Omnishambles

At yesterday's Balkan Summit in London, foreign ministers and entrepreneurs from Serbia, Bosnia-Herzegovina, Montenegro, Kosovo, Macedonia and Albania were stood up by Boris Johnson who was due to unveil £10 million in aid funding to help young people in the Western Balkans improve their digital skills. When he later emerged, Boris followed David Davis in quitting the government. Our politics is an omnishambles.


A year ago, I wrote an e-bulletin entitled M is for Mediocre. It got lots of responses from people agreeing with my pointed conclusion that too many of our current crop of MPs aren't up to scratch. (The exceptions we invite to speak at our events.) Whether through the current political parties, or perhaps through one of the plethora of new "centrist" parties, we need smarter people in power. Now is the time for those with the right skills to enter politics. But as Billy Connolly quips: "The desire to be a politician should bar you for life from ever becoming one."

What a GEM!
It's not all bad news. Last week we helped launch the Global Entrepreneurship Monitor (GEM). Coming out of Aston University and sponsored by NatWest, the GEM is the largest and most comprehensive study on entrepreneurship globally, collecting data on entrepreneurial activity in 54 countries, covering two-thirds of the world’s population.
 

This year the UK edition revealed that people from ethnic minority and immigrant backgrounds are twice as likely as their white British counterparts to be early-stage entrepreneurs. On the back of the launch, I wrote for City AM yesterday on why Britain should be proud to be a nation of immigrant entrepreneurs.

 

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Unlike a Virgin

Richard Branson and Harland David Sanders are exceptional. Branson was always an entrepreneur, shunning school to trade in Christmas trees and budgerigars; while "The Colonel" waited until he was 65 before starting KFC.

Branson and Sanders are exceptions to the rule – that there is a sweet spot for successfully starting and growing a business. Thankfully, it's rather large: 25 to 49. After this age, entrepreneurship is more likely to take the form of self-employment or micro businesses without growth ambitions.
 

According to Demographics and Entrepreneurship – a book that we have recently released with the Fraser Institute – leaders across developed countries should be concerned about ageing populations and mitigate the pressure this will exert on reducing the quantity and quality of entrepreneurship.

The ideal demographics for entrepreneurship peaked around 1995, the UK, US, Australia and Canada are all expected to see a significant projected decline in this key entrepreneurial age group across all four countries by 2065.

Short of governments distributing aphrodisiacs – and sadly clinical trials suggest oysters and other natural libido enhancers don’t actually work – what can be done? Across 498 pages, we have some suggestions.

Chapter considers the impact of capital gains tax upon entrepreneurship. Capital gains tax is effectively a tax on future consumption over current consumption. Mitchell and his co-authors argue that high rates reduce start-up activity:

“Compared to other countries in the OECD, Australia, Canada, the United Kingdom, and the United States all have room for improvement when it comes to their top personal capital gains tax rates. The United States and Canada, for example, have top capital gains tax rates above the OECD average and rank in the top third of countries with the highest top capital gains tax rates in the OECD. While Australia and the United Kingdom have top capital gains tax rates under the OECD average, they, too, still have room for improvement as 11 and 14 countries have top capital gains tax rates lower than those in the United Kingdom and Australia, respectively. All four countries are thus able to improve their position on capital gains taxes in order to spur entrepreneurship.”

In chapter 9, Peter Vandor and Nikolaus Franke consider immigration. The evidence shows that immigrants are particularly entrepreneurial, with the Global Entrepreneurship Monitor showing higher entrepreneurial activity among first-generation immigrants than natives:

“The relatively strong inclination of immigrants to become entrepreneurs is not a new phenomenon. Historians have documented the economic impact of immigrant entrepreneurs in different countries and time periods. Jewish immigrants constituted a significant share of successful entrepreneurs in the United Kingdom between the 1930s and 1950s. These mostly Lithuanian and Polish immigrants have left their mark in many industries, creating household names such as Marks and Spencer or the food retail giant Tesco by introducing product and financial innovation.”

Just consider Silicon Valley. As John Collison, an Irish immigrant and co-founder of the payments start-up Stripe, explains in the New York Times: “The U.S. is sucking up all the talent from all across the world… Look at all the leading technology companies globally, and look at how overrepresented the United States is. That’s not a normal state of affairs. That’s because we have managed to create this engine where the best and the brightest from around the world are coming to Silicon Valley.” 
 

Collison is right. Our Government desperately needs to change tack to offset the uncertainty around Brexit. As Vandor and Franke argue:

“The economic and political climate of a country plays a significant role in the attraction of highly skilled migrants, as has been witnessed with the Brexit vote and the election of president Trump in 2016. Even before any concrete policy measures had been implemented, the public perception of these events had already triggered a measurable decrease in graduate student applications for universities in the United Kingdom and the United States. At the same time, universities in countries associated with more open policies, such as Canada and Australia, saw a significant increase in applications in the aftermath of these events, suggesting a redirection of mobile international talent in their direction.”

We are in the planning stages of a research-led project on the connection between immigration and entrepreneurship. If this is the sort of thing you or your company would like to get involved, drop me an email to find out more.

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Press Coverage Round Up Q2

Following the launch of our annual report on female entrepreneurship we received a lot of media coverage on a range of different subjects. However, despite the successful launch causing celebration, we’ve not been lying idle.

Q2 kicked off with our Programmes Director, Sophie Jarvis, having a piece in the Telegraph comment section of the paper! She commented on the launch of BBC’s 50:50 project to get more women experts on panels arguing that, although the intention might be to empower women, the project will have the opposite effect.

Also, for the last month we’ve been very active on the recently launched Refresh, a new initiative by the Telegraph on their website providing comment pieces on the biggest problems facing Britain written by young people for young people.

