Findings Nima

On Wednesday, NatWest's Accelerator hosted us and the prolific author Nima Sanandaji for an event on Brain Business Jobs – that is, the jobs in sectors with a high proportion of knowledge-intensive occupations.

Nima has measured this across 31 countries and 278 regions. He finds that 8% of the UK working age population are employed in knowledge-intensive sectors, which put us highest among large European economies, but lower than Switzerland, Sweden, Denmark, Netherlands and Luxembourg.

In terms of intensity, the leading regions of the UK are Berkshire, Buckinghamshire and Oxfordshire (17.9%), London (17.3%), North Eastern Scotland (11.3%), while the lowest are Cornwall and Isles of Scilly (3.4%), East Anglia (3.2%) and West Wales and The Valleys (3.2%).

This is a good news story for innovation and entrepreneurship in the UK. So what's driving these knowledge-intense jobs? Nima finds that innovation capacity is the dominant determinant for their concentration. Innovative capacity is the ability of a country to produce and commercialise a flow of innovative technology. Clearly there's a lot that goes into this – perhaps most critically R&D spending, the intellectual property regime, and the education system. There's room for improvement, but we shouldn't forget to celebrate our successes.

We're working with Nima to drill down further into his dataset. If this is the sort report you would be keen to support or get involved with, just let me know.

Bright Future
It's a sign of the times when an Instagram influencer's story leads to more people seeing your report than an article in national paper. But whether you heard about our Future Founders report as one of Grace Beverley's 1 million followers, or Octopus Group's Simon Rogerson's article in City AM, or via the excellent James Hurley in The Times (paywall), or on the Financial Times's Sifted site, or the 101 other places it appeared, we hope you enjoyed our report that we undertook with Octopus Group on the entrepreneurial ambitions of young people. If somehow you missed it, here it is.

Total Package
Nesta has a new study out on the incentives for FTSE 350 executives. It suggests that remuneration packages are dominated by measures that inhibit corporate innovation.

It finds that just 16% of total FTSE 350 annual bonus conditions encourage spending on innovation compared to 39% that discourage it. The report recommends that companies examine their remuneration packages to encourage the pursuit of innovation and long-term value creation. While investors are encouraged to use their power to demand better incentives for investment in innovation.

The takeaway question for a business owner of any size is: how do you incentivise innovation?

Party Time
As part of the Female Founder Forum project we run with Barclays, we will be in Brighton at the Labour Party Conference on 23rd September, and in Manchester for the Conservative Party Conference on 30th September. Don't worry if you don't have a conference pass – we are hosting our events outside the secure zones.

Watch this space, or drop us an email to register your interest. Also, please forward this on to anyone who lives in or near either city who might want an invite.

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Today we've released an important report uncovering the entrepreneurial ambitions of Britain's next generation.

Authored by Sam Dumitriu, in partnership with Octopus Group, and based on a survey of 1,549 young people, Future Founders: Understanding the Next Generation of Entrepreneurs reveals that 51% of British young people aged 14-25 have thought about starting (or have already started) a business. A further third (35%) are open to the idea and just 15% rule it out altogether.

(If you're in a rush we have a Twitter thread here with some of the main findings).

The main barrier to starting a business was “not knowing where to start” (70%). Just two in five (38%) 14-25 year olds say that their education has given them the skills they need to start a business, compared to a quarter (26%) who say it has not. Half of respondents currently studying at university (51%) or currently studying business (55%) say that their education has given them the skills they need to start up – significantly more likely than non-university graduates, or those studying other subjects. However, this falls to 39% when students graduate, suggesting that some knowledge isn’t transferring from the classroom to the real world.

Women make up just a fifth of UK entrepreneurs, and the survey suggests a lack of role models could also present a significant barrier. 57% of young people could not name an entrepreneur who inspires them. Of those that could, 7.9% named Lord Sugar, 6.5% said Richard Branson, and 2.6% named Elon Musk. Kylie Jenner was the most commonly named female entrepreneur (just 1.1%). Further – half of young men could name an entrepreneur who inspires them, but only a third (35%) of women could do the same. Of the entrepreneurs who were named, 85% were male.

Past research shows that role models have a greater impact when they are relatable. Closing the gender gap and drawing on a wider range of entrepreneurial talent will require us to champion a more diverse range of entrepreneurs.

But we may also need to change attitudes towards failure if young women – and men – are to create the firms of the future. According to our report, 71% of women and 63% of men cite fear of failure as a barrier to starting up a business.

It has already got a fair amount of press coverage:

FT Sifted
"A member of Gen Z, Jack Cornes started his first business at age eight, selling vegetables from his grandmother’s garden. By the time he was 14 he had founded an online t-shirt business that was shipping to the US and Australia. Now, age 21, he has just raised £210,000 for his six-person startup HausBots, which makes climbing robots that automate the painting of walls..." Read Maija Palmer's whole article here.

The Times
"Young men are almost twice as likely as young women to have started a business, despite similar levels of desire to do so, according to research that highlights barriers to entrepreneurship..." Read James Hurley's whole article here.

City A.M.
"Every entrepreneur has a story of past failure that they’re not afraid to share. I’m no exception. Back in 2010, when Octopus began investing in film production companies, we turned down the opportunity to invest in a small British film called The King’s Speech, which went on to gross £250m worldwide and win four Oscars. Instead, we invested in Burke & Hare, an “edgy” horror-comedy that lost money at the box office and was labelled “unpleasant drivel” by Hollywood Reporter..." Read Simon Rogerson's whole article here.

It would be amazing if you could share any thoughts you have about the report with the hashtag #FutureFounders. On Twitter (@tenthinktank & @OisforOctopus), Facebook, LinkedIn and Instagram.

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Half of Young Brits Want to Start a Business

Today we release Future Founders: Understanding the Next Generation of Entrepreneurs – a report in partnership with Octopus Group. The report finds 14-25 year olds are entrepreneurially ambitious, though fear of failure and lack of role models present significant barriers

Based on a ComRes survey of 1,549 young people, is finds:

  • 51% have thought about starting (or have already started) a business. A further 35% are open to the idea and just 15% rule it out altogether.

