatre practice less available, Cambridge Surgical Models fills a critical gap. The goal is simple: “Train surgeons, increase their skills, increase their confidence, reduce errors, and improve patient outcomes.”

Mark’s entrepreneurial journey has been challenging but worthwhile. Cambridge Surgical Models has gone from being just an idea to generating revenue and securing investment. Life as a founder “is challenging,” Mark says, “but it’s highly rewarding. From winning competitions, to talking about our ideas and getting recognition, to finding that people are genuinely interested in our products – they’re all nice milestones that we’re rather proud of.”

Despite having raised investment, Mark’s biggest frustration is accessing capital. “It’s increasingly difficult, particularly as a hardware company with long adoption timelines,” he notes, before adding: “A lot of investment is now going into AI businesses, where startups can scale to substantial revenue within months – which is something a MedTech business like ours could never realistically do.”

Mark also highlights the struggles involved with selling into the NHS, which he describes as “exceptionally frustrating.” Despite support networks helping companies pilot innovations, waiting times can be “protracted” – with Mark noting how one hospital quoted them a pilot slot in May 2026, almost a year away from when they initially made contact. Moreover, even when pilots succeed, orders can be blocked by procurement departments. “We’ve had to perform a slight pivot by focusing our efforts more towards the private sector,” Mark explains, where “there’s seemingly more demand and the time to adoption is relatively shorter.”

Mark’s advice to aspiring entrepreneurs is unequivocal: “One should certainly pursue the opportunity. Despite the risks involved, one will acquire many new skills and knowledge.” He stresses that “in entrepreneurship, it is as much about putting oneself outside of their comfort zone as it is having the conviction that the venture will be a commercial success, and young founders can be uniquely positioned to test out uncertain ideas.”

challenges and opportunities

It takes a finely balanced constellation of variables to create a business landscape that encourages founders to launch and grow amazing companies. Even putting all of the right building blocks in place will not necessarily result in success.

Ultimately, individual founders are all individual human beings. They have agency and considerations of their own, and won’t necessarily flock to wherever is ‘best’ to base their startup. Other factors, like language barriers, family ties, climate and even culinary preferences will play an important role in determining where, or even if, a founder chooses to start a business.

With that being said it is obviously true that jurisdictions can make themselves relatively more or less attractive to founders on the margin. Aggregated at the level of a national economy, and extrapolated over many years, this shows up in the data. Thus, while it takes more than just a positive enabling environment to sow the seeds of a blossoming entrepreneurial ecosystem, it is not as if policymakers are powerless to increase the likelihood that someone might opt to build in one place rather than another. Incidentally, we may also suppose that this is especially true for younger founders – who may have fewer ties to specific geographies, or face other considerations, than their older counterparts, which enables them to be more footloose when deciding where to be.

In the subsections below, we identify some of the modal policy themes that stood out to us as being especially important to young founders in Britain today. They reflect what we heard over the course of running the Forum this year – at in person events, through survey work, and so forth. In each instance, we try to summarise what young entrepreneurs were conveying to us in broad terms, before going into more granular detail about how policymakers may be able to respond.

Investment: Adding fuel to the fire

Access to capital is critical for startups, particularly in their very early stages when revenues are uncertain and overheads are high. Whether it’s being used to hire talent, develop prototypes or enter new markets, investment gives entrepreneurs the runway they need to test, iterate and scale their ideas. Without sufficient capital, even the most promising startups can struggle to get off the ground or compete effectively.

As shown in Chart 1, Britain is a venture capital powerhouse – third only behind China and the United States in terms of the quantity invested in 2024. More VC money was invested in Britain last year than was in France and Germany combined, and London in particular stands out as one of the world’s leading destinations for startup investment. While there are many valid criticisms of Britain’s economy, the ability of fledgling companies to cash cheques necessary to kickstart their growth does not seem to be one. Indeed, this was certainly the view of many of the founders we spoke to during this research – with one going as far as saying that: “pre‑seed and seed money now rains down like confetti.”

Yet, if we look closer, the picture is not quite as rosy. For a start, there are indications that the amount of investment in smaller businesses is declining by value, as are the number of deals. Second, and perhaps more pertinently, many investors, entrepreneurs and others close to this world will have heard variations on the phrase: “Britain is good at starting companies, less so at scaling them.” From an investment perspective, it certainly appears to be true that – at least relative to countries like America – accessing growth capital steadily becomes harder as companies begin to scale and look to expand.

As one young founder told us: “Scaling still feels like trying to sprint through treacle – growth‑stage cheques dry up fast once you’ve exhausted the large funds.” This was echoed by many others, who reserved their criticism in particular for institutional investors like pension funds, which one summed up as being: “largely allergic to venture risk.”

What’s welcome about this problem is the fact that it is clearly one that policymakers are aware of. Governments past and present have devoted considerable bandwidth to diagnosing the problem and devising remedies to fix it – in policy packages such as 2022’s ‘Edinburgh Reforms’, 2023’s ‘Mansion House Reforms,’ and this year’s ‘Leeds Reforms’.

By all accounts, this array of measures is broadly welcome. If institutional investors make good on their commitments to invest more in illiquid assets like startups, it will likely have positive consequences for Britain’s young founders. But it should not be seen as the be all and end all of improving the capital landscape. Ministers will have to grapple with the fact that increasing the supply of investable opportunities will also be critical – and to that end, it will need to enact broader measures that actively encourage investors to allocate more capital towards promising startups.

Perhaps one of the most straightforward ways to do this would be to abolish Stamp Duty on shares. Britain is one of the few advanced economies that still imposes a tax on the purchase of shares, which is levied at 0.5% on most equity transactions, and nets the Treasury around only £3.2 billion a year – not small change, but neither is it a great sum of money in the context of wider government spending. Eliminating Stamp Duty would make listing in the UK more attractive, by reducing the cost of capital for businesses and deepening the pool of domestic investors willing to back them. Greater liquidity would also improve price discovery, attract analyst coverage, and increase the appeal of public markets as a viable funding route for innovative firms.

Recommendation: Abolish Stamp Duty on shares to invigorate Britain’s capital markets

Institutional investors are far from the only pools of capital available to startups – and indeed, for the most fledgling of companies, a much more common source of investment will be smaller VCs, angel investors and alike. Here, two acronyms repeatedly animated young founders we spoke to during this research – EIS and SEIS, or the Enterprise Investment Scheme and the Seed Enterprise Investment Scheme respectively.

These two schemes give targeted tax relief for investors who back qualifying startups, therefore reducing the risk of investment into what will, by definition, be companies with little track record of success. They are long-lived, with EIS being established in 1993-94 and SEIS in 2012-13, and have helped incredible companies to scale in the UK – research last year from Beauhurst found that nearly half of the current crop of British unicorn companies had used EIS at some stage in their growth. During our research, young entrepreneurs expressed views such as: “The EIS scheme is a real backbone for early-stage venture building. It’s one of the UK’s strongest tools for fostering entrepreneurship,” and: “Layer on SEIS/EIS tax relief that lets angel investors feel heroic rather than reckless, and the pre‑Series A funnel stays generously greased even in choppy markets.”