Our founder, Philip Salter, and Sophie have both been in Refresh making calls for Britain, and Tories specifically, to embrace immigration if we want Britain to prosper. Sophie argues that the Tories can once again become the party for entrepreneurs as it was in the glory days of the late Margaret Thatcher if they endorse a new liberalised immigration system. By giving access to a broader pool of talents, entrepreneurs have the opportunity of scaling up their business. As Sophie also notes, scale ups are much bigger generators of economic growth than start ups, although focus should not be on one over the other. According to Philip, this could help detoxify the Tories and shake off their image as the “nasty party”.

On a different subject, our editor, Annabel Denham, was arguing in Refresh that young people have embraced the gig economy. Therefore, if the Tories want to recapture the Millennial generation they must stop implicitly conceding that Corbyn is right by killing off innovation with regulation. Not only will they scare of millenials with regulation, but it would hurt everyone else in the economy as well. In fact, as Annabel argues in the Women Mean Business section of the Telegraph, the gig economy is the future and women can lead the charge.

Those of you who’ve read our report (if you haven’t, you can read it here) know that mentorship is one of the best vehicles for encouraging and supporting entrepreneurship. If you want a slightly condensed version of the arguments, Jarvis was in the Women Mean Business section as well, making the case for why creating mentors are key for female entrepreneurship.

Our founder, Philip Salter, has also been busy on Forbes this month. He has done some interesting interviews with several entrepreneurs. He’s been chatting to co-founder and CEO of Coinfirm among other things, a company that is trying to professionalise the crypto industry.

Chances are you’ve not heard of mixed-reality marketing and you most likely haven’t heard of Landmrk, but Philip have been talking to their their co-founder and CEO to find out more on how mixed-reality can revolutionize marketing.

Ahead of Scale Up Britain, an event we’re hosting to highlight the importance of scale-ups to the British economy, Philip interviewed the co-founder, Chieu Cao, of Perkbox. Cao is not hedging his ambition, he wants Perbox to grow to be a £100m+ run rate business in 2020, followed by an IPO and Philip interviewed him to find out more.

Philip also talked to Kim Palmer, the founder of Clementine, an app helping women struggling with anxiety, low self-esteem or generally overwhelmed by life’s stress to become more confident. She tells her story of how she turned a dire situation into her first start-up.

Christian Owens, founder and CEO of Paddle, a one-stop shop for firms and developers selling software, also spoke to Philip on what lies ahead for his company.

The recently published report on AI by the House of Lords Artificial Intelligence Committee made Philip chip in with his thoughts on the subject. He thinks it’s important that the House of Lords don’t dismiss the risks of AI.

Annabel provides insight into the machinery of the UK’s second fastest growing business, Bloom & Wild. She tells the story of how the company managed to stay on top of the game and to make the step onto the international scene.  

If you’re unable to find Sophie in the newspapers, you’ll most likely find her on a radio station near you. This month she was co-hosting Hoxton Radio’s DE:CODE, a program talking about the latest tech news and our event at the International Festival Business in Liverpool on June 12th. She’ll appear around 16:30 min. in. She also went on BBC London to do a paper review with Vanessa Feltz. She’ll be on from min. 48:30, and has appeared on talkRADIO for paper reviews on the day of the Royal Wedding (from 6am to 7am) & earlier on in April (from 7am to 10am)!  

And last but not least, Sophie also spoke at Big Tent Ideas Festival Warm Up organised by George Freeman MP. She managed to come second in the finale! Her topic was on the equity funding gap. If you want to read some of her thoughts on the subject, she was in the Guardian this month writing about it. And if you have read all her articles and listened to all her radio appearances and you still want more, you can watch her talk here. In June she’ll be speaking at the RSA.

Demographics and Entrepreneurship: Mitigating the Effects of an Aging Population

Entrepreneurship is widely acknowledged as the basis for innovation, technological advancement and economic progress—and subsequently, a driving force for improved living standards.

Most of us are generally unaware that as our population ages, the share of the population best positioned to be successful entrepreneurs—individuals in their late-20s through to their early-40s—will shrink. People in this age group drive entrepreneurship because they are both willing to take risks to start their own business while also possessing real-world business experience, which increases the likelihood of success.

While there’s little that governments can do to halt the ageing of their populations, a number of policy initiatives could strengthen the incentives for entrepreneurship and improve the likelihood of successful new business start-ups.

Key among potential policy reforms is tax relief, both in the form of reductions in marginal tax rates for individuals and businesses and reductions (or even the elimination) of capital gains taxes. These reforms were broadly determined to strengthen the incentives for people to start and grow businesses (i.e. take risks) and expand the pool of entrepreneurial capital.

Other key potential reforms include reducing red tape to make it easier to start new businesses and grow existing ones, changes to banking and financial regulations that would make it easier for entrepreneurs to access the financial capital needed to start and grow their businesses, and policies encouraging increased immigration of individuals with skills and other attributes that make them potential entrepreneurs.

Developed countries face a long-term decline in entrepreneurship that is at least partially driven by demographics. Since demographic trends cannot be easily reversed, countries will have to improve the environment in which entrepreneurs and businesses operate, to encourage more and better entrepreneurs.

Read Demographics and Entrepreneurship: Mitigating the Effects of an Ageing Population to find out how we can mitigate these demographic trends. It's a collaboration with Canada’s Fraser Institute, the Centre for Strategic and International Studies (CSIS) in the US and the Institute of Public Affairs in Australia.

Why Britain’s Businesses Need To Scale Up

Editor, The Entrepreneurs Network,

Join us at Scale Up Britain

A decade ago, entrepreneurship became the national obsession as thousands of bold entrepreneurs struck out alone, built businesses and lifted the UK economy out of recession. Though the start-up revolution shows no sign of abating – with the number of companies founded reaching new highs in 2017 – the challenge now is ensuring new companies fulfil their potential, scale, and go global. Britain’s businesses need to scale up.

