This will be the last Friday Newsletter of the year, so I hope you don’t mind indulging me in looking back at the year through our reports, events and webinars.
As regular readers will know, it only scrapes the surface of the work we do, but I hope it offers a useful snapshot that inspires you to get even more involved with The Entrepreneurs Network in 2021.
January
We started the year by launching Cashing Out – a report by Fred de Fossard looking at the rise of cashless commerce and its implications for SMEs. It concluded that the decline of cash offered opportunities for SMEs and argued that rather than banning cashless retail as some US cities have, there are better ways for the government to solve the challenge of the unbanked. The report turned out to be prescient, with many businesses switching to cashless to help reduce the spread of the virus.
February
We held an informal meetup of the Female Founders Forum at The Office Group in February to discuss plans for the year, and later in the month relaunched the APPG for Entrepreneurship on the Terrace of the House of Commons with Andrew Griffith MP. We also held an Entrepreneurs Dinner with Chris Philp MP with support from Mishcon de Reya.
March
In March, we released the first of our two 2020 reports with the Enterprise Trust. In Unlocking Growth Sam Dumitriu and I evaluated the funding options open to SMEs from Start-Up Loans and grants to equity crowdfunding and peer-to-peer lending, identifying key reforms to boost SME access to capital.
The APPG for Entrepreneurship also held a Parliamentary Reception with Lord Howard Flight and the Enterprise Investment Scheme Association on the role that EIS and Seed EIS plays in providing access to finance for UK start-ups, scale-ups, and would-be unicorns.
April
Like many organisations, we moved to webinars in April. The first was on what businesses should know regarding HR & COVID-19 with the Department of International Trade.
May
I think one of the best webinars of the year we undertook looked at how Covid was impacting entrepreneurs with disabilities, featuring Dr Lisa Cameron MP, Liz Johnson (gold-medal winning Paralympic swimmer) and Kush Kanodia (social entrepreneur) (video). A lot of the attendees would have been prevented from joining the event if we had held it in Parliament, proving the advantages of the technologies like Zoom – advantages that will remain even after the vaccine.
We also undertook an event with John Penrose MP, Baroness Kramer and Gary Richards (Mishcon de Reya )on the impact of Coronavirus on the economy and business (video).
June
In June we hosted Andrew Griffith MP again for a webinar on innovation, international trade and the economic recovery, alongside Chris Hulatt (co-founder of Octopus), and Katherine Fletcher MP (video).
July
We released Upgrade over the summer – supported by Xero and written by Sam Dumitriu. It argues that small firms should make better use of digital technologies to tackle the sluggish productivity which characterised the pre-Covid economy. We launched it at an event with Paul Scully, the Small Business Minister, Irene Graham (ScaleUp Institute), Gary Turner, (co-founder of Xero UK) and Dom Hallas (Coadec) (launch video).
We also hosted Gagan Mohindra MP for a webinar on supporting local economic growth, with Mark Bretton (Chair of the LEP Network) and Tom Forth (co-founder of TheDataCity.com). Later in the month we hosted a webinar on supporting employment during Covid with Seema Malhotra MP, Sharon Tan (Mischon de Reya) and Julia Rouse (Manchester Metropolitan University).
September
With support from ABE Global, Educating Future Founders reviewed the evidence for early interventions in entrepreneurship education, making the case for teaching children as young as eleven the basics of running a business. We had Rt Hon. the Baroness D'Souza CMG, Dr Lisa Cameron, Shadow MP, Rob May (ABE) and Mark Watson-Gandy (founder of KidsMBA) for the launch (launch video). Sam Dumtriu’s report built on his previous one in 2019 with Octopus on Future Founders.
In September we undertook a webinar with the Female Founders Forum. The speakers were Alexandra Daly (founder of AA Advisors), Julia Elliott Brown (founder of Enter the Arena) and Juliet Rogan (Barclays). We also hosted an event with Lord Leigh (co-founder of Cavendish Corporate Finance) and Kevin McCarthy (Mishcon de Reya) on the future of funding, floating and selling your business (video).