Despite their success, both EIS and SEIS face a number of limitations. The complexity of the rules can act as a barrier for both founders and investors, particularly those unfamiliar with the system, while administrative delays – such as obtaining Advance Assurance from HMRC – can slow fundraising at critical junctures when founders and investors alike need to move fast. Fingers have also been pointed at the adequacy, or not, of current investment limits. For EIS, companies cannot raise more than £5 million per annum (or £10 million per annum if they are deemed ‘knowledge-intensive companies’) and this has been fixed since 2012-13. The lifetime limit stands at £12 million (or £20 million for knowledge-intensive companies), which has similarly been fixed since 2012-13. For SEIS meanwhile, both the annual and lifetime limits have been fixed at £150,000 for most of its existence, but were admittedly raised to £250,000 in 2023. There are no extra SEIS allowances for knowledgeintensive companies.

In the years since being set, these limits have been significantly eroded by recent inflation, and failed to keep up with the capital requirements that firms seeking to scale in globally competitive markets have. One straightforward way to resolve this challenge is therefore to increase the generosity of the schemes, both in terms of headline tax reliefs and the maximum amounts that companies can raise. Raising the SEIS investment ceiling would provide early-stage founders with a more substantial runway before needing to secure further finance, while an increase to EIS could better help proven firms to bridge the so-called ‘Valley of Death’ when it comes to raising investment and breaking into the next phase of their growth journey.

Alongside these adjustments, there is a strong case for simplifying administrative processes to ensure that the act of receiving investment through them is quicker, more certain and less bureaucratic. The Government may also be minded to look at introducing extra SEIS allowances for knowledge-intensive companies. Taken together, such reforms would ensure that EIS and SEIS evolve in line with the changing needs of high-growth businesses and continue to serve as vital instruments of Britain’s entrepreneurial economy.

Recommendation: Bring SEIS and EIS up-to-date with the current capital requirements of founders and investors, especially for knowledge-intensive startups

What’s welcome about this problem is the fact that it is clearly one that policymakers have cottoned on to. Governments past and present have devoted considerable bandwidth to diagnosing the problem and devising remedies to fix it – in policy packages such as 2022’s ‘Edinburgh Reforms’, 2023’s ‘Mansion House Reforms,’ and this year’s ‘Leeds Reforms’.

Perhaps one of the most straightforward ways to do this would be to abolish stamp duty on shares. Britain is one of the few advanced economies that still imposes a tax on the purchase of shares, which is levied at 0.5% on most equity transactions, and nets the Treasury around only £3.2 billion a year – not small change, but neither is it a great sum of money in the context of wider government spending. Eliminating stamp duty would make listing in the UK more attractive, by reducing the cost of capital for businesses and deepening the pool of domestic investors willing to back them. Greater liquidity would also improve price discovery, attract analyst coverage, and increase the appeal of public markets as a viable funding route for innovative firms.

Recommendation: Abolish Stamp Duty on shares to invigorate Britain’s capital markets

These two schemes give targeted tax relief for investors who back qualifying startups, therefore reducing the risk of investment into what will, by definition, be companies with little track record of success. They are long-lived, with EIS being established in 1993-94 and SEIS in 2012-13, and have helped incredible companies to scale in the UK – research last year from Beauhurst found that nearly half of the current crop of British unicorn companies had used EIS at some stage in their growth. During our research, young entrepreneurs expressed views such as: “The EIS scheme is a real backbone for early-stage venture building. It’s one of the UK’s strongest tools for fostering entrepreneurship,” and “Layer on SEIS/EIS tax relief that lets angel investors feel heroic rather than reckless, and the pre‑Series A funnel stays generously greased even in choppy markets.”

Recommendation: Bring SEIS and EIS up-to-date with the current capital requirements of founders and investors, especially for knowledge-intensive startups

Regulation: From static to streamlined

Regulations represent the rules of the game for doing business in an economy. Contrary to cries of some commentators, Britain is a relatively lightly-regulated country – especially on key, cross-cutting areas of business regulation such as how straightforward it is to incorporate a company and how flexible employment laws are. According to Innovate UK’s Global Regulation Index – which assesses how well different countries’ approaches to regulation support innovation – Britain ranks a commendable third out of 21 roughly comparable nations, behind only the Netherlands and Singapore.

With that being said, it is also the case that certain regulations doubtlessly stand in the way of economic growth – especially when they stifle the flourishing of novel technologies. Indeed, many of the young entrepreneurs we spoke to during this research echoed this sentiment. Among those working in emerging industries or with business models predicated on particularly innovative ideas or technologies, the idea that our regulatory state becomes much more of an impediment was widespread. As one founder put it: Regulatory red tape and a ‘wait and see’ attitude often slow down startups that could be scaling faster.”

While there are usually perfectly good reasons for regulations to be enforced – upholding health and safety, protecting the environment, and so on – it should be kept in mind that a good deal of requirements exist for much less defensible reasons. For a start, because regulation is ‘additive’ by nature, it exhibits a tendency to constantly ratchet upwards and become outdated as technologies advance ahead of what regulators could ever conceive of at the time of drafting specific rules.

Second, policymaking processes also tend towards regulatory capture by incumbents with vested interests. Larger companies often have greater capacity to influence government, whether by employing expensive and experienced lobbying teams, or by being able to threaten economic harm should decisions go against them. Moreover, large companies may simply be better positioned to navigate regulatory burdens in a way that smaller challengers may typically not – for instance the latter may well not have dedicated lawyers or compliance teams.

This may just be the way of the world, and it should be noted that what small businesses like in size they certainly make up for in numbers. Moreover, it would be a mistake to necessarily equate small with good. But with this being said, it should not prevent governments from acting to ensure that they approach regulatory issues in ways that do not disadvantage otherwise dynamic startups.

To its credit, the current Government has already made some commendable moves in the right direction on exactly this front – not least through the establishment of the Regulatory Innovation Office (RIO), which it says will “support regulators to update regulation, speeding up approvals, and ensuring different regulatory bodies work together smoothly” and “work to continuously inform the government of regulatory barriers to innovation, set priorities for regulators which align with the government’s broader ambitions and support regulators to develop the capability they need to meet them and grow the economy.”

Given how nascent the RIO is, judging its success to date with regards to improving the regulatory landscape for Britain’s most innovative companies would be an unfair exercise. So far, it has announced that it will focus on four areas – engineering biology, artificial intelligence and digital in healthcare, connected and autonomous vehicles, and space. What one might reasonably hope for is that as the RIO matures and proves itself as a vehicle for change, other areas of focus are added to its remit, enabling a wider set of businesses to engage with government. If the RIO succeeds, the speed and clarity dividend will be felt across the board, but will be particularly visible to first-time and younger founders, for whom a single timely approval can unlock an investment round, secure a hire or land a first customer.

But a dedicated office is just a start. The operational and delivery method is what will determine whether innovators experience a faster path to market. Here, efforts such as Accelerate Estonia can offer a useful playbook the UK can borrow from. The initiative helps businesses overcome obstacles by shaping policy and, where needed, proposing legislative changes, so innovative ideas can operate lawfully from Estonia rather than stalling in a sandbox or moving overseas.