The UK is third in the world for new company formation, but our record on scale-ups is less impressive.

According to the OECD, the UK is third in the world for new company formation, but our record on scale-ups is less impressive. The most recent Scale-Up Institute report has revealed there are currently 31,440 scale-ups – defined as an enterprise with average annual growth in employees or turnover greater than 20 per cent per annum over a three-year period, and with more than 10 employees at the beginning of the period – in the UK. We can and must do better.

Access to talent, finance and management experience are brakes on scale-up development.

The ratio of companies making it through the start-up phase to establish themselves as sustainable and substantial businesses is an important one. High levels of productivity are twice as common among scale-ups, which average £235,000 per employee. Scale-ups are twice as likely as their peers to be trading internationally, and twice as likely to have innovated in the past three years. Close to three-quarters of scale-ups offer opportunities to young people through internships or apprenticeships. And almost half have at least one female director.

Access to talent, finance and management experience are brakes on scale-up development. Longer-term government policy is important, but here and now there are businesses struggling with those issues and looking for support. For this, there is an increasing role for large business, the media, financiers, academia and our flourishing entrepreneurial ecosystem to provide support to those at an earlier stage on the journey.

The Entrepreneurs Network is an increasingly important part of the UK’s entrepreneurial ecosystem. Through the media, research and the APPG for Entrepreneurship, we have an impact on public and political debates and influence government policy. But we also run a number of programmes designed to help entrepreneurs start, run and scale their business.

Setting your company on the path to growth is always a challenge. That’s why next month we will be holding an all-day event at the International Business Festival with high-profile entrepreneurs. Hosted every two years in Liverpool, the festival gives businesses the space, support and expertise they need to make connections, do deals and realise their potential

The UK’s economic recovery was built on the success of start-ups, but our future prosperity relies upon turning those start-ups into scale-ups.

Our one-day event will comprise of five panels with leading scaleup entrepreneurs, covering the key challenges of scaling in an uncertain world; the power of tech; scaling with social purpose; going global and the next generation of talent.

The UK’s economic recovery was built on the success of start-ups, but our future prosperity relies upon turning those start-ups into scale-ups. Scale Up Britain will be an opportunity to be inspired and learn from the best in business – giving entrepreneurs the first step towards ensuring they are able to fulfill their ambitions.

WE HAVE A FEW EARLYBIRD TICKETS REMAINING

 
 

Hear more on this from Will Butler-Adams, CEO, Brompton Bicycles; Celia Francis, CEO, Rated People; Giles Andrews OBE, Founder, Zopa; Kresse Wesling, environmental entrepreneur & Co-founder, Elvis & Kresse; Jeff Lynn, Executive Chairman and Co-Founder of Seedrs; Cameron Stevens, Founder, Prodigy Finance, Chris Baker-Brian, Co-founder & CTO, BBOXX; Simon Coley, Co-founder, Karma Cola; Lauren Armes, Founder, Welltodo; Chieu Cao, Co-founder, Perkbox; David Taylor, Managing Director, World First Group

Don't Eat the Rich

For most of history, generation after generation have lived a similar life to that of their parents. If your father toiled the soil, the odds are you would do the same. If your mother married young and had a dozen children, you would do the same. The Industrial Revolution changed this. 

However, it didn’t change it quickly. Even in 1989, wealth in Britain was dominated by the landed gentry. As the latest The Sunday Times Rich List reveals it’s taken 30 years for entrepreneurs to win out.

Here are the key stats:

• 1,000 richest individuals and families have a combined wealth of £724bn — a 10% rise on last year’s figure of £658bn
• 145 billionaires — 11 more than last year
• 141 women in the top 1,000 (14%); in 1989, there were 9 of 200 (4.5%)
• 86 ethnic minorities (8.6%); in 1989, there were 5 of 200 (2.5%)
• 29 (2.9%) landowners; in 1989, 57 (28.5%) were landowners, then the largest single category of wealth
• 5.7% of this year’s list represent wealth passed from one generation to the next

At the top of the Rich List is Jim Ratcliffe – a self-made, British-born industrialist who grew up in a council house in Greater Manchester. Over 20 years, he has amassed a fortune in excess of £21bn.

Shadow Cabinet Office Minister Jon Trickett MP has come out against those on the list: “People have had enough of years of the elite pinching wealth from the pockets of ordinary working people. Labour will overturn the rigged economy that the Tories are obsessed with protecting.”

Trickett is taking the wrong approach. Rather than trying to tear down the hardworking entrepreneurs who deliver products, services, jobs and growth, we should be thinking about how to ensure that the current trend towards meritocracy continues. Short of eating the rich (which would reduce inequality), the best thing the government can do to decrease national inequality with the UK is to increase the stock of houses. The only long-term rise in capital’s share of income is in housing. Global inequality is best addressed by easing mobility

Entrepreneurs need defending. To do this it’s is incumbent on all of us to give a realistic impression of the trials and tribulations involved in starting and growing a business. People aren’t as bothered by economic inequality as many presume – as long as people think that it's fairly earned. What people care about economic unfairness.

Entrepreneurship isn’t anti-worker – quite the opposite. Entrepreneurs are the job creators. Any government intent on improving the lives of its citizens needs to understand this.

 

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Join Us

The Entrepreneurs Network is growing. Over the last year we have substantially increased our network to well in excess of 10,000 entrepreneurs. Through the media, research, the APPG for Entrepreneurship, consultations, evidence to committees and events, our small, hard-working team has an impact on public and political debates and increasingly influences government policy. Also, through a growing number of programmes, we support entrepreneurs in their efforts to start, run and grow a business.