October
In October we released The Case for Remote Work by US economist Matt Clancy. It makes the case for policymakers supporting the switch to remote work. To mark the launch of the report, we recorded a launch discussion between the paper’s author Matt Clancy, Oglivy’s Rory Sutherland and Upwork’s Adam Ozimek (launch video).
October also saw the release of this year’s Female Founders Forum report authored by Aria Babu. Using data from Beauhurst, Resilience and Recovery found that female-led, high-growth companies were disproportionately impacted throughout the pandemic. The Female Founders Forum is joint project with Barclays and we have big plans for it in 2021. To find out more about the project and sign up to the newsletter, check out this dedicated page on our website. We also hosted an event on attracting and retaining talent with Tugce Bulut (founder of Streetbees), Aimee Bateman (founder of Careercake), and Eugenia Migliori (Confederation of British Industry).
It was a busy month for webinars, with another one with Holly Lynch MP, Shadow Minister for Immigration, on the future of visas and immigration and Nicolas Rollason (Kingsley Napley). This was followed by an event on supporting diversity with Kemi Badenoch MP, the Exchequer Secretary and Minister for Equalities, and Wilfred Emmanuel-Jones (aka The Black Farmer), Melanie Eusebe (founder of the Black British Business Awards), and Professor Monder Ram OBE (Director of CREME).
November
Last month we released Green Entrepreneurship by Eamonn Ives. Once again we were supported by the Enterprise Trust to examine how entrepreneurs, and their innovative technologies and ideas, can help deliver not only a more sustainable tomorrow, but also economic growth, exports, and jobs. I’ve just written a blog on the role of entrepreneurs in tackling climate change, which includes an overview of four of the 20 recommendations.
We hosted another Female Founders event in November on building business resilience, with Anna Sofat (previous founder of Addidi Wealth), Anne-Laure Le Cunff (founder of Ness Labs), and Juliet Rogan (Barclays). We also hosted Kevin Foster MP, Minister for Future Borders and Immigration, for another event with Kingsley Napley looking at the future of visas and immigration.
December
We undertook a launch of the Green Entrepreneurship report with Luke Pollard MP, the Shadow Environment Secretary in December. Also speaking at the launch were Alex Fisher (founder of Saturn Bioponics) and Helen Booth and Liz Slee (Enterprise Trust). These followed launches earlier in the year with Bim Afolami MP and JoJo Hubbard (co-founder of Electron) and Jo Bamford (founder of Ryse Hydrogen).
We also hosted a webinar with the Female Founders Forum on how entrepreneurs can better tell their story, with Dana Denis-Smith (founder of Obelisk Support), Cordelia Meacher (founder of FieldHouse Associates), Juliet Rogan (Barclays) and Ruth Saunders (author of Female Entrepreneurs – The Secrets of Their Success)
We hosted Nahim Zahawi, Minister for Business & Industry and COVID Vaccine Deployment, for our second Entrepreneurs’ Drinks. The first was with Dr Alan Whitehead MP, Shadow Minister for Energy and the Green New Deal and last of the year was earlier this week with George Freeman MP. These are for our Advisers and we have plenty more planned for 2021 – the first is with Chi Onwurah MP, Shadow Minister for Digital, Science and Tech.
We have lots of exciting plans for 2021, but even before then we are launching a new monthly newsletter next week focused on eduction policy with our new Research Adviser James Croft. You can sign up here. And if you haven't already signed up as a Member, please do so here (it's free) to make sure we know what issues you're interested in.
The Role of Entrepreneurs in Combatting Climate Change
The Committee on Climate Change (CCC) has just released its Sixth Carbon Budget. It’s a sizable report, which will be influential – not least because it is the CCC’s job to advise government – in setting out the UK’s approach to combating and coping with climate change.
We recently released a report of our own on Green Entrepreneurship, supported by the Enterprise Trust and written by Eamonn Ives. Both reports have some overlap in policy recommendations that are worth reflecting upon.