  • The main barriers to starting a business were “not knowing where to start” (70%) and fear of failure (68%). Women (71%) were more likely to cite fear of failure as a barrier than men (63%).

  • 57% of British people aged 14-25 cannot name an entrepreneur who inspires them.

  • Of those who were able to name an entrepreneur, just 15% named a female entrepreneur.

  • Alan Sugar and Richard Branson topped the list, while the most popular female entrepreneurs were Kylie Jenner and Grace Beverley (an Instagram influencer with a fashion line).

    The report finds that university education clearly influences entrepreneurial ambition: 65% of young people attending university have thought about starting (or have already started) a business, compared to just 53% of 18-25 year olds who didn’t go to university.

  • A desire to “be your own boss” (86%) and the “freedom to do what I want” (84%) were the top motivations for 14-25 year olds who have thought about starting companies. Wanting to be famous was the least popular motivation (40%).Exposure to entrepreneurship is a key driver of entrepreneurial intention. 68% of young people who have a family member or friend who is a business owner say this has made them more likely to consider starting a business.

Future Founders: Understanding the Next Generation of Entrepreneurs, has reveals that 51% of British young people aged 14-25 have thought about starting (or have already started) a business. A further third (35%) are open to the idea and just 15% rule it out altogether.

Though young people today show greater aspirations to become entrepreneurs than previous generations, this doesn’t always translate into the creation of new businesses. To support and nurture the next generation of entrepreneurs, policymakers need to grasp their motivations, ambitions and fears. The Entrepreneurs Network and Octopus Group commissioned ComRes to poll over 1,500 young people (aged 14-25) to better understand what they think about entrepreneurship and how different aspects of the education system affect entrepreneurial intentions.

Barriers to Entrepreneurship

The main barrier to starting a business was “not knowing where to start” (70%). Just two in five (38%) 14-25 year olds say that their education has given them the skills they need to start a business, compared to a quarter (26%) who say it has not. Half of respondents currently studying at university (51%) or currently studying business (55%) say that their education has given them the skills they need to start up – significantly more likely than non-university graduates, or those studying other subjects. However, this falls to 39% when students graduate, suggesting that some knowledge isn’t transferring from the classroom to the real world.

Women make up just a fifth of UK entrepreneurs, and the survey suggests a lack of role models could also present a significant barrier. 57% of young people could not name an entrepreneur who inspires them. Of those that could, 7.9% named Lord Sugar, 6.5% said Richard Branson, and 2.6% named Elon Musk. Kylie Jenner was the most commonly named female entrepreneur (just 1.1%). Further – half of young men could name an entrepreneur who inspires them, but only a third (35%) of women could do the same. Of the entrepreneurs who were named, 85% were male.

Past research shows that role models have a greater impact when they are relatable. Closing the gender gap and drawing on a wider range of entrepreneurial talent will require us to champion a more diverse range of entrepreneurs.

But we may also need to change attitudes towards failure if young women – and men – are to create the firms of the future. According to our report, 71% of women and 63% of men cite fear of failure as a barrier to starting up a business.


The findings of Future Founders will feed into the government review, led by The Prince’s Trust, examining how best to tackle the barriers facing the UK’s aspiring young entrepreneurs. We have raised a number of issues for policymakers to consider:

  • Britain’s youth are more likely to be motivated by the desire to be independent or to work on something they are passionate about, than by a desire to get rich quick. This should inform the way educators talk about entrepreneurship. Teachers could, for example, discuss with pupils how entrepreneurship can be used to solve pressing social problems.

  • Exposure to entrepreneurship is a key driver of entrepreneurial intention. 68% of young people who have a family member or friend who is a business owner say this has made them more likely to consider entrepreneurship as a career. Policymakers should therefore champion the work of organisations that aim to bring founders into schools, such as Founders4Schools, Girls in Charge Initiative, and Young Enterprise.

  • In addition, creating a safe space for young people to experiment with starting a business might help build confidence and knowledge, while reducing the fear of failure.

  • The government should champion schemes such as the Peter Jones Foundation’s Tycoon Enterprise Competition, where students are lent money to build businesses, but only have to pay it back if they breakeven, allowing them to try entrepreneurship in “a safe and controlled environment”.

Commenting on the report, Simon Rogerson, CEO and co-founder of Octopus Group, says:

“It’s in everyone’s interest to break down barriers to entrepreneurship. Entrepreneurs drive economic growth, create jobs and solve many of society’s problems – but to do this we need a diverse pool of talent and ideas. That’s why it’s critical to ensure that we give the next generation of innovators every opportunity to realise their ambitions.

“Starting a business is as much about your mindset as it is about the idea – and it can seem like a big leap of faith. That’s why it’s so important for young people to have access to mentors and relatable role models. They can make the impossible seem possible and help overcome that fear of failure.”

Sam Dumitriu, Research Director at The Entrepreneurs Network and author of Future Founders, says:

“Over half of under 25s see entrepreneurship as a real option, but entrepreneurial intentions often don’t lead to the creation of real businesses. Understanding the motivations, intentions, and barriers faced by young people is vital to widening the pool of entrepreneurial talent. In particular, the polling highlights the potential for closing the gender gap in entrepreneurship by raising the profile of female founders as role models.”

The Science Bit

"We're going to turn the UK into a supercharged magnet, drawing scientists like iron filings from around the world."

As expected, Boris is striking a very different tone to his predecessor when it comes to innovation and immigration, vowing to supercharge UK science. Yesterday, at the Culham Science Centre in Oxfordshire and later on Facebook, he announced that the Government will create a new fast-track visa system to attract the world's leading scientists and scrap the 2,000 a year cap on the Exceptional Talent visa.

Only a fraction of the Exceptional Talent Visas for scientists are actually being used, so getting rid of this cap isn't enough in itself. A lot goes into making a successful visa route – just look at how badly the new Start-Up and Innovator visas have been implemented.