The Entrepreneurs Network doesn't take government funding. Instead, we rely upon individuals and companies that share our goal of making Britain the best place in the world to start and grow a business.

Due to increasing demand at our events and a growing capacity to support entrepreneurs and experts, we are now creating an annual membership of £50.

The key benefits of membership are:

  • Free, priority invitations to our popular events;
  • Regular press opportunities from journalists to help promote you, your expertise or your business;
  • Monthly updates explaining changes to legislation, as well as established government schemes designed to support entrepreneurs.

We are giving one year's free membership to anyone signing up to attend  Scale Up Britain – our biggest and best event – on 12th June in Liverpool (£50). This also gives you access to the whole 12-day festival.

Become a member here

Anyone further along in their business journey may wish to enquire about becoming an Adviser. And feel free to drop me message if you have any questions. 

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Don't Belt Up

Britain's housing crisis is deepening. We need more homes in places where people want to live and work. It's time to build upon the antiquated Metropolitan Green Belt that's throttling London.

If you agree, please consider putting your name to a campaign we are supporting.

This isn't about concreting over areas of outstanding natural beauty, protected habitats, local green space etc. – those would remain protected. We just need a presumption in favour of housebuilding on the scattered plots of Green Belt land within a 45-minute travel time of London Zone 1 and less than a 10-minute walk from a train station. This would free up space for over 1 million new homes.

It's a policy of such moral force that the smartest thinkers from the left, right and centre of British politics are now making the case for it. On their side, they cite strong evidence of its drag on economic growth, sympathy towards the increasing numbers of homeless families, the inability of next generation to afford to buy, or its often misunderstood negative environmental impact. The other side just Nimbyism.

Not In My Back Yard (NIMBY) doesn't cut the mustard. That's why we are getting behind  Siobhain McDonagh, Labour Member of Parliament for Mitcham and Morden, who is campaigning on this issue. The first step is a collective submission to the National Planning Policy Framework consultation and later McDonagh will present an Early Day Motion in Parliament.

Entrepreneurs rely on talent to grow their businesses. A limited presumption in favour of housebuilding on the scattered plots of Green Belt would go a long way to help. Get in touch if you're interested in reading a one-page outline of the submission, with a view to putting your name on a letter supporting it.

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Oh, Boy!

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Understandably overshadowed by the birth of the Royal baby, the weekend saw another royal story: the release of the latest Queen’s Awards for Enterprise, with 230 businesses from across the UK recognised for their contributions. Countries, like companies, succeed by making the most of their competitive advantages, and even Republicans can't deny that the institution of monarchy is an unrivalled asset in global prestige. The Queen's Awards are a way for businesses to tap into this, particularly as they look to export and internationalise.

But don't take my word for it. Francis Toye – founder of Unilink, a previous winner of the Queen’s Award for Enterprise in Innovation and Adviser to The Entrepreneurs Network – is clear about the benefits it has brought his business: "Winning the Queen's Award for Innovation gave a fantastic boost to our staff and a fillip with our customers. We were even lucky enough to meet Her Majesty. One of our customers in the Ministry of Justice said 'we had approval from as high as you can get.'"

Entries for 2019 awards open on 8 May 2018. Find out more

Management Matters
"We have a large tail of businesses which, for a variety of reasons, have struggled to adopt and embrace the new technologies," explains Robert Jenrick MP, the UK Treasury's lead spokesperson on economic growth and productivity, in a Business Insider interview. "Within [any] industry there's a quite a large group of businesses which are slow to adopt new technologies – where there is less automation than some of their competitors in France and Germany – where perhaps management skills and training is lower," he add.

What can be done? The interview doesn't really get into solutions, but here are some ideas. First, the government should incentivise investment by allowing firms to immediately deduct capital expenses. We proposed this in A Boost for British Businesses (p.16) and its one of our key tax policy asks.

We also need to understand the problem better. And that's what we are doing with our research-led Business Stay-Up campaign. As Rob May, founder of ABE, wrote in City AM: "Improving management skills may require a rethink about how business owners learn. Few will have the time, money or inclination to put their business on hold to enter the classroom full-time. Bespoke, accessible, on-demand learning may be better placed to help more people." We are currently reaching out to individuals and organisations who are interested in getting involved in this project – let me know if you would like to find out more.

Third, economist Robin Hanson has a zany suggestion: "Record the full lives of many rising managers over several years, and show a mildly compressed and annotated selection of such recordings to aspiring managers. Such recordings could be compressed by deleting sleep and non-social periods. They could be annotated to identify key decisions and ask viewers to make their own choices, before they see actual choices." Economist Alex Tabarrok has also written about this.

On the subject of videos, check out this inspiring 10-minute documentary produced and directed by Sophie Sandor about the 23-year-old fashion entrepreneur Tianah. It's a powerful defence of enterprise and the beauty and necessity of the profit motive.

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Artificial Intelligence? 

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Yesterday, the House of Lords Artificial Intelligence Committee released a report: AI in the UK: ready, willing and able?
 
There’s a lot to unpack from its recommendations, but what concerns me is what was omitted. In the summary, it states: “Many of the hopes and the fears presently associated with AI are out of kilter with reality. While we have discussed the possibilities of a world without work, and the prospects of superintelligent machines which far surpass our own cognitive abilities, we believe the real opportunities and risks of AI are of a far more mundane, yet still pressing, nature.”
 
What sort of fantasist would believe that we have anything to fear from superintelligent machines? Well, the late, great Stephen Hawking, as well as Elon Musk and Bill Gates, for starters. In focusing on the mundane, the Lords might be missing the existential risk in the room.
 