Accelerate Estonia’s motto – “making illegal things legal” – is backed by a tightly-run, time-boxed pipeline that moves a case from validation (testing whether a genuine legislative blocker exists and the likely impact) to definition (pinning down the exact rule change and pilot), to proof (running the pilot and drafting the amendment), and finally to aftercare (shepherding the amendment through and publicising the newly opened market). This has included concrete rule changes, such as enabling 24/7 automated dispensing following amendments to medicines law.

It helps to be explicit about the cross-Whitehall coordination problem innovators face. In March 2025 the National Audit Office (NAO) found that the Department for Business and Trade (DBT) must “collaborate with at least 10 other government departments” to realise its objectives, and that DBT “faces challenges in its relationships with departments who view growth as integral to their own work and therefore have a different approach to growth and prioritisation.” The NAO also reported unclear coordination that has caused frustration among businesses about which department can best support their needs.

That results in slower approvals, mixed signals and duplicated demands of founders. During an evidence session for the Business and Trade Committee’s inquiry into the Industrial Strategy in March 2025, Steve Brierley, Founder and CEO of Riverlane, praised the Department for Science, Innovation and Technology’s quantum leadership but flagged that since quantum cuts across defence, life sciences, advanced manufacturing and clean energy, “the challenge then is whether everybody thinks it’s someone else’s job to figure this out.” That is what RIO could potentially prevent.

A growing body of analysis points in the same direction. Form Ventures, an investor in British startups with public policy exposure, have argued that creaking regulatory capacity and fragmented accountability have become a rate-limiter on startup growth in Britain, and have made the case for introducing paid-for approval lanes and wider recognition of trusted foreign regulators where appropriate to speed up decision-making – or obviate the need for it entirely. Similarly, the think tank Onward has stressed that the UK is “failing to lead at the leading edge” because regulators are slow and overstretched, citing evidence such as the FSA completing only 14% of novel food approvals since 2021 and Space Forge having to consult eleven regulators before launch.

Pulling together these strands strengthens the argument for a more muscular, outcomes-based RIO. As the Centre for British Progress has previously argued, simply standing up another unit won’t move the dial if it lacks authority, pace and a mandate that spans both frontier technologies and enabling pathways in mature, regulated markets. Without clear powers, resourcing and the ability to translate pilots into binding rule changes, innovators will remain stuck in sandboxes.

The RIO should therefore serve as a trusted delivery partner that pairs each case with relevant regulators from day one and defines success as an evidence-based, safelyimplemented rule change that removes a concrete blocker and opens a new market. To make a difference instantly felt by businesses, and young founders in particular, it should also publish ‘handshake’ agreements between relevant public bodies that set roles and give founders a single accountable front-door in multi-regulator cases, and issue plain-English guidance so a first-time team is not bottleneck by complexity.

Recommendation: Empower the RIO with the resources and political backing it requires to enable innovative businesses to cut through Britain’s regulatory thicket

CASE STUDY: JOE SEDDON — FOUNDER, ZERO GRAVITY

Having grown up in a single-parent family in a post-industrial town, Joe Seddon describes himself as “not a conventional founder.” His “sliding doors moment” came after winning a place at the University of Oxford, where he was propelled into a new environment with people from a range of different backgrounds. This also reinforced the idea in Joe’s mind that “while talent is everywhere, opportunity is not.”

Ultimately, it spurred him to start Zero Gravity – a free-to-use tech platform that aims to unlock the potential of young people who might otherwise get overlooked. Focusing on students from the bottom 40% of the socio-economic distribution, Zero Gravity’s algorithm spots talent early and connects individuals to educational, mentorship and employment opportunities. Joe and his team have now supported over 25,000 students, struck relationships with some of Britain’s most prestigious universities and largest employers, and have no plans of slowing down – especially as the “once in an era disruption” that Joe thinks artificial intelligence is revolutionises how employers and applicants engage with each other.

Reflecting on what it’s like to be a young founder in Britain, Joe admits that “the journey has been really tough,” before saying that “at many points, I was convinced I’d fail.” He views the first roadblock on his own entrepreneurial journey as the lack of entrepreneurial culture around him, especially coming from outside of London. “The word ‘entrepreneur’ was seen more as an innuendo for ‘unemployment’,” Joe says, adding that: “After graduating I had a training contract for a big law firm, but I turned it down to focus on the startup. Friends and family thought I was crazy – and it took them about two years to go from understanding that what I was doing was a genuine business, not just a project.”

On the more positive side of the ledger, Joe notes how the investment landscape for new businesses has transformed since when he first started out. He thinks it’s easier for founders to get the cash they need to launch, although growth capital is harder to come by in a world of higher interest rates. He also says that investors have woken up to mission-driven startups: “Most of them now understand that having a tangible social impact can be a competitive advantage when it comes to brand and product love, and that it’s not just about ESG compliance.”

Joe’s clear about what he would like to see from the Government to make life easier for young founders: “The most helpful thing they could do is to get out of the way rather than trying to create lots of new initiatives.” The biggest barriers he now faces are the regulations that “make big firms so averse to working with plucky startups,” and the “constantly changing landscape to key policies for entrepreneurs – like R&D tax credits, National Insurance Contributions and Business Asset Disposal Relief – which makes long-term financial planning almost impossible.”

With particular relevance to Zero Gravity, Joe also laments how poorly local governments are set up to embrace innovation. “Almost all of their budgets are spent on statutory duties like social care and SEND, with barely anything left for experimenting on new solutions,” he says. Joe also notes that “the whole point of localism is to test different approaches, see what works, and spread the best to other areas,” but believes that there isn’t a strong enough culture of diffusing innovation across different bodies.

Immigration: Keeping the talent magnet switched on

It’s often said that people are a company’s greatest asset, and that is especially valid for many of Britain’s young startups. In their early stages, startups can’t trade off storied reputations, or tap into mature supply chains or an established customer base. What can set them apart, however, is the positive difference that any given individual can have on the company’s growth trajectory.

In Britain, we can be thankful that we have a relatively highly-skilled domestic labour force. Without wanting to confuse inputs with outputs, children receive more ‘learning-adjusted’ years of schooling than their counterparts do in France, Germany, Italy, Spain, the United States and many other comparatively affluent nations. They perform above the OECD average on the respected PISA rankings. And if they decide to go onto university or other tertiary education – as nearly four fifths now do – they are spoilt for prestigious institutions to choose from.

For virtually all countries, the native-born population will stand as the bedrock of its labour force. But immigration can serve as a means to enhance labour productivity, and, contrary to initiatives to upskill the domestic population, which may take decades to bear fruit, is something that can have more of an immediate impact. At a time when first-mover advantage matters more than ever for economic growth, that matters.

As we have catalogued at length, immigrants play a critical role in Britain’s entrepreneurial ecosystem – most notably in how they disproportionately found or cofound leading startups, often in cutting-edge industries. Household names of British headquartered businesses, such Deliveroo, Wise, Synthesia, Oddbox, Monzo, Gousto and more all boast founders who were born overseas. Many more innovative businesses will have international talent who are integral to their success embedded throughout their teams, whether they’re proficient managers or skilled engineers or incredible communicators.