And, ultimately, this goes nowhere near offsetting the loss of free movement with the EU, which makes it logistically very easy for scientists to work in other EU countries. Sure, there are challenges with setting up bank accounts and countless other micro-annoyances, but this visa will have to be very fast and convenient to avoid putting some scientists from coming here.

The other key advantage of free movement is a sense that people feel they have a right to live in another country and that they're welcome to build a life there. On the evening of the Referendum result, I was on a boat in the Thames with a hundred or so young, talented immigrants who were supposed to be celebrating a summer party for the world's largest youth led charity at which they worked or volunteered. The mood was that of a funeral – many felt that they were no longer wanted.

Boris is right to try to overturn this public relations disaster. He is lucky that Britain is a world-leader in science, technology and entrepreneurship, and that this won't change any time soon. But we're 83 days out from a Hard Brexit, and we don't have the institutions, funding agreements and regulatory frameworks in place to cushion the scientific community from what will be a nasty shock.

The Main Event
Continuing the theme of supercharging the economy, on Wednesday morning we have the brilliant and prolific academic Dr Nima Sanandaji speaking at what will be an optimistic lecture on knowledge-intensive jobs in the UK. These are the jobs that are crucial for income and productivity growth. Just let me know if you want to attend and feel free to share with your friends and colleagues.

Lost Einsteins
Nicole Kobie considers a much-discussed issue over at Wired. It's more of a statement than a question:The UK's startup founders are way too posh. Here's how to fix that.

I have doubts about some of the evidence she cites, including The Sutton Trust's Elitist Britain report, which uses the Richtopia 2017 list as representative of successful entrepreneurs. Two of the main things that go into Richtopia's rankings are social media profiles and regular media coverage, which allows lots of non-entrepreneurs to sneak in.

However, there are plenty of data to back up her concerns. Kobie also cites the top research of Raj Chetty and John Van Reenen which shows that children who do well in maths are likely to become inventors, but only if their family is wealthy: "Indeed, children with parents in the top one per cent in terms of income were ten times as likely to become inventors than those who grew up in the bottom half in terms of wealth."

My colleague Sam Dumitriu is quoted in the article: "One of the things we're finding is that people who have become entrepreneurs are more likely to say that at school level it was talked about more often, or that they know someone who is an entrepreneur."

Sam is referencing a research report we're launching on Monday in partnership with Octopus Group, looking at the views and knowledge of young entrepreneurs. I'll be sending through more details about the report on Monday afternoon, but let me know if you would like me to email you a copy when it launches first thing on Monday morning.

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Press Coverage: Job Creators

Our new Job Creators report has been featured widely in the media. The Financial Times ran a page two story, titled: “Migrants drive UK’s fastest-growing companies, study finds”. The report’s author, Sam Dumitriu, wrote an op-ed for CapX (“The vital role of immigrants in start up Britain”). “At a time of rising pessimism about the UK economy, a vibrant startup scene attracting record levels of venture capital investment is a rare bright spot,” he said.

Sam was interviewed by Mike Graham on talkRADIO for a segment on the report (11.30am-12pm, from 4m40). He outlined the report’s findings, and how these founders are making an outsized contribution to our economy and society, to job and wealth creation. Sam also flagged the absurd example of one entrepreneur being rejected by the Home Office because they disagreed with his assessment that the “UK is a very stable country with very little risk of fluctuation in business markets”, given the UK’s planned exit from the European Union.

In his Forbes column, our founder Philip Salter, made the case for policymakers to prioritise preserving the UK’s status as a destination for entrepreneurs and skilled workers who will enable their businesses to flourish. Policy contributor Fred Lindsay also covered our report in Forbes, calling the Entrepreneurs Network the latest voice “calling for Britain to remain open to foreign entrepreneurs and founders.”

Philip also penned an op-ed for City AM, writing “The history of Britain’s best businesses can’t be told without the story of immigrants – there would be no Marks & Spencer without Belarusian refugee Michael Marks.”

And Annabel Denham criticised Theresa May’s fixation with the net migration target while praising Boris Johnson’s pro-immigration stance in the Telegraph. She writes, “With the Fourth Industrial Revolution underway, we will need bold individuals willing to strike out alone and create the jobs of the future.” Many will come from overseas.

Blythe Edwards also covered the report in CapX (“Research by The Entrepreneurs Network shows that while only 14% of UK residents are foreign-born, a whopping 49% of the UK’s fastest-growing startups have at least one foreign born co-founder.”) Finextra also used the data as the basis for their article on the importance of migration to the future of UK fintech, while IT Pro used the report to call for visa reform.

Unhidden GEM

This week we helped launch the Global Entrepreneurship Monitor (GEM), which is led by Aston Business School's Professor Mark Hart and supported by NatWest.

The GEM is kind of a big deal in the world of entrepreneurship research. It tracks the rates of entrepreneurship across multiple phases in 49 economies, making it the world’s most authoritative comparative study of entrepreneurial activity in the general adult population.

I won't try to summarise the UK's full 88-page report, but here are two things that I found interesting.

Not so great expectations
We are a nation of entrepreneurs. One-fifth of working age individuals in the UK either intended to start a business within the next three years; were actively trying to start a business; or were running their own business. This has more or less been the case since 2011, and represents an increase on the previous long-run rate of around 1 in 6.

Early-stage entrepreneurial activity – the nascent entrepreneurship rate and
the new business owner-manager rate – also looks to be on trend (7.8%). Before the great recession the trend was more like 6%, so it's fair to say that over time we have become a more entrepreneurial country. However, this increase is largely in low expectation entrepreneurial activity, Just 1 in 6 UK early-stage entrepreneurs having high job expectations, which is lower than its comparator countries: US, France and Germany at 1 in 4.

A good gig
Gig economy workers are more entrepreneurial than many assume. In the UK, 4.3% of the population participate in the gig economy, but one
in 10 entrepreneurs are a gig economy worker – cutting across nascent entrepreneurs, through to new business owner and even established entrepreneurs.

As is concluded in the report "The gig economy seems to be an attractive way of working for those intending to start a business or who are in the early stages, with one in five future entrepreneurs working this way and one in ten nascent entrepreneurs. Given the flexibility inherent with this type of work it would seem ideal for those individuals who wish to spend time getting their business off the ground and earn a wage at the same time. The latter point is particularly important for those early-stage entrepreneurs who may not yet have a steady monthly income arising from their business venture."