A dozen AI experts also signed the Hawkins/Musk/Gates letter, and last year a robust survey of AI experts found that on average they believe AI will outperform humans in many activities in the next ten years: translating languages by 2024, writing high-school essays by 2026, driving a truck by 2027, working in retail by 2031, writing a bestselling book by 2049, and working as a surgeon by 2053. There are a few dozen experts who think there’s 100% chance of human-level AI before 2050 and on average researchers believe there's a 50% chance of AI outperforming humans in all tasks in 45 years.

High-level machine intelligence (HLMI), which is when unaided machines can accomplish every task better and more cheaply than human workers may take a while, but it’s short-sighted to dismiss it as not presenting “real opportunities and risks.” The Lords may have set it aside for another report, but if they ignore AI risks entirely they could be failing to understand the most brilliant and dangerous technology the world has ever known.
 
Nick Bostrom, director of the Future of Humanity Institute at Oxford University, has inspired celebrants and critics in thinking through the future impacts of AI. Bostrom believes AI presents an existential risk to humanity, and I think his ideas deserve to be taken seriously. In fairness to the Lords, he was a witness for the report, where he didn't go into the risks, but his Future of Humanity Institute provided written evidence that was explicit about long-term AI safety concerns. The Lords should follow up with the Institute's offer to support policy thinking around this issue.
 
The average AI expert isn’t a doomsayer. The survey cited above finds that most experts think HLMI will be positive, aren't discounting catastrophic risks entirely. When the numbers are crunched, 14% of experts believe that AI might be soon, superintelligent, and hostile.
 
Britain’s most esteemed Lords have got in wrong in the past. Lord Kelvin, the first British scientist to be elevated to the upper house, predicted that heavier-than-air flight was impossible eight years before the Wright brothers proved him wrong. Even Lord (Ernest) Rutherford was wrong about the significance of his own work. The father of nuclear physics, said in 1933: “Anyone who expects a source of power from the transformation of these atoms is talking moonshine.”
 
The House of Lords Artificial Intelligence Committee would do better to keep an open mind on the long-term impact of AI. Perhaps they could chat with their colleague Lord Martin Rees, astrophysicist and co-founder of Cambridge’s Centre for the Study of Existential Risk. As the former President of the Royal Society thinks: “We don’t know where the boundary lies between what may happen and what will remain science fiction.”

Pro Cures

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I've delayed sending out this week's e-bulletin to comply with an embargo announcing that Cabinet Office Minister Oliver Dowden is introducing changes to encourage small businesses to apply for more government contracts. I was recently in Number 10 to hear about these proposals and came away more optimistic than I walked in – which is not always the case after meetings with ministers.

The Prime Minister has written to members of the Cabinet to ask them to nominate a small business champion minister in each department. There's always the risk this will just be cosmetic, but ensuring responsibility is exactly what any well-run organisation – public or private – would do to bring about institutional change. It's not sufficient, but it's necessary.


The Government will also exclude suppliers from major government procurements if they cannot demonstrate fair and effective payment practices with their subcontractors. Late payments can have devastating repercussions down the supply chain, with the European Commission finding that 30% of UK businesses report that late payment had links to subsequent redundancies.

Also, suppliers will have to advertise subcontracting opportunities via the Contracts Finder website. This will reduce the search costs for smaller businesses and through increased competition should improve the quality of subcontractors and with it the quality of procurement projects.

These announcements are all part of meeting the long-established target of procurement spend of 33% with small businesses by 2022. This is now being framed as an "aspiration", which is government language for unattainable. However, I don't think we should obsess over percentages.

What we should care about is further levelling the playing field by reducing the burdens of bureaucracy and regulations, improving the experience of Contacts Finder and ensuring departments have the skills, processes and even a little risk appetite for procuring innovation.

Selling into government isn't for everyone, but for business owners interested in finding out more, Contracts Finder will let you search for opportunities in different sectors, find out what’s coming up in the future, and look up details of previous tenders and contracts.

The Uncommon Good

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Some businesses do more good than others. This will seem obvious when comparing the practices of a company like Enron with that of Lego, but this point goes deeper than culture and management practices. On average, businesses at different stages of their lifecycle have more or less positive impacts upon the world.

A recent report from Octopus Group shows that high-growth small businesses (HGSBs) create 20% of jobs and add 22% of gross value added, driving increased productivity. HGSBs are defined as companies with more than 20 per cent average annual growth over three years, and between £1m and £20m of annual turnover. Between 2015 and 2016, 22,074 HGSBs created 158,000 new jobs, amounting to over 3,000 new jobs every week. The report also reveals that HGSBs are significantly more productive than the average business, creating an additional two months of economic output every year compared to the average UK business.

But it’s not all good news. HGSBs are waning in number and their economic output fell by 9% year-on-year. And critically, 90% of them face some form of skills shortage, this compares to only 17% of the average UK business. Whatever shade of Brexit we end up with – soft, hard or something in between – Britain’s best businesses need talent to grow. HGSBs aren’t principally concerned about low-skilled workers, most, 62%, find it tricky hiring people with the right technical or practical skills.

As Chris Hulatt, co-founder of Octopus Group, explains: “It’s abundantly clear that, despite being small in number, high growth small businesses are disproportionately important to our economic growth, especially as Britain looks to a future outside of the European Union. We need to ensure that they are given every opportunity to flourish and grow. By championing these businesses and implementing the right policies to unlock their growth potential, they can continue to boost employment and productivity across the country.”

More of HGSBs might well be key to increasing UK productivity, which remains below its pre-financial crisis trend. And as Rachel Reeves MP, Chair of the Business, Energy and Industrial Strategy Committee, says in reference to the report: “High growth small businesses are really punching above their weight across the country and it’s great to see the value they provide to the UK economy. Productivity provides the basis for long-term, sustainable growth and improvements in living standards, and by supporting these businesses we can close the productivity gap and increase wages.”