Among the founders we spoke to as part of this research, the positive impact of immigration on startups in Britain was abundantly clear. Not only did many of them come from overseas to begin with, plenty more praised the fact that international talent was integral to their startups’ senior teams. We heard time and again how immigrants help plug critical skills shortages, bring outside perspectives and broker connections across the globe.

In contrast to the overwhelmingly positive sentiment about immigrants we heard, however, was the number of founders who remarked on the negative direction which Britain’s immigration policy appears to be trending towards. Whether it was the high and growing costs of visas, slow Home Office approval timelines, seemingly endless bureaucracy or arbitrary red-tape, a range of complaints could be directed at Britain’s immigration system. Almost as important as the rules governing the eligibility and process of getting a visa was the rhetoric used by Ministers, which several founders told us was materially weakening Britain’s appeal in the eyes of talented individuals.

Clearly, the Government is under significant pressure to control the number of people coming into Britain from abroad. But we firmly believe that there is a path to be taken which alleviates concerns the general public may have about types of inward migration without trashing our reputation as a place to start or help grow a business.

This process should begin by revising aspects of the Immigration White Paper, parts of which if passed in their current form would needlessly damage Britain’s entrepreneurial ecosystem for little meaningful political gain.

For example, the Government intends to cut the length of the Graduate visa that allows students from British universities to stay in the country after completing their undergraduate and taught postgraduate studies from two years to 18 months (while keeping it at three years for PhD graduates). We know how critical post-study work visas have been for Britain’s entrepreneurial ecosystem in recent decades – with many of the founders and cofounders of Britain’s fastest-growing and most innovative companies first coming to the country as students and remaining here afterwards, whether immediately working on something of their own, or simply dipping their toes into Britain’s startup waters.

While the proposed change to the Graduate visa might seem like a small tweak, it fundamentally represents a 25% reduction in its duration, and will have consequences for individuals who hope to later move onto other visas such as the Skilled Worker visa. In fact, one of its most pernicious effects would be to remove the buffer graduates use to reach sponsorshipready roles and complete the pre-application steps that must be in place before they can even submit a Skilled Worker application: the employer has to hold a sponsor license, then assign a Certificate of Sponsorship and the salary must meet the stricter thresholds now in force. Shortening the route to 18 months reduces this window and raises the risk that otherwise strong hires simply run out of time. Secondly, time spent on the Graduate route counts towards the four-year “new entrant” allowance under Skilled Worker rules. Cutting the Graduate route therefore compresses the period during which startups can rely on the discounted salary option before moving to the full experienced-worker rate. Thirdly, the Migration Advisory Committee’s review found that graduates who switch after time on the route move into graduate-level occupations in proportions similar to domestic graduates, that earnings rise over time on the route, and that those who switch before around 21 months are noticeably more likely to end up in care roles than those who switch later. Finally, in a global market where international competitors offer post-study work of two to three years – up to three years in the US for STEM and up to three years in Canada – moving the UK down to 18 months would weaken our offer to exactly the talent our startups need.

Recommendation: Reverse planned cuts to the length of the Graduate visa

Beyond this, the Government must consider how steep increases to the salary threshold for the Skilled Worker visa will impact Britain’s startups. Raising the amount someone must earn in order to qualify for a visa mechanically restricts the supply of talent to all firms in the economy, but there is good reason to assume the effects will weigh especially heavily on Britain’s startups. This is because in young companies, total compensation isn’t limited to wages alone – employees will also commonly have their salaries supplemented with equity in the company they work for. As a result, while they still receive a regular monthly paycheck, it will typically be lower than it might otherwise be. For startups, this remuneration model is particularly valuable because it keeps monthly costs down – a crucial advantage when cash is tight – while also helping to build a committed team culture with employees motivated to make a success of what may well be a risky venture

If we aren’t to price international talent out of our ambitious startups, the Government should urgently look at how the immigration system can open its eyes to this reality of entrepreneurship. One approach could be to allow a capped portion of verified equity to count towards the Skilled Worker salary requirement. To verify the equity’s value, a valuation letter, option grant documents and a cap table would be required. Startups already produce these documents for investors, so this would keep the admin burden minimal, while ensuring the mechanism doesn’t become an easily exploited loophole

Recommendation: Explore ways to count equity towards Skilled Worker salary thresholds

Most entrepreneurs and skilled workers who emigrate to Britain will do so through established channels – whether by securing a job offer, pursuing a degree, or applying for a formal visa scheme. But if we want to compete with the world’s most dynamic economies, we cannot simply rely on being a passive recipient of talent. In a world where the brightest and best are able to be more agile than ever, all governments hoping to succeed in the industries of the future should treat talent attraction not just as an administrative function, but as an active, strategic priority. As part of this, it means recognising that some of the world’s sharpest minds will not necessarily fit neatly into the boxes of conventional visa pathways.

To its credit, the current Government has as part of its Industrial Strategy unveiled plans for a Global Talent Taskforce, which it says: “will provide a concierge service for top talent, using our international network and UK diaspora to connect with elite individuals; facilitating a smooth and soft landing into the UK for them; and identifying improvements to our offer to make the UK the natural destination for them to come.” We look forward to seeing the Taskforce come into being. In order to ensure it is as effective as possible, we would make the following suggestions about how it should function.

First, the Taskforce should be afforded the power to issue a set number of visas per year in its own right. These golden tickets would allow top talent to live and work in the UK with the certainty such people demand, giving them the confidence and runway to build. Recipients of Taskforce-issued visas should also be able to bring their partners and immediate family members with them. Given the profile of individuals the Taskforce would target, the net effect on immigration figures would amount to a rounding error on absolute numbers.

Second, the Taskforce should be given appropriate autonomy to act, while also receiving political backing from all relevant departments – from the Prime Minister’s Office, to the Home Office, to the Treasury, the Department for Business and Trade and the Department for Science, Innovation and Technology. As part of this, the Prime Minister should instruct Ministers to give direction to civil servants within all of these departments to work collaboratively with the Taskforce wherever necessary to allow it to achieve its aims. The Taskforce should also have a ringfenced budget with appropriate discretion on how best to spend it – whether on outreach efforts, internal staffing decisions, or relocation packages for prospective talent.

Third, it is important that the metrics of success by which the Taskforce should be judged are set correctly. A failure mode would be to evaluate the Taskforce on the basis of how many individuals it manages to identify and assist to come to the UK. Rather, the Taskforce should be assessed on the basis of what the individuals it helped bring to Britain have managed to do since relocating – whether that’s developing new cures to diseases or scaling lucrative startups. One shortcoming with this is that it leads to qualitative evaluations which do not fit neatly into a standard cost-benefit analysis, but, viewed another way, it could help create a rich archive of phenomenal immigrant success stories.