Sukhpal of the UK
This week I interviewed Sukhpal Singh Ahluwalia for my Forbes column. Sukhpal supported Job Creators – our recentImmigrant Founders report. Sukhpal's story is compelling: "I came to the UK when I was 13 with my parents and two brothers, fleeing the murderous regime of Idi Amin in Uganda. We left very quickly and we left everything behind, including the business that my family had worked so hard to build up. We arrived in the UK with literally just the clothes on our backs and ended up living in a refugee camp. That experience was formative for me."Read the whole thing here.

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The DUD(E)

"I know some WAG has already pointed out that deliver, unite and defeat was not the perfect acronym for an election campaign since unfortunately it spells DUD, but they forgot the final E my friends, E for energise." Johnson's first speech as Tory leader was typically meandering, but his policy platform is starting to take shape.

Let's get Brexit out of the way first. The most likely sequence of events will be Boris going to Europe to negotiate the deal/backstop; Europe saying no thanks. Boris will then probably try to push through a no-deal Brexit. He might succeed, but his narrow majority means it's reasonable to assume he will lose a vote of no confidence. We will then get a General Election.

Brexiters and Remainers will both be seething. So in the interest of unity and sanity, let's talk of other things. Here are three reasons to be optimistic (as with governments of all stripes, I'm sure there will be plenty to criticise in future e-bulletins).

Down Under
Boris has immediately axed Theresa May's vow to lower immigration to the tens of thousands. Unlike Boris, I don't think an Australian-style points system is the answer, but the change of tone from May's premiership is a blessed relief. As my colleague Annabel Denham argues in The Telegraph: Immigrants are the lifeblood of Britain's entrepreneurial spirit – we need them more than ever.

Where Art Thou?
Boris's brother Jo Johnson – who wrote the foreword for our recent Job Creators report on immigrant founders – is back at the science ministry, straddling BEIS and the Department for Education. Johnson is well regarded by the research community and is widely considered to have done a good job when previously in the role. He was behind the creation of UK Research and Innovation (UKRI), championing the target that the UK spends 2.4% of GDP on research and development by 2027. Johnson might have an unexpected ally in his brother's Special Adviser Dominic Cummings. The former Campaign Director of Vote Leave takes a keen interest in science, as readers of his eclectic log will know. A recent blog on why science is becoming less efficient draws on the same body of research that interested me here last year.

Health of Nations
Matt Hancock remains at health, which may give him the time go some way to realising his tech vision to build the most advanced health and care system in the world: "The vision sets out how digital services and IT systems will need to meet a clear set of open standards to ensure they can talk to each other and be replaced when better technologies become available. A focus on putting user needs first and setting standards at the centre will enable local organisations to manage their use of technology and spread and support innovation wherever it comes from." Anyone interested should read last year's policy paper.

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Today we've released an important report revealing that foreign-born founders are making an invaluable contribution to the UK. In Job Creators: The immigrant founders of Britain’s fastest growing businesses, Sam Dumitriu and Amelia Stewart reveal that 49% of our fastest-growing businesses have at least one immigrant co-founder.

The report is featured on page 2 of today's Financial Times, I've written about it for City A.M., and we expect it will be in the Evening Standard later today. Sam Dumitriu has also written a longer article for CapX

The report reveals that – despite just 14 per cent of UK residents being foreign-born – 49 per cent of the UK’s fastest-growing businesses have at least one immigrant co-founder. We use the SyndicateRoom’s Top 100 list, which is based on Beauhurst data to identify the startups, scaleups, and fast-growing firms that have seen the largest increase in value over the last three years. The list includes seven unicorns – startups with a valuation of $1bn or more – of which five have at least one immigrant co-founder, including Monzo and Deliveroo.

We would like this shared as widely as possible. Here is our Tweet thread on the report;  here is our this easily digestible page to find out more; and here is a link to the full report.

If you want to support this research, it would be awesome if you share the links, news articles or any thoughts you have about the report on Twitter (@tenthinktank), Facebook (@tenthinktank) and Instagram (the_entrepreneurs_network) with the hashtag #JobCreators.

This isn't just about celebrating immigrant entrepreneurs. We are about fixing the system and are calling on the Government to:

  • Restore the Tier 1 Post-Study Work Visa and allow international students to work in the UK up to two years after graduation before moving on to another visa. Many of the entrepreneurs featured in Job Creators originally came to the UK to study.

  • Reform the Tier 1 Investor Visa by lowering the minimum qualifying investment threshold for investment in UK startups, scale-ups and venture capital funds.

  • The report also calls for the government to ensure that the new startup and innovator visas, which allow accelerators and incubators to sponsor entrepreneurs for visas, are implemented successfully. While new visas for entrepreneurs are welcome, the implementation has been flawed with Home Office guidance creating delays, briefly leaving the entrepreneurs with few options for moving to the UK.

Jo Johnson MP backs the report and has written the Foreword:

“For Britain to remain at the economic top table, we need to embrace the gifted students and buzzing entrepreneurs who wish to contribute to our success. It is senseless, therefore, to deny graduate entrepreneurs the chance to set up their business and invest their talents and energy in the country where they studied.

“This report sets out measured, reasonable and workable ways to harness international talent, for example by reinstating the Post-Study Work Visa and allowing international graduates to work in the UK for up to two years.

“I am proud of the positive impact immigrants have had on the UK economy. Without them, we would not be the dynamic nation of manufacturers, exporters, app designers, innovators and disruptors what we are today.”

We are proud too.As I conclude in my City A.M. article: "Today’s report shows the profound impact that immigrant founders are still having on Britain. Not shutting the door on them isn’t enough, let’s embrace them with open arms"

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Call Her Maybe

Kelly Tolhurst MP, the Government’s Minister for Small Business, and Keith Morgan, Chief Executive of the Government-owned British Business Bank, are holding a teleconference at 10am on Thursday to hear business owners' experiences of finding and using external finance.