I couldn't agree more. Read more about the report's policy suggestions in my Forbes article.

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Female Founders Forum Report 2018 - Press Coverage

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On 15th March we launched our annual report on female entrepreneurship Mentoring Matters with the support of Barclays. Using the latest data from Beauhurst, the report highlights the equity funding gap in the UK. The key figures from the report include:

  • In 2017, the total amount of capital raised by entrepreneurs almost doubled. Yet the proportion invested in businesses with at least one female founder decreased from 14.9% in 2016, to 8.5% in 2017;

  • Between 2016 and 2017, the total amount of funding raised by male-led companies increased by 55%, compared to a decrease of 0.1% for those with a female founder;

  • Yet the highest amount raised by a company with at least one female founder almost tripled in 2017 compared with 2016; this was Monica Kalia, Co-founder of Neyber, which raised £143.5m;

  • The total number of recorded deals for companies with at least one female founder increased from 775 to 901 between 2016 and 2017.

The report also serves as a practical aid for entrepreneurs: we interviewed some of the UK’s most successful entrepreneurs for their top tips on leadership, innovation, mentoring and pitching. Please do share it among your networks!

One of our recommendations that appeared in both the 2017 and 2018 reports is that the media should promote female role models through their publications. On International Women’s Day The Telegraph launched a Women Mean Business campaign which aims to encourage and promote female entrepreneurship. As part of The Telegraph campaign, I’ve written about why female entrepreneurship is the last piece of the puzzle for female empowerment and Annabel, our Editor, has written about our report. We were also on the front page of The Telegraph on 15th March, with Olivia Rudgard reporting on how investment in women's businesses has fallen.

I appeared on the BBC Daily Politics show stating that female role models not quotas are the way to bridge the gap. Forbes reported twice on Mentoring Matters, writing that funding for female entrepreneurs in the UK has taken a tumble and about female only accelerators . Also Insider reported that start-up funding for women “remains stubbornly low”.

I wrote for CapX on why the equity funding gap is more worrying than unequal pay. I also authored an article for ConservativeHome on why the Government should champion female entrepreneurship. And Annabel wrote for the Yorkshire Post on why Britain will benefit with more female entrepreneurs.

Plenty has been written on last year’s report as well over the past few weeks with our data featuring in a Telegraph letter to the Government, which over 200 business leaders and MPs signed to urge Government to boost female entrepreneurship in Britain. Findings from Untapped Unicorns was also mentioned in a Telegraph interview with Dragon’s Den star Jenny Campbell. And another article around the funding gap.

After a day of plenty of press coverage we celebrated the launch of the report with an evening reception at Blooms London, with delicious food from female-led businesses Foraging Fox, ChickP and Well&Truly, as well as drinks Karma Kola and The Urban Cordial.

A big thank you to everyone involved in the project – particularly Barclays. We hope to see some of you at our future mentoring events which will focus around pitching and leadership. Please sign up for our e-bulletin for the latest information on these events.

R&D Tax Credits: What they are and why they're awesome

Earlier this evening – or yesterday, if you're disciplined enough to avoid checking your email late in the evening – a debate took place at the Chartered Institute of Taxation on whether business tax reliefs are corporate welfare or essential elements of the tax system.
 
It’s easy to be critical of the business tax system. It’s easy because it's a behemoth requiring simplification (broadening the base) and cuts. But not all interventions are equally bad; and some might even be good! For example, as Helen Miller of the Institute for Fiscal Studies pointed out, the evidence suggests there are decent arguments in favour of Research & Development (R&D) Tax Credits.
 
The economic justification for the policy is that it can produce spillovers – in other words, positive stuff that wouldn’t otherwise happen and enough of it so this outweighs the economic cost of lost tax revenue. Evaluations show that £1 of R&D relief results in £1.7 of R&D, as well as other positive externalities on innovation. (Over the years, I've seen a lot of evidence backing this up – more than I've found for any other tax break.)
 
The government doesn’t do a great job of promoting its policies. The experience of Charlie Mowat (p. 44), founder of The Clean Space, is typical:
 

“We just stumbled across R&D tax credits – I was at a conference and there was a guy who was pitching as an accountant to see if anyone was interested in help claiming for R&D. We found that we qualified, so we submitted an application and we went from there. It’s had a massive impact in terms of allowing us to invest more in the system but the government should be advertising it better. We found out in time to make the most of it for this project, but we did miss out on previous projects which we could have claimed on, and which we spent around £200 thousand on developing. Entrepreneurs just don’t know enough about it.”

 
For any entrepreneurs not yet up-to-speed on R&D Tax Credits, here are the basics (taken from the Gov.uk website). 

R&D Tax reliefs support companies that work on innovative projects in science and technology. It can be claimed by a range of companies that seek to research or develop an advance in their field. Specifically, companies that:

  • looked for an advance in science and technology;
  • had to overcome uncertainty;
  • tried to overcome this uncertainty
  • couldn’t be easily worked out by a professional in the field. 

There are two types of relief, but the one for SMEs – that is, companies with under 500 employees, and a turnover of under €100m or a balance sheet total under €86m – allows companies to deduct an extra 130% of their qualifying costs from their yearly profit, as well as the normal 100% deduction, to make a total 230% deduction. Also, you can claim a tax credit if the company is loss making, worth up to 14.5% of the surrenderable loss.

Spread the good news!

You can read the full e-bulletin here and sign up here

We Don't Need No Education

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Theresa May is planning to force universities to charge less for some courses based on their costs and potential graduate earnings. You can see her logic. When the government set a price cap – now £9,250 a year – it didn’t expect nearly every course across all universities would charge the same price, but that's what happened. Given the current system is effectively a progressive income contingent graduate tax, it’s not unreasonable to argue for doing away with price caps altogether and letting universities create a market for courses. But this would be a bad idea.