Recommendation: Ensure the Global Talent Taskforce is set up to succeed

Case study: kai-tse lin — co-founder, Bellwether industries

Kai-Tse Lin was obsessed with two things growing up – digital technology and vehicles. He carried those passions with him through to university, where he and his friends realised that the automotive world was ripe for disruption. “Everything about cars is almost already perfect,” Kai-Tse reflects, “so they all start looking identical and doing similar things, because we’ve hit the limit of what’s possible.”

This frustration sparked a question: what comes next for personal transportation? The answer, Kai-Tse and his friends believed, was getting vehicles off the ground. After swapping Taiwan for London to pursue Master’s degrees at the Royal College of Art, they began work on a prototype for a flying vehicle. What started as a degree show project evolved into Bellwether Industries, with a mission to revolutionise urban mobility by providing accessible personal flight within cities.

Kai-Tse chose to come to London deliberately, drawn initially by its prestige in vehicle design but staying for its entrepreneurial ecosystem. “I really like it a lot,” he says of the city’s startup landscape, adding: “It’s very open and people are always very willing to make connections and build relationships.” He contrasts this favourably with the United States, where he feels it can be “harder to establish long-term relationships.” London’s centralisation is another advantage: “Everyone is in London, so it’s extremely easy to meet anyone that you probably want to meet.”

There are drawbacks, however. On a personal level, Kai-Tse explains the headaches he’s experienced in terms of renewing his visa to stay in the country. Whether it’s months of delays that prevent him from travelling, or the lack of certainty that he’ll even be able to remain in the UK, Kai-Tse openly admits that he might be better off moving somewhere else if immigration policy continues trending in the direction it is.

Taxation: Incentivising incredible individuals

Contrary to common belief, the idea that most entrepreneurs start companies expecting to make a fortune simply does not tally with reality. More often than not, founders launch their businesses with an aim of changing some part of the world for the better, however small, and this is the driving motivation behind what they do. In the frequent conversations we have with entrepreneurs, it is much more common to hear stories of individuals quitting lucrative careers to build something of their own than ones about someone desperately trying to turn a quick profit. Among young founders in particular, this rings especially true.

That being said, it is not as if entrepreneurs are immune to the incentivising – or disincentivising – effects that taxation has over decision making. As a rule of thumb, a tax system that extracts greater revenues from an economy’s wealth creators will deter economic growth more than one that extracts less. And, whereas once the tax system represented a moderate but not especially troubling concern to many of Britain’s entrepreneurs, we are increasingly seeing more and more founders not only citing the tax burden as a significant impediment to building successful startups here, but that Britain is decidedly becoming uncompetitive on tax policy relative to other economies that are rapidly and concertedly upping their game.

One tax which weighs especially heavily on founders’ minds is Capital Gains Tax (CGT). As the old adage goes, if you tax something, you generally get less of it. With regards to CGT, this is particularly evident in terms of company formation and growth – all things held equal, a higher rate of CGT will mechanically reduce the future expected rate of return from selling an asset like a business. It will also deter scaling a business at the margin, make stock options less attractive to employees, and prospective investors will similarly expect a lower effective rate of return on any value that is eventually realised. In sum, even if high CGT rates don’t deter an entrepreneur from starting up, their business’ growth is hindered relative to a lower tax counterfactual. It’s unsurprising, therefore, that polls of leading economists show many more in agreement with the view that taxing capital income at a lower rate than labour income results in higher average long-term prosperity.

Another pernicious effect of CGT is called the ‘lockin effect’, which only increases as headline rates climb higher. This alludes to the situation whereby entrepreneurs are discouraged from selling their business because they do not think it will be worthwhile to do so given the tax obligation they will incur. It also impacts investors, who may not allocate their assets as efficiently as they would in a world where no CGT existed – potentially denying promising startups the investment they need to scale.

Where lock-in effects become particularly harmful to overall economic growth is by the way in which they limit serial entrepreneurship. By first weakening the incentive for successful founders to exit their startup, and secondly by reducing the overall reward they pocket from doing so, the ultimate pipeline of talent and capital available to reinvest in the entrepreneurial ecosystem is diminished. Some founders are of course extremely skilled at running mature businesses, but there is evidence that where successful entrepreneurs are most adept relative to others is the initial starting of companies, before then handing over the reins to someone else. On this basis, we should want the tax system to enable entrepreneurs to lean into where their comparative advantage is strongest, and the logical outturn of this argument is to ensure CGT is not set at a rate which locks founders into companies that have already passed the ‘growing pains’ any startup has.

In comparison to other countries, the UK’s approach to capital gains taxation is not particularly attractive – on the most recent iteration of the Tax Foundation’s respected International Tax Competitiveness Index, Britain ranks 30th out of 38 countries for capital gains taxation, and this is before we consider the impacts of recent increases to the rate of CGT. As part of her first Budget, the Chancellor Rachel Reeves hiked the lower rate of CGT from 10% to 18% and the upper rate from 20% to 24%. Business Asset Disposal Relief (BADR) – which allows eligible entrepreneurs to pay a lower rate of CGT on the first £1 million of gains – was also made less generous, with its rate rising from 10% to 14% in 2025, and will continue to rise to 18% in 2026. This reduction in attractiveness continued a trend, with BADR itself having replaced an even more generous relief (Entrepreneurs’ Relief), which entitled entrepreneurs to pay just 10% CGT on the first £10 million of gains.

The long and short of the last few years for CGT is that it has become more punitive for entrepreneurs that are hoping to build lucrative companies. Investors have also been exposed to higher taxes, and so too have employees in startups who may hold shares in the companies they work for and are helping to scale. These pains will be felt by entrepreneurs of all ages, but there’s good reason to assume that younger ones will be particularly harmed, not least because of the way in which it could reduce the amount of angel investment available due to later-stage founders not exiting at the same rate as they previously might have been.

Going forward, the Chancellor must be unequivocal that CGT will not be hiked any further on entrepreneurs who are building precisely the dynamic businesses we need to grow the economy. While understanding that the fiscal situation in Britain is bleak, the route out of the mire does not run through disincentivising new wealth creation. If reducing CGT is out of the question, the very least the Chancellor can do is to increase BADR for entrepreneurs who have demonstrated that they are generating growth, attracting investment, and creating jobs in the economy.

Recommendation: A promise to not increase the effective rate of Capital Gains Tax on entrepreneurship should be made

Universities: Turning lecture halls into launchpads

As noted at various points above, Britain boasts a worldclass education system, especially through its universities. These elite institutions nurture talent, from home and abroad, and produce hundreds of thousands of skilled graduates each and every year. Only a handful of these graduates will go on to launch companies of their own, but many more will play key roles in other startups – applying what they have learnt and driving innovation forwards.

Despite its well-deserved status, however, Britain’s university sector is not without fault – and, moreover, significant challenges loom on the horizon.

A most obvious way by which universities and entrepreneurship collide is seen in the spinouts that academics and students start. Companies that are the result of commercialised intellectual property created within universities, spinouts are a vital component of Britain’s entrepreneurial ecosystem – particularly when it comes to the cutting edge of science and technology. Thus, ensuring that we have the best possible policies in place to make research commercialisation an easy and attractive exercise stands out as incredibly important,especially given how so much of the UK’s research base is located within universities. Unfortunately, there is strong evidence to suggest that this is not the case. Increasingly, academic founders are voicing concerns that the process of spinning out research is overly bureaucratic and unattractive to investors. This stymies the amount of investment spinouts can raise, resulting in founders failing to get the money they need for their companies to hit their full growth potential, or, in the worst cases, not bothering to spin out at all.