This is in response to some businesses telling them that the market for finance is not working as well as it could, with many saying that they find it difficult to navigate the finance options on offer.

If you are a business owner and have questions or suggestions about accessing business finance, register for the call here.

Gimme More
I hadn't planned to write about tech regulation two weeks in a row, but I co-authored a paper on the subject that's been released today. 

In Safeguarding Progress: The Risks of Internet Regulation, Matt Lesh (Adam Smith Institute) Sam Dumitriu (The Entrepreneurs Network) and I make the case for a for a free, open internet, and for the Government to adopt these five principles for Permissionless Innovation:

  1. Identify and remove barriers to entry and innovation;

  2. Protect freedom of speech and entrepreneurship by retaining immunities for intermediaries from liability;

  3. Rely on existing legal solutions, the common law, and competitive pressures to solve problems;

  4. Push for industry self-regulation and best practices;

  5. Adopt targeted, limited legal measures for truly hard problems based on evidence.

As I say in the press release, the growing burden of tech regulation risks strengthening the market position of tech giants by raising the barriers to entry. Treating platforms as publishers would hit startups hard. Facebook and Google can afford to hire an army of moderators, but their would-be competitors will struggle. While the Copyright Directive risks stymieing creativity, funding and innovation for disruptive tech entrepreneurs. Britain's tech sector is the envy of Europe. If we are to remain a world challenger, we need to up our game and factor in the significant cost of poorly targeted regulation.

City A.M. has a short write-up of the paper. And if you're a glutton for tech policy regulation (who isn't?), check out Ryan Bourne's paper on the antitrust policy in the US.

Separately, and more broadly, we're working with Liya Palagashvili, Visiting Scholar in the Department of Political Economy at King's College London. She is undertaking pilot interviews with founders/CEOs, investors, accelerators, and others in the London startup ecosystem better understand what it is like for entrepreneurs to run their businesses in London. Email her if you want to get involved.

Read the whole thing here, and sign up for the e-bulletin here.

VAT Chance

I wrote for The Spectator’s Coffee House blog this week on why Michael Gove’s plans to scrap VAT and bring in a US-style Sales Tax should be reject.

At first glance, a US-style sales tax is much simpler. The tax is only charged at the final point of sale. In theory, only the final consumer should pay and resellers are exempt. It is easy to see why the Environment Secretary might think swapping a VAT for a retail sales tax would reduce the burden on business.

But in practice, retail sales taxes aren’t so simple. Businesses have to pay the tax unless they can prove the item was bought to sell on to a customer. But resale exemptions are often limited; it’s not always clear whether someone is a consumer (and therefore should pay the tax), or a business (and therefore shouldn’t pay the tax). If a reseller is wrongly identified as a consumer, then the tax can build up over multiple stages of production. The final consumer ends up paying way more than they were meant to.

Rather than reducing the bureaucratic burden on small businesses, this would give bigger businesses, who have brought their suppliers in-house, an unfair advantage.

Read the whole thing.

In Principle

This week the Government announced some tweaks to way tech will be regulated.

As I've argued in the past, over half of businesses think the level of regulation in the UK is an obstacle to success; however, it’s not just a matter of cutting. There are tradeoffs – regulation doesn’t just protect consumers and the environment, at it’s best, it also helps promote competition and support economic growth.

To help guide entrepreneurs in emerging technologies, we should embed the Innovation Principle across government with regulators across all relevant industries creating break-out zones where entrepreneurs can test new technologies. The Financial Conduct Authority’s Sandbox is an exemplar of this. It’s a safe space in which fintech companies can innovate by testing products, services, business models and delivery mechanisms in a live environment, while ensuring that consumers are appropriately protected. 

Business Secretary Greg Clark has announced a new Regulatory Horizons Council to advise government on rules and regulations that may need to evolve and adapt to keep pace with technology. Also, a Regulation Navigator will be created – a new digital interface to help businesses ease their way through the regulatory landscape and bring their ideas to market quickly.

In addition, Clark announced a partnership with the World Economic Forum to share best practice on getting innovative products and services to market, and a review of the Regulators’ Pioneer Fund, which backs projects that are testing new technology in partnership with the regulators in a safe but innovative environment.

We aren't just a think tank for tech entrepreneurs, but it's impossible to ignore the importance of this sector. In fact, it's increasingly awkward describing tech as a 'sector', as it becomes is critical to the way nearly all businesses deliver their products and services. To an increasing extent: every business is a tech business.

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A Thousand Fathers

Although every policy has a thousand fathers (and mothers), it's always heartening when ideas we've pushed are backed by politicians.

Back in 2015 we released Made in the UK with the NUS, revealing that 42 per cent of international students intended to start a business after graduation. However, in order to do this, international graduates wanted time to work in start-ups, building their ideas and networks. Instead, many of the best and brightest in the world are turfed out. That's why we made the case for reintroducing the Post-Study Work Visa, which prior to 2012 granted international students time the time they needed after graduating.

The Post-Study Work Visa was scrapped by Theresa May when she was Home Secretary. Today, Sajid Javid – the Home Office's Secretary of State and contender to be the next Prime Minister – has promised to support Jo Johnson's cross-party visa proposals, which includes the reintroduction of the Post-Study Work Visa.

Javid has also vowed to broaden the apprenticeship levy into a wider skills levy, giving employers the flexibility they need to train their workforce. Again, this is something that we called for in our recent Management Matters report – part of our ABE-sponsored Business Stay-Up campaign.

Meanwhile, fellow leadership hopeful Sam Gyimah announced some encouraging tax policies today. As part of a five-point plan to scrap the worst taxes in Britain, Gyimah has called for a couple of things we've proposed. He would replace business rates with a commercial land tax – paid by commercial landlords on the land value so that no business is worse off if it invests in its property. He also plans to make all business investments deductible immediately, by making the Annual Investment Allowance unlimited. We suggested both these things in our report on Tax Reform for the All-Party Parliamentary Group for Entrepreneurship.