First, too many young people – particularly those from poorer backgrounds who don’t have the advice of parents who have been there and done it – lack the necessary information to make the right decisions about the education they should invest in. Second, it's not a proper market. Universities are heavily subsidised and most current student loans aren't paid back. The taxpayer would have even more to bail out, which is a regressive transfer of wealth from relatively poor non-graduates to relatively rich graduates.

But there is a provocative third reason. In The Case Against Education, Professor Bryan Caplan argues that a lot of our education system is a futile arms race of wasteful signalling and credentialism, rather that a useful way of learning transferable skills. Even if he is partially right, the implications are significant. Entrepreneur Peter Thiel is convinced – that's why he set up The Thiel Fellowship, which gives $100,000 to “young people who want to build new things instead of sitting in a classroom”. It’s an idea worth pondering upon.

Creative Thinking
Nesta and the Creative Industries Council have released Creative Nation. Among its findings is that though creative businesses are more productive than similarly sized businesses, they will not materially contribute to addressing the UK’s productivity problems unless they scale-up significantly.

Grin Up North
The Northern Tech 100 League Table is open for applications. The table ranks the top 100 fastest-growing tech companies in the North, with rankings based on revenue growth over the past three years. To enter you must be an active technology company with at least £500,000 revenue in 2015 and be based in the North of the UK (including Scotland).

 

 Our Survey

APPG for Entrepreneurship: 2018 Survey
Your answers will serve as the raw data on which we base three briefing papers designed to impact policy.
Tell politicians what you think!
 


Our Events

Leap 100 Breakfast with Sophie Eden and Sam Gordon, Founders of Gordon & Eden
How to Secure World-Class Talent
7 March 2018
7.45am to 9.15am
Mishcon de Reya, 70 Kingsway, London
Free
Find out more
RSVP
This event will consider: techniques on how to secure people in a competitive market; pragmatic advice for the CEO/Founder on how they can impact the search process; and how to get the best out of your search provider



Female Founders Forum Launch: Mentoring Matters
15 March 2018
19-23 Featherstone Street, Blooming Founders, London
6pm to 8pm
Free
Find out more
RSVP
Join us for our launch of the 2018 report on the importance of mentoring for female entrepreneurs. We're very excited to announce our keynote as Vin Murria!

 

News & Views

Boris Johnson urges Remainers to recognise the benefits of leaving EU… 
…but Simon Tilford disagrees, arguing that our domestic policy is holding us back (check out A Boost for British Businesses for our thoughts on what should be done on the domestic front)
The Harvard Business Review looks at what happens to a startup when venture capitalists replace the founder
The visa cap for skilled workers was hit for third month in a row… 
…Ian Robinson argues in the Times that UK employers need a clear immigration policy…
… and Russ Shaw calls for a more flexible visa system  
Grand challenges are reshaping US university research
Labour’s Seema Malhotra on why closing the entrepreneurial gender gap requires us all to take action (which mentions this Female Founders Forum research
Over 450,000 students currently run, or plan to run a business while at university
The RSA calls for sovereign wealth fund to give every resident under 55 a £10k dividend
As part of the Leap 100, my colleague Annabel Denham writes about how Oaknorth’s founder is banking on challenging incumbent lenders
 
 

Friends of the Network

Events

Meet the Director
20 February 2018
Oxford and Cambridge Club , 71-77 Pall Mall, London
Free
6pm to 9pm
Find out more
A networking event will follow the talk with drinks and nibbles. It is a terrific opportunity to mingle with members of the Cambridge Judge Launchpad community. 


Workshop: Getting the Most from your Network
22 February, 2018
9am to 1pm
Albert House, 256-260 Old Street, London
Cost: Non-members: £150 +VAT; Members £95 +VAT
Find out more
This four-hour interactive session aims to help attendees get the most from their network, ultimately driving success in both business and personal life.


E2E #ScaleUp2Success
27 February 2018
5pm to 9pm
Spaces, 9 Greyfriars Road, Reading, RG1 1NU
Cost: SCALEUP18 for a the complimentary ticket. Otherwise £30
Find out more
E2E hosts an evening of drinks & canapés in conversation with Tim Weller, Founder of Incisive Media and Rob Law MBE, Founder of Trunki.


Make It Your Business: London
1 March 2018
6.30pm to 8.30pm
The Bull Theatre, 68 High Street, Barnet, London
Cost: £10 (Or free if you become a member)
RSVP
Join Make It Your Business for a panel event with guest speakers: Karen Wright (founder, Love Feet); Dr Mandy Kent (founder, Hadley Green Dental Practice); Laura Milligan (founder, Laura Felicity Design) and Louise Bawcutt (owner, The Present).
 

Insuring Women’s Futures Live 2018: The Big Conversation
6 March 2018
The Mermaid, Puddle Dock, London
Free
8.15am to 6pm
Find out more
A day of lively panel discussions and breakout sessions around the unique risks women are exposed to throughout life. 


Leap Academy: Managing Shareholder Agreements and Disputes
14 March 2018
Africa House, 70 Kingsway, London
Free
8.30am to 10.30am
Find out more
Topics to be discussed are: benefits of shareholder agreements; increase the prospect of building a successful business and avoid disputes; advance planning for risk management issues and resolving boardroom and shareholder disputes. Joining the discussion will be Jonathan Berman, Corporate Parnter at Mishcon de Reya and Nicola Bridge, Litigation Partner at Mishcon de Reya.


Competitions

The Astra Awards
Deadline: 16 May 2018
Prize: There are various prizes for each category, ranging from co-working space in Blooms London, support from NACUE, access to Toucan's ecosystem and being fast-tracked straight to the Investment Committee
Find out more
Toucan Ventures, Blooming Founders and NACUE are coming together this Spring to bring you The Astra Awards - a competition to champion the creative community, female businesses and the very best students that the UK has to offer. 