No doubt because of the increasingly vocal calls from academics, investors, and others in this space, policy is waking up to the fact that Britain could be leveraging much more innovation from its universities. In 2023, the Conservative Government commissioned an independent review into spinouts, the result of which was published later that year. It recognised that more work was required on the part of universities to ensure that equity stakes were commercially attractive, and that action was required to speed up timelines for spinning out.

One take on the review was that it moves the needle in the right direction. Two years on from publication, it’s perhaps still too early to say whether or not this is true. But more fundamentally, there is reason to believe that we can, and should, still go further on spinout reform. In our report Academic to Entrepreneur, we argued that British universities should adopt a model known as ‘Professor’s Privilege’ when it comes to awarding IP. This would vest IP with academics, giving them the ability to commercialise it how they want. Without universities being on their cap tables, spinouts would not only be more attractive prospects to investors, but their founders would also have a much greater incentive to make a success of their research.

Recommendation: A model of Professor’s Privilege should be introduced at British universities

Even with reforms being made, only a small fraction of all university students will go on to produce commercialisable academic research. However, many more may nonetheless devise investable business ventures of some kind while still on campus. Indeed, many of today’s most famous entrepreneurs did exactly that – often dropping out of university to fully concentrate on building their startup.

Yet, a common complaint we heard during the research for this report was that, to a large extent, British universities are not well set up to encourage this. We were repeatedly told that the notion that students could pause their studies to have a go at starting a business, and then returning to study should it fail, does not really exist.

Sometimes there are understandable reasons for this – indeed, there are hard-coded systems and metrics such as data on ‘non-continuation rates’ that would punish universities if too many of their students were dropping out, so institutions can scarcely be blamed for not wanting to fall foul of these. Nevertheless, it is doubtful how much of a serious limiting factor these conditions are. Most British universities have more than passable continuation rates, and some have pointed out how ineffective Office for Student sanctions have proven since their introduction.

It would therefore appear that any meaningful change on this front will have to come from universities themselves to be as open minded as possible about students undertaking early-stage entrepreneurship, even if it means pausing – and potentially returning to – their studies. Moreover, beyond simply permitting more entrepreneurialism from students, universities should do more to actively encourage entrepreneurship, perhaps facilitating connections between alumni who have become founders or who play another role in the startup ecosystem. We would be hesitant to insist on mandates from on high, or to prescribe blanket approaches for what this could look like, but as a rule of thumb, universities could do well to recognise the latent appetite for entrepreneurship among British students that our research suggests is largely going unmet.

Recommendation: Universities should do more to encourage and enable students to pursue entrepreneurship

Case study: Josef Chen – Founder, KAIKAKU

Josef Chen’s entrepreneurial journey began in an unlikely place – working in his parents’ Chinese restaurant in rural Austria. “I was basically enslaved there doing random jobs,” says Josef, “but I was desperate to understand how to make money.” What his parents saw as quality time together became Josef’s crash course in business fundamentals, instilling in him a work ethic that would prove essential for his later ventures.

Three years ago, Josef founded KAIKAKU, with an ambition to disrupt the global restaurant industry by building autonomous food assembly robots. Having developed prototypes that can increase throughput by 300% compared to traditional assembly lines, Josef ultimately wants to create “a Marriott-type business with a single layer of interoperability” – essentially developing a unified platform that can seamlessly integrate across multiple restaurant locations.

When asked for his takes on the entrepreneurial landscape in Britain, Josef offers a nuanced perspective. His main concern is what he describes as a “lack of forward thinking” and pervasive short-termism: “Too many talented people will go and work for established companies because they want to get rewards as quickly as possible. Once they’re in these roles, they rarely leave because they get too comfortable.”

Josef points a finger at the education system for this mindset: “European education is very structured, whereas in the US you see more of an emphasis on adaptability.” In his view, this produces graduates who are less willing to embrace uncertainty and respond to rapidly changing circumstances.

Despite this, Josef remains “extremely optimistic about the UK’s future.” He believes the risk-averse culture is shifting, with Britain beginning to emerge from its entrepreneurial inertia. “We’re seeing more success stories, and flywheels are starting to turn,” Josef says. This growing momentum, he argues, creates a virtuous cycle where success breeds more success, inspiring others to take entrepreneurial risks.

When it comes to advising aspiring founders, Josef’s message is direct: “Stop overthinking and do the work.” He advocates for embracing discomfort rather than avoiding it, suggesting entrepreneurs should “triple down” on challenging situations. Most importantly, he poses a crucial question for anyone considering starting a business: “Ask yourself if you’re willing to grind through obstacles and setbacks year after year.”

Regarding what more the Government could do to support young entrepreneurs, Josef takes a measured stance. While acknowledging that “everything can be better,” he doesn’t believe radical policy changes are necessary. “The fundamental institutions are quite good,” he notes, praising initiatives like the British Business Bank for funding VCs and the straightforward process of forming a business.

Instead, Josef focuses on the importance of leadership and messaging. He applauds efforts like Jensen Huang’s recent collaboration with the Prime Minister, arguing that the Government’s highest return on investment comes from projecting optimism about entrepreneurship: “Excitement is contagious.”

Government initiatives: A new deal for support schemes

Younger founders typically start off with thinner social and financial capital and less sector experience, which makes it harder to find mentors, early customers and investors. As aforementioned, research shows that successful high-growth companies are more often founded by people later on in their careers, which points at the specific experience, capital and network deficits younger teams must overcome. At the same time, there is evidence that while entrepreneurial intention is high among young people, fewer are able to convert ideas into businesses because of finance, skills and network gaps. Research from the OECD finds that younger people are among the most likely to want to start a business, yet face distinctive barriers that inclusive entrepreneurship policy is meant to address.

Well-designed public support schemes can be a good substitute for what time hasn’t yet supplied. For example, the Start Up Loans programme combines modest capital with pre-application help and post-loan mentoring. Evidence on the programme suggests that around two thirds of finance would not have been provided otherwise. An earlier evaluation also showed that levels of self-reported additionality (whether the business would have started up at all, or at the same time, scale or quality if the recipient had not been awarded a loan) were higher in individuals aged 18-30 than those aged above 30.

Support in the form of accelerators and similar programmes promise to help young entrepreneurs too. Programmes that bake in mentorship and investor and customer access can shorten learning cycles and improve fundraising and market entry, which is particularly valuable for young entrepreneurs.

Yet, while Britain’s landscape of startup support programmes is rich, it is also uneven. For example, there are now hundreds of programmes calling themselves accelerators, but delivery quality, outcomes and focus vary widely, and definitions are often blurred. As documented in our recent report Full Speed Ahead, fewer than half of all accelerator programmes explicitly promise access to investor networks, and most cohorts run only a few months, which may work fine for software startups, but is poorly matched for the needs of those in deep tech or regulated markets. The result is often ‘acceleratorhopping’ without cumulative value. This makes it hard for founders, especially first-timers and younger entrepreneurs with smaller networks, to know which programmes actually move the needle.