No matter who becomes Prime Minister, many of the policies announced by the candidates over the coming days (both good and bad) will feed into the next Government's agenda. Today's announcements offer room for hope.
On your bike
The Resolution Foundation has released some important research. Moving Matters finds that the rate at which the British public take up a new opportunity and change residence has fallen – particularly for younger people. Among other things, the report finds the propensity of young private renters to move home and job fell by two-thirds between 1997 and 2018, largely driven by increased rental costs. This should concern us all. Individuals can't make the most of their talents if they're priced out of cities, and entrepreneurship is stymied if the pool of talent isn't deep for founders to build their companies.

Read the whole e-bulletin here, and sign up here.

Culture is King

According to the latest YouGov survey, the Lib Dems would win a General Election if it was held tomorrow. The Brexit Party are a close second. This lends more weight to the idea that politics is undergoing a realignment away from the familiar left/right divide – something I've written about previously.

In the UK, that dividing line is dominated by Brexit. As Professor Chris Grey writes on interpreting the UK's European Election results: "A few days before the elections Jeremy Corbyn tweeted that “the real divide in our country is not between those who voted Leave and Remain three years ago”. That is a profound misreading: it is precisely the divide. To ignore it is as mistaken as the claim from May (when calling the 2017 General Election) that the country was coming together about Brexit, even if politicians were not."

The divide goes beyond Brexit though. The way you voted in the Referendum is highly predictive of your views on things like the environment, immigration and feminism. Forget class warfare – we're now in a culture war.

Come What May 
So far there are twelve candidates to replace Theresa May. A few have a business background – all are vying to position themselves as the pro-business candidate. Here's a snapshot of what we know so far:

– Jeremy Hunt has vowed to cut Corporation Tax to Irish Levels (12.5%).
– Raise EIS relief to 50% and let entrepreneurs in accelerators like Entrepreneur First access maintenance loans, says Dominic Raab.
– Tory Leadership candidate Matt Hancock doesn’t beat around the bush: ”To the people who say ‘f**k business’, I say ‘f**k, f**k business”.
– Leadership longshot Kit Malthouse says: “We must revolutionise our economy, freeing a new generation of entrepreneurs to take risks and build businesses, creating jobs and wealth.”

Grand Idea
As part of nationwide efforts to drive up small business productivity, our friends at Enterprise Nation are delivering free training to small businesses in Birmingham, London, Oxford and Lancashire. Heads Up is worth £1,000 and will be delivered at no cost to the business owner. The focus will be on accounting and finance, sales and marketing, collaboration, and time management. Find out more here.

At The Entrepreneurs Network we're broadly supportive of these sorts interventions as there is plenty of evidence of they work (and Heads Up will help provide more data on what works). This is detailed in our Management Matters report, which is part of our ongoing Business Stay-Up campaign we run with ABE. 

Think of the Children
Today our friends at the Coalition for a Digital Economy (Coadec) have sent a public letter with Allied for Startups to the Information Commissioner Elizabeth Denham. Coadec thinks the ICO’s proposed Age Appropriate Design Code poses a direct threat to the startup ecosystem in the UK.

"What started as a well-meaning attempt to treat children’s data more carefully has instead resulted in proposals that could cause age-verification to be enforced for vast swathes of the internet, lead to a huge increase in data collection, and create an internet for kids designed by tech giants." Find out more here.

Read the whole e-bulletin here, and sign up here.

In praise of a “contrarian book that ought not to be contrarian at all”.

I’m in today’s Daily Telegraph recommending Tyler Cowen’s new book, a contrarian defence of Big Business, to Conservative MPs who’ve recently taken a more negative line towards business.

Here’s a snippet:

Another common criticism of business leaders is that, unlike politicians and journalists, they are myopically focused on the short term. Yet, this criticism doesn’t stack up. Loss-making tech companies can attract billion dollar valuations. Take Twitter: it wasn’t profitable until 2018, 12 years after it was founded. Is there any better evidence against the short-termism hypothesis than Amazon’s stratospheric share price despite regularly reporting losses or (relatively) low profits?

I’m more sympathetic to the charge of crony capitalism. Some businesses do gain unfair advantages by lobbying for regulations that smaller firms can’t bear. We should be sceptical of Facebook’s recent support for greater regulation of social media for that exact reason. Yet, business seems to have had little sway over legislation in recent years. Take the issue of immigration: business groups have consistently argued against Theresa May’s decision to cap high-skilled migration from outside the EU.

There are cases of blatant cronyism, but it’s not clear that it’s as widespread as some ministers suggest. The most harmful regulations tend to be those demanded by the general public and opposed by big business. The absurd rules preventing 8 new flats being built at the end of my road were not written in response to special pleading from FTSE 100 companies.

Read the full article here.

Philip Salter on Sajid Javid's asking the MAC to review the £30,000 minimum salary threshold

“Savid Javid’s decision to ask the Migration Advisory Committee’s (MAC) to reconsider a £30,000 minimum salary threshold for EU migrants is welcome news for Britain’s ambitious business owners.

A hard cap of £30,000 would stymie Britain’s start-ups, damaging entrepreneurship in the UK. Lower, differentiated thresholds based on location or age would make ending free movement with the EU less harmful for British businesses.

Many start-ups rely on foreign-born workers with specific skills necessary to grow the business. Start-ups often have limited funds so offer employees a lower salary in exchange for equity and the opportunity of being an early employee in a potential scale-up.

Access to the best people for the job helps companies scale, leading to more employment of native workers and better products and services for us all. Everyone's a winner.”

Raise a Glass

new report from Tech Nation shows that despite recent political turmoil, the UK’s tech sector still punches above its weight.

Based on the relative size of our economy, last year’s scale-up tech investment was 2.5 times higher than would be expected. We can rightly brand ourselves a ‘tech nation’, having created 35 per cent of tech unicorns – that is $1bn+ valued businesses – across Europe and Israel. Britain's fintech firms lead the world. It's our number one sub-sector, with high-growth fintech firms receiving around £4.5bn in investment between 2015 and 2018.