Worth Staying Up For

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Today we are launching Business Stay-Up: a research project with the Association of Business Executives (ABE) and the Centre for Education Economics that aims to increase understanding about the role of skills, knowledge, and experience in ensuring we have fewer unnecessary small business failures.

In today's City AM, ABE's CEO Rob May gives some background to the project. Here are his key points:

  • Not every failure is due to a lack of demand for a product or service – poor management can destroy what could otherwise be a successful business.
  • UK business policy has pivoted from focusing on startups to scale-ups – from having more businesses to building better businesses. This should be welcomed. There is no point having lots of people starting up if they aren’t going to scale, but before they can thrive many will need to survive. That’s where skills and training matter.
  • We shouldn’t compare Apple with oranges. Silicon Valley is dominated by entrepreneurs and investors betting on catching the next big technological wave. By necessity, many will wipe out a few times, and just like the most ambitious entrepreneurs in the UK, they should be allowed and encouraged to get back on their board. But not all founders are aiming to disrupt an entire market – failure is a luxury many can’t afford twice.
  • Overall survival rates and churn are driven by market dynamics outside the control of entrepreneurs on the ground, but it makes sense to want as many business owners as possible to have the skills to give it their best shot. The better firms are run, the more competitive the business environment, with competition driving efficiencies and innovations that increase productivity, which leads to higher wages.
  • Improving management skills may require a rethink about how business owners learn. Few will have the time, money or inclination to put their business on hold to enter the classroom full-time. Bespoke, accessible, on-demand learning may be better placed to help more people. As with so many areas of our lives, artificial intelligence will no doubt have an increasing role to play in supporting both the edtech revolution and wider support for business owners and managers.
  • And, at the very least, there will be an evolving role for the government in signposting, convening and supporting the right training through the tax system. Entrepreneurs should be celebrated for the risks they take – over the course of this year, Business Stay-Up will try to work out what can be done to help them and the country prosper.

You can read the full article here. And find out more about the project here.

 

Our Survey


APPG for Entrepreneurship: 2018 Survey
Your answers will serve as the raw data on which we base three briefing papers designed to impact policy.
Tell politicians what you think!
 

Our Events



Leap 100 Breakfast with Sophie Eden and Sam Gordon, Founders of Gordon & Eden
How to Secure World-Class Talent
7 March 2018
7.45am to 9.15am
Mishcon de Reya, 70 Kingsway, London
Free
Find out more
RSVP
This event will consider: techniques on how to secure people in a competitive market; pragmatic advice for the CEO/Founder on how they can impact the search process; and how to get the best out of your search provider



Female Founders Forum Launch: Mentoring Matters
15 March 2018
19-23 Featherstone Street, Blooming Founders, London
6pm to 8pm
Free
Find out more
RSVP
Join us for our launch of the 2018 report on the importance of mentoring for female entrepreneurs. We're very excited to announce our keynote as Vin Murria! 


 

News & Views

 

Rohan Silva defends the role of the State in Elon Musk's success...

... while Bryan Appleyard praises the man's "hint of madness" in The Times

Eddie Copeland blogs on innovation in the delivery of public services

Venture investment in UK fintech more than doubles...

... but Karl Flinders worries that fintech funding will suffer if the Brexit deal goes sour

Yessi Bello Perez quizzes Debbie Wosskow about how to scale

Is the NHS too fragmented when it comes to adopting new developments?

City AM profiles the prolific Russ Shaw, founder of Tech London Advocates

Richard Reed (Innocent Drinks) shares his tips on winning customers here...

... and his tips for small businesses getting funding here

Benjamin Joffe thinks Sequoia’s Mike Moritz doesn’t understand startups in China...

... which aims to charm tech-savvy Taiwanese entrepreneurs...

... while North Korea lets foreigners run bootcamps for entrepreneurs
 

Friends of the Network

Event


Workshop: Getting the Most from your Network
22 February, 2018
9am to 1pm
Albert House, 256-260 Old Street, London, EC1V 9DD
Cost: Non-members: £150 +VAT; Members £95 +VAT
Find out more
This four-hour interactive session aims to help attendees get the most from their network, ultimately driving success in both business and personal life. 

Competition


The Astra Awards
Deadline: 16 May 2018
Prize: There are various prizes for each category, ranging from co-working space in Blooms London, support from NACUE, access to Toucan's ecosystem and being fast-tracked straight to the Investment Committee
Find out more
Toucan Ventures, Blooming Founders and NACUE are coming together this Spring to bring you The Astra Awards - a competition to champion the creative community, female businesses and the very best students that the UK has to offer. 

Press Coverage: Seema Malthotra MP writes about female entrepreneurship in City AM

British men are nearly twice as likely as women to be entrepreneurs.

This isn’t just bad for entrepreneurship, but society at large suffers when the ideas of half the population aren’t adequately represented. Closing the gender entrepreneurship gap would ensure we no longer miss out on countless innovations, increase productivity, and raise wages...

Read the whole article here... 

Press Coverage: The Entrepreneurs Network launch Business Stay Up

Last year in the UK, 70 new businesses were started every hour.

In just three years’ time, up to 90 per cent of them will have failed.

Business failure is often a personal tragedy, though inevitable in a dynamic market economy.

However, not every failure is due to a lack of demand for a product or service – poor management can destroy what could otherwise be a successful business.

That’s why today we’re launching the Business Stay-Up campaign: a research project with The Entrepreneurs Network and the Centre for Education Economics that aims to increase understanding about the role of skills, knowledge, and experience in ensuring we have fewer unnecessary small business failures.

Read the full article here