In our report, we proposed several ways forward which bear repeating. These include establishing clear programme standards so that the term ‘accelerator’ actually means something verifiable, shifting evaluation to a dual track that follows both company outcomes and the entrepreneur’s progression, and replacing stop-start grants with multi-year, outcome-linked contracts and bridging finance so momentum isn’t lost between cycles. These changes would help raise the floor for everyone while particularly helping younger founders, for whom predictable timelines and clear navigation of available support are most valuable.

When possible, startup support should also aim to connect companies to early customers. Challenge-based or corporate innovation style programmes that end in paid pilots or purchase orders are typically more useful than classroom-heavy bootcamps. Public buyers can also play a similar role by adapting challenge mechanisms towards early, well-scoped pilots.

Policy recommendation: Public funding for startup support schemes should be contingent on them meeting robust criteria to ensure they actually deliver value for founders and taxpayers alike

Joining accelerator or incubator programmes will not be appropriate for every young founder. Some will be confident enough in their own abilities to strike out and begin building on their own terms and timelines. Depending on the industry they are in, or the circumstances unique to them, this is only to be expected. But even here, young founders will likely interface with the government or public bodies in various ways.

One such way is with respect to receiving grants, such as those disbursed by Innovate UK, local authorities, and even philanthropic funders. During our research, we heard several young founders express frustration with the process of applying for grants. They bemoaned the bureaucracy involved, the slow timelines that public bodies operated on, and uncertainty of whether or not they’d be successful. Even though they were very early on in their entrepreneurial journeys, many acutely appreciated how there are often arbitrary ‘done things’ – hoops to jump through or signals to signal – that are required for grant applications to stand a chance of being successful.

For many years, The Entrepreneurs Network has highlighted how the government should take a more experimental approach to funding innovation. While change on this front does appear to be happening, still too much of the total envelope of public R&D funding is made through conventional channels, which arguably bias against some of the most innovative ideas, from the most innovative quarters of the economy – including young founders.

Slowly but surely, the UK is developing an infrastructure to allow it to experiment with novel innovation funding mechanisms. For example, the Advanced Research and Invention Agency (ARIA), established in 2023, is breaking new ground and has the autonomy to test new ways of supporting innovators. Focused Research Organisations were given backing by the previous Government to try to expedite progress on medium-term problems by blending traditional scientific teams with entrepreneurial discipline.

Across government, we should lean into funding more innovation through novel mechanisms. Lottery-based grant funding, for example, could slash the bureaucracy founders have to slog through to acquire non-dilutive finance. Meanwhile, Advanced Market Commitments could incentivise innovators to devise solutions for distant problems that are tailored to real-world consumers. Prizes could similarly help to incentivise innovative effort, while also raising awareness of certain issues and elevating the status of eventual winners.

Recommendation: Experiment with novel R&D funding mechanisms for startups which cut bureaucracy and allow entrepreneurs to focus on actually innovating

case study: Randy Forson – Co-Founder, Formaer

“From a very young age, I knew I wanted to leave a lasting legacy in the world,” says Randy Forson, Co-Founder of Formaer. “I wanted to put my stamp on the world in a way that would help lots of other people.”

Randy followed that vision through to qualification as an architect, but the experience proved transformative in unexpected ways. “That process solidified the idea that I wanted to build and problem solve,” Randy explains, “but I became frustrated with systems and processes and realised that what I wanted to pursue was something more entrepreneurial.” The structured world of traditional architecture felt limiting for someone eager to “take bigger risks and solve other problems in the industry.”

It was while studying for his Master’s degree at the University of Cambridge that Randy met his co-founder and began developing the idea for Formaer – a cloud-based generative platform that offers on-demand custom furniture and storage solutions for residential and commercial interior projects. “We’re using technology to make bespoke furniture accessible to everyone,” Randy says.

Randy’s experience as a young entrepreneur in Britain has been “tougher than anticipated.” After quitting his job at the end of last year while the startup was still in its early stages, he “quickly found out that it’s very difficult to survive as a non-revenue making founder.” This financial pressure creates a systemic problem, Randy believes: “What stops innovative ideas from getting out there is the fact that people can’t afford to leave their jobs, and that limits the time they can put in.”

Another challenge for young founders Randy identifies is the lack of trustworthy support systems: “There’s not a lot of help available – you’re relying on savings and whatever else you can manage.” He also notes how navigating Britain’s accelerator landscape has proved particularly frustrating. “They’re understandably extremely competitive at the top end, but the process of applying and interviewing is made harder than necessary because you rarely get useful feedback, and it’s difficult to understand what the criteria are for successful applicants.”

Despite these challenges, Randy sees significant untapped potential in Britain’s startup ecosystem. “London is full of great minds and diverse people from around the world – it’s a brilliant melting pot of ideas with vibrant communities of founders, aspiring founders, and investors.” What’s limiting this potential as he sees it is a culture of conservatism, particularly when compared to the American approach to entrepreneurship, which he describes as “like night and day with the UK, especially very early on in startups’ journeys.”

For aspiring entrepreneurs is stark but realistic: “If you expect it to be hard, prepare for it to be ten times harder. Entrepreneurship isn’t easy, and it isn’t meant to be easy.” He emphasises the importance of education and preparation, noting that “depending on the business you want to build, you might be best bootstrapping, or you might be best going to a VC – there are resources in the UK, but it’s about finding the right ones for you.”

Mentorship has proven invaluable in Randy's journey, particularly from other entrepreneurs and investors. “Try to find a community around you,” he advises. “You need an understanding of how things work and where opportunities lie.” Most importantly, he stresses the need for intentionality: “Believe in what you’re doing – no matter where you find yourself, you’ll do something great. But you need to be intentional about things, and you can’t build in isolation.”

Culture: Centuries in the making

While engaging with young founders throughout this research project, one topic came up perhaps more than any other – culture. Specifically, there was much debate around the extent to which Britain has a culture that produces entrepreneurs, and, in particular, that produces entrepreneurs with ambitions to build globally significant companies. It was also a topic that divided opinion – with some believing that a conducive entrepreneurial culture very much does exist in Britain, while others were less convinced. Alternatively, some thought that while we do have a strong culture for now, there are signs that this is beginning to turn – with young founders increasingly looking to relocate elsewhere where they believe opportunities to network and build are stronger.

Encouragingly, on the balance of what we heard, there was overwhelmingly more positivity than negativity – with a good deal of founders acknowledging the often collaborative and supportive nature of Britain’s entrepreneurial ecosystem. Moreover, where we did hear criticism about the UK’s culture towards entrepreneurship, it was usually exclusively with respect to comparing ours to that which exists in the United States. Sentiments such as: “In the US, there’s a stronger culture of celebrating risk and failure – entrepreneurs are encouraged to take big swings without the stigma of setbacks,” or: “The US stands out for encouraging ambition – there’s a cultural default to think big and far less criticism when people fail or aim high,” or: “Failure is treated as a badge of honour rather than a mark of shame in the US, which means founders iterate publicly instead of pivoting in secret,” were commonplace.