From time to time, founders, companies and even nations should take time to reflect on the positives. For the tech sector, that time is now. But not for too long though. For anyone who prefer their glasses overflowing, check out my thoughts in CapX on how we can do even better (tl;dr we need more international talent, less Nimbyism and better infrastructure). 


Cutting off one's nose to spite the face doesn't come highly recommended. In related news, Tesco's boss has called for the introduction of an online tax to "save" the high street. Our Research Director Sam Dumitru debated the issue in City AM:

"The high street is undergoing massive changes. Adapting to creative destruction is always painful, but the solution isn’t to tax new industries to subsidise the old ones.

"Policymakers should instead focus on eliminating the barriers faced by businesses adapting to the changing retail environment. It should, for instance, be easier to get planning permission to turn failing shops into cafes or restaurants.

"Online sellers shouldn’t be punished for responding to changing consumer demand by offering goods at a lower price in a more convenient manner. E-commerce platforms such as Amazon have lowered barriers to entry and enabled small and micro-businesses to cater to every obscure taste out there.

"Worst of all, the reforms will do little to help struggling bricks and mortar retailers. The evidence suggests that commercial landlords respond to cuts by raising rents, leaving shopkeepers no better off. The only retailers that will benefit are those which own large property portfolios like, er, Tesco."

We appreciate there is an issue with multinational companies paying less tax less in the UK through creative accountancy than some traditional businesses. But the Tesco CEO’s proposal wouldn’t do anything to solve this (admittedly tricky) problem.

One nifty idea that has potential is moving to a destination-base for corporation tax: it is far harder to obscure where something is bought than where it is made. Martin Wolf has a useful explainer article in the FT.

The 78%

It's Mental Health Awareness Week. Mental health is an issue pertinent to many entrepreneurs and something that the Officers of the APPG for Entrepreneurship have asked us to investigate.

Christina Richardson – founder of 3sixty – recently found that 78% of founders say that running a business has negatively impacted their mental health. And one of our Advisers – Guy Tolhurst, founder of Intelligent Partners – has taken it upon himself to drive awareness around the issues of mental health and entrepreneurship (read more about his story here and check out some of his videos to hear from other entrepreneurs talking about their mental health challenges).

Read the whole thing here, sign up here and join us here.

What the Spring Statement means for entrepreneurs and the tech industry

Given the Spring Statement has – since its introduction by the Chancellor in 2018 – been a fiscal non-event to make it easier for businesses to manage changes, this year's was always going to be a damp squib. But compared to the enormity of the Brexit, today’s announcements are largely insignificant. Nevertheless, they are relevant to entrepreneurs and the tech sector, and the Statement was a welcome distraction from the daily humiliation of watching our politicians try to leave the European Union.

There was some good news. Tax receipts from Income and Corporation Tax were higher than expected, helping reduce the deficit. But economic growth remains weak. Chancellor Philip Hammond expects business investment to start growing again from next year, although all the forecasts are based on May’s deal passing – which is looking increasingly unlikely.

Wages are increasing at their fastest pace in over a decade, outstripping inflation. But The Government remains concerned about low wages, and has appointed Professor Arindajit Dube to undertake a review of the latest international evidence on minimum wages to inform future National Living Wage policy after 2020. This could ultimately impact any employers of low-wage employees and increase demand for technology to replace their tasks.

It’s widely acknowledged that apprenticeships aren’t working as intended. That’s why the government is reducing the percentage that employers will need to pay towards training from 10% to 5% and increasing the amount that levy-paying firms can pass on to their supply chain from 10% to 25%. This is a step in the right direction, but as we called for in our Business Stay-Up report, this should be increased to 50% as many businesses can’t find relevant training courses for their business needs.

The Chancellor has called for a CMA Market Review of digital advertising. This follows the release today of the Furman Review on competition rules for the digital age. It calls for closer examination of acquisitions by large tech companies, more data portability between social networks, and a new digital markets regulator to work with industry to develop a code of conduct for big digital platforms. This is all sensible stuff, with Furman’s report prioritising competition and consumers without resorting to potentially destructive suggestions such as breaking up tech firms or regulating them like utilities.

Hammond did manage to sneak in a couple of relatively minor funding announcements, including committing to fund the Joint European Torus (JET) programme in Oxfordshire as a wholly UK asset if the European Commission doesn't renew the contract. JET’s raison d'etre is to pave the way for nuclear fusion grid energy. There’s also £81m in Extreme Photonics (state-of-the-art laser technology) at the UK’s cutting-edge facility in Oxfordshire, £79m for a national supercomputer in Edinburgh, five times quicker than the UK’s current capabilities, and £45m for Bioinformatics research in Cambridge.

Research institutes and innovating businesses will benefit from an exemption for PhD-level occupations from the cap on high-skilled visas, and overseas research activity will now count as residence in the UK when applying for settlement. As such, researchers will no longer be penalised for research time spent overseas. Alongside scrapping landing cards and allowing some foreign nationals to use e-gates, the Government clearly wants to show that we are open for business. All this can’t and won’t offset the talent we will lose from ending free movement with the EU though – assuming, that is, we actually leave the EU.

Business is all the better for owners not having to keep up with the machinations of 650 politicians in Westminster. That’s why Hammond downgraded the Spring Statement three years ago. In these exceptional times politics will have an undue influence, with sharp changes in access to talent, tariffs and investment directly and indirectly impacting every business in the country. This statement isn’t enough to put a spring in anyone’s step, but Hammond can’t work miracles.

The Rose Review of Female Entrepreneurship

Good morning and thank you all for joining us at the launch of the Rose Review into female entrepreneurship. I’m Annabel Denham, I work at The Entrepreneurs Network, a think tank for entrepreneurs. We bridge the gap between entrepreneurs and politicians, and try to change policy to make it more favourable Britain’s start-ups and scale-ups.

In my role there, I do a lot of writing and research around female entrepreneurship and women in leadership more broadly, and as a result am thrilled to have been invited here to this great city and speak in front of not only a very distinguished panel but also an audience filled with inspirational female founders. 

The launch couldn’t have come at a more apt time, for today is International Women’s Day. For those of you who don’t know, this day has been marked for around 100 years now, though many would lament that it has yet to achieve its original goal of equality for women around the world.