If broad notions of culture do matter in cultivating entrepreneurship in an economy, being the runner up to the undisputed global startup hegemon is hardly anything to be ashamed of. But that’s not to say that there aren’t things we might be able to do to close the gap. Before thinking about what those might be, however, it is worth unpacking the premise of the question a little more. As posed above, does culture even really matter? And indeed, what do we even mean by the term?

It would take far more than this report alone to adequately define something as abstract and contested as ‘culture’. But most people probably understand it to at least correlate with a country’s shared values – such as beliefs around what makes a society just and equitable, attitudes towards individualism versus collectivism and views towards dynamism versus tradition. In more basic terms, and with respect to our focus here on entrepreneurship, we might ask questions like: to what extent does a culture encourage individuals to strike out on their own? How tolerant is the culture of successful people having more than others? Is the culture comfortable with new technologies displacing existing ones?

Certain datasets can give us a decent approximation of answers to various questions like these. As illustrated below, however, the idea that there are sweeping differences between Americans and British people on many pertinent variables doesn’t appear to be true. While certainly on some metrics Americans adopt what might be thought of as more ‘pro-entrepreneur’ attitudes, the differences could hardly be described as a gulf – and indeed, sometimes the UK comes out on top.

We can also consult data from the Global Entrepreneurship Monitor for more evidence. Again, one can observe close similarities between respondents from the US and the UK. Almost exactly the same percentage of Americans and British respondents know someone who has started a business in the previous two years (53% and 53.1% respectively), and the same is true for the percentage of respondents who believe they have the requisite knowledge, skills and experience to start their own business (55.7% in the US, and 54.5% in the UK), and the percentage who believe it is easy to start a business in their country (57.2% in the US, and 58.6% in the UK).

All told, despite there being plenty of anecdotal evidence that the US has a culture that is particularly conducive to entrepreneurship, this doesn’t seem to be reflected in more sober data. Perhaps there are other, harder to quantify aspects of ‘culture’ we have ignored – aspects which, if analysed, would show that there really is something in the American way of life that makes them not only disproportionately more likely to go into entrepreneurship, but also to launch startups that go beyond employing only a handful of people or turning over only a modest amount of revenue a year.

But it is our belief that the better explanation is that there are likely other, more powerful, and more material forces at play. These will include variables such as the availability of capital, the stock of already successful entrepreneurs who are able to reinvest their wealth and expertise into the ecosystem, market size, immigration frameworks, the tax regime, regulations, and intellectual property laws, to name just a handful.

We don’t dismiss the idea that it is important to spread pro-entrepreneur narratives, or to champion efforts to raise the status of entrepreneurship. In fact, this is something The Entrepreneurs Network, through initiatives like the Young Entrepreneurs Forum, tries to play an active role in doing. We have also previously called for things like a new Order of Merit to be created to honour Britain’s most exciting contemporary innovators, and for a new Great Exhibition of industry to be convened to showcase cutting-edge technologies. But while a pro-entrepreneur disposition among society may be a necessary condition for cultivating a startupfriendly economy, it would be conceited to think it is a sufficient one. In addition to noble rhetoric, tangible policies that actively allow founders to strike out and thrive are also required. On this front, Britain starts from an enviable position. With only a handful of additional tweaks, it could further cement its reputation as a fertile place for startups to launch and grow. Through this report we have detailed some of what those might be – and how the Government can help bring them about.

Recommendation: Appreciate that culture matters for fostering an entrepreneurial spirit in an economy, but recognise there are limits to how to inculcate this and that hard policy choices will likely be more important

Conclusion

Britain’s economy stands at an inflection point. While our entrepreneurial ecosystem has significant and hard-won strengths, we cannot afford to rest on these laurels. The voices of young entrepreneurs captured throughout this research project paint a picture of a country simultaneously brimming with immense potential but also one that risks being left behind due to policy drift and complacency, just as the next global economic transformation unfolds.

None of the challenges identified by the Young Entrepreneurs Forum are insurmountable. Indeed, what is striking about many of the obstacles highlighted is how tractable they are. Unlike the decades-long investments required to build world-class universities, or the implicit trust needed to establish strong legal frameworks, all it would take to implement many of the reforms outlined in this report is a committed government which is cleareyed about the need to deliver a new policy settlement for Britain’s most ambitious founders.

The urgency of action cannot be overstated. In a world where first-mover advantages matter more than ever, in which AI and other frontier technologies are reshaping entire industries, and where global competition for talent and capital intensifies by the day, standing still is virtually equivalent to moving backwards. While just about all of the young entrepreneurs we consulted during this research acknowledged the advantages Britain offers to founders, many also recognised how other countries around the world are upping their game and are now serious alternatives as places in which to build amazing startups.

In this report we detail a series of recommendations that, taken together, represent a coherent agenda for truly unleashing Britain’s entrepreneurial potential. Enacting the policies we propose will require political will to take on vested interests and make difficult trade-offs. But, if put into practice, the dividends they could bring over the long-term would be profound.

And the stakes of doing so extend far beyond economics. In an era of mounting challenges – from the consequences of global warming, to changing healthcare needs, to assaults on our national security – many of the solutions we need will come from entrepreneurs pioneering unproven technologies and novel business models. By creating the conditions for these founders to strike out and thrive, Britain can position itself not merely as a prosperous nation, but as one that leads in solving the defining problems of our time.

Britain’s young entrepreneurs are already building this future, despite the headwinds they often face. Their optimism and determination should inspire us all. Now it falls to policymakers to match their ambition with action, ensuring that Britain is not just a good place to start a company, but the best nation in the world to build a business of global importance.

Our future is not predetermined. With the right choices made today, Britain’s next generation of entrepreneurs could create companies that rival anything produced in Silicon Valley, Shenzhen, or elsewhere in the world. The opportunity is clear. What remains is the will to seize it.

Acknowledgements

This report was researched and written by Eamonn Ives, Research Director of The Entrepreneurs Network.

We are extremely grateful for the kind support on this project from Sean Kohli. We would also like to thank all of the members of the Young Entrepreneurs Forum for candidly sharing their insights and experiences of what it is like to be a young founder in Britain today, which helped shape the issues the project examined and the policies recommendations it proposed. Among others, these include: Amelia Miller, Daniel Peacock, George Phillips, Jack McMillan, Joe Seddon, Josef Chen, Kai-Tse Lin, Kimon-Aristotelis Vogt, Lauren Smithie, Lavinia Roma, Lucy Lyons, Maggie Chen, Margot Blanc, Mark Golab, Quinn Leatherbarrow-Stokes, Randy Forson, Samuel Flynn, Sophie Zienkiewicz and Yaniv Proselkov. Special thanks are also due to Anastasia Bektimirova for help in drafting and editing sections of this report, to Philip Salter for further editing, and to William Walter and Tom Zundel at Bridgehead Communications for their assistance on the project as a whole. The views expressed in this report are those of the author alone, and are not necessarily endorsed by any of the aforementioned individuals. All errors and omissions are similarly those of the author alone.

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