Here in Britain, we have come leaps and bounds since the Sex Disqualification (Removal) Act of 1919. It is not uncommon for women today to have careers after children. The gender pay gap is narrowing. Women represent over half the workforce in many spheres – from medicine to marketing.

But one area that hasn’t kept up with the pace of change is entrepreneurship. The Rose Review has highlighted some alarming statistics: that just a third of businesses are run by women, that companies with male teams are five times more like to reach 1m turnover and will attract around 90% of VC investment.

To many of you here, this will sound all too familiar. Perhaps you’ve gone along to an investment meeting and not only been the sole woman at that meeting, you’ve been the first female entrepreneur that the investment committee has ever come across. Perhaps you’ve struggled to access networks because you don’t play golf or use the men’s room. Perhaps being told to lean-in sounds good, but goes against your gut instincts.

The Rose Review is important for three reasons. First, it is a joint report between the private sector and government, and draws on first-hand experiences from entrepreneurs across the nation. Second, it offers tangible recommendations not just to policymakers but also schools, the investment sphere and other private sector actors. These calls to action do more than pay lip service. Third, while it brings to light some worrying statistics, it is also hugely inspirational.

Policy change doesn’t happen overnight, and societal changes take far longer. But thanks to reports like the Rose Review raising awareness, and with countless women up and down the country already running exciting, fast-growth businesses and inspiring the next generation of girls, we’re well on the way.

Annabel Denham’s opening remarks at the launch of The Rose Review of Female Entrepreneurship.

Blurred Lines

Why are MPs quitting the two main parties? The immediate causes are obvious: Brexit and anti-Semitism. But the formation of The Independent Group (TIG)may be part of something much more significant: the realignment of modern politics.

As historian Stephen Davies has been saying for years (but perhaps most succinctly here), changing interests, sentiments and power are leading to a new alignment. Currently the split in most developed countries is between social democrats and free market conservatives (or the US equivalent of liberals and conservatives) – in other words, the crude but important pro-market/anti-socialism vs. anti-market/pro-government divide between the Conservatives and Labour. According to Davies, the new alignment is between "globalism and cosmopolitanism on the one hand and nationalism and ethnic or cultural particularism on the other". 

A common criticism of TIG is that they don't agree on enough and haven't set out a clear set of policies. This might be missing the point – and not only because they aren't (yet) a Party. They don't need to agree on everything. Over the years, the Conservative Party, for example, has coalesced around issues such as economic liberalism, a strong national defence and a conservative social order. There are no strong logical reasons why people in favour of free markets and the defence of traditional family values should necessarily be in the same party (in some countries they aren't).

For as long as the primary dividing lines matter to them, party supporters' views align with others in their camp through herd effects, or they live with the tensions – perhaps most acutely in the numerous privately gay Conservative MPs speaking and voting publicly against legislation supporting LGBT rights (before the Party changed tack on these issues).

If Davies is correct, the new polarity will be between what is often awkwardly termed “openness” and “closedness”. The Labour and Conservative Parties may survive and change their views to become the parties of these movements, though they're both increasingly vying for the closedness side of the realignment. Hence TIG.

So which side should entrepreneurs be on? The Entrepreneurs Network doesn't back political horses, but we know that entrepreneurship flourishes when goods, capital and people are freest. When the dust settles, whoever most represents openness will be the political party for Britain's entrepreneurs.

You can read full e-bulletin here, and sign up here.

Britain Needs Talent

This week we're doing something a little different. Whenever we speak with entrepreneurs, one of the main issues impacting their ability to grow their business is access to talent. That's why we are surveying entrepreneurs on their approach to recruitment, which will feed into our policy work and a Barclays report on the project.

If you're an entrepreneur, it would be great if you could take 5 minutes to complete this survey. If you're not an entrepreneur, we would be immensely grateful if you could forward this on to any entrepreneurs who might be keen to support our work.

All responses will be anonymised, and we're offering a year's free membership to The Entrepreneurs Network to anyone who responds.

The key benefits of membership are:

  • priority invitations to our popular events

  • monthly Policy Updates which explain how changes to legislation will impact your business, and how your business can benefit from schemes designed to support entrepreneurs

  • occasional press opportunities from journalists to help promote you, your expertise and your business.

In the News

Welcome to my entrepreneurs’ playground

The sooner you go home the better” 2 Vice-Chancellor’s ask is this the UK's message to international students?

Early stage funding for UK startups drops 15pc to four year low

Women can break mould of venture capitalists

Venture capitalists lose out by ignoring female entrepreneurs

The businesses demanding the 'free' from freelancers

Women need to be less 'squeamish' about making money, Liz Truss says

£700k boost for university entrepreneurship competitions

How Tink raised capital from banks but kept its independence

Friends of the network

British Library: Innovating for Growth: Scale-ups

Register your interest by Thursday 14 March, Free

Innovating for Growth is a European Regional Development Fund programme designed to help small businesses scale-up and grow. 18 high-growth businesses are selected each three months to give £10,000 worth of specialist support and tailored one-to-one advice on areas including: developing a growth strategy, refining your business model, product and service innovation, creating a market strategy and building your brand, maximising your Intellectual Property, business and market intelligence and more.

Find out more

IESE Business School: Valuable Lessons from an Overlooked Asset Class

12 February 2019, 7pm to 9pm, Nomura International, London

IESE Business School professor Jan Simon will provide insight into the world of search funds and deliver valuable lessons on entrepreneurial acquisitions (acquisitions by entrepreneurial managers), including sourcing, acquiring and growing a company.

Find out more

Supper Club: How to be a Top Communicator

14 February 2019, 9am-1pm, The Office Group, 2 Stephen Street, London, £195 Non-members

This session is designed to give you a detailed awareness of the importance of your personal impact and the way you communicate to those you wish to influence.

Find out more

IoD Lancashire: Diversity in the Boardroom

21 February 2019; 8.30am to 11.30am, Free

Burnley College, Themis, Burnley

This event will explore why it is essential to encourage diversity in the business environment.

Find out more