For example, the CCC report calls for the government to incentivise the continued roll-out of zero-emission buses and coaches to ensure that new sales of diesel vehicles end by 2040 at the latest. While the wide-ranging report doesn’t specifically suggest how to do this, Eamonn does:
“The government currently subsidises bus operators to the tune of around £250 million a year through the Bus Service Operators Grant (BSOG). The BSOG pays bus operators a set amount per litre of fuel their buses consume. Strictly speaking, therefore, what the subsidy incentivises is fuel consumption. This model has come in for criticism of late, because it puts newer, more fuel-efficient models at a relative disadvantage. A more appropriate funding approach might be a distance-travelled model, perhaps with a passenger number multiplier, as this is fundamentally what the government is seeking to encourage.”
These reforms would incentivise research and development into zero-emission powertrains (which aren’t actually trains) – such as hydrogen, or even batteries if they can advance enough to cope with the particular demands of heavier vehicles.
Green Entrepreneurship and the CCC report both call for reforms to Energy Performance Certificates (EMPs), with the former citing research suggesting that perhaps up to 62% of EPCs contain errors. More broadly, EPCs fail to show benefits of decarbonising electricity or savings possible from smart tariffs. Government has recognised the urgent need to improve EPCs, with the CCC recommending the introduction of green building passports, which would document a full record of a building, showing upgrades and improvements throughout its lifetime, as recommended elsewhere by the Green Finance Institute, to “unlock green finance at scale by providing a robust, quality source of information to raise finance against, track progress and help make standards enforceable.”
The last of the 20 recommendations in our report called for the government to examine how it can stimulate demand for more environmentally sustainable foodstuffs. Similarly the CCC calls on the public sector to take a lead in providing plant-based options with all meals. Green Entrepreneurship specifically suggests promoting clean meat and dairy and other animal produce substitutes, or instigating initiatives such as ‘meat free Mondays’, as other governments around the world already have, including in Tokyo.
In Green Entrepreneurship we call for the Government to commit to simplifying, standardising, and broadening carbon pricing. This is also a significant strain of the CCC report.
Economists mostly favour carbon pricing to cut carbon. The key advantage of pricing over targeted subsidies or regulation is that the government doesn’t need to try to work out which technology to bet on. Instead, the tax will spur entrepreneurs and investors with local knowledge to focus on where they can make the biggest gains – they would also bear the risk of picking the wrong solution.
With this year’s COP postponed until 2021, there’s time for the UK to ensure it has a clear set of policies. The EU and the Biden Administration are drawing up plans to introduce border carbon tariffs – the border element combats carbon leakage – so this is an issue in which the UK set out a clear set of proposals, worthy of the effort of bringing the world’s leader together to solve climate change.
Taxing Times
First, the good news: I won’t mention the ‘B’ word this week (it will be unavoidable next week). Now the bad news: I’ve got a couple of things to say about tax.
It’s not a new idea, but Simplifying by Design, the Office of Tax Simplification's recent review of Capital Gains Tax (CGT), has put equalising CGT with income taxes back on the agenda. As reported in The Times, more than 2,200 entrepreneurs have joined a campaign to try to thwart this, with Lord (Howard) Leigh, founder of Cavendish Corporate Finance and an Officer of the APPG for Entrepreneurship, and Shalini Khemka, chief executive of E2E leading the charge. Henry Whorwood – Adviser to The Entrepreneurs Network – is also leading a campaign at Beauhurst to lobby against the changes.
If this is on the cards, it would be announced (without warning) at the March Budget. Watch this space for updates on these campaigns.
Elsewhere, the final report of the Wealth Tax Commission has called for a one-off wealth tax. The benefits of this tax – if that’s the right way of talking about a new tax – is if it were a one-off tax. An annual wealth tax, for example, would be open to avoidance, make a mess of the tax system (like in Spain), and make the UK much less attractive to investment and entrepreneurs.
The inability to credibly make it a one-off tax should in itself make the idea a non-starter. In July of this year Chancellor Rishi said: “I do not believe that now is the time, or ever would be the time, for a wealth tax.” I would be surprised if this report will be enough to convince him otherwise.
Sneak preview
Many of us who work in think tanks tend to stay in our particular policy and political niches, but if we were forced – from the most leftwing to the most rightwing, and from the most socially focused to the most economically minded – to sit in a room and decide on a policy to change, it would likely be around planning policy.
While there are disagreements on the best remedy, pretty much everyone in wonk world thinks something needs to change. To this end, we’re scoping out a project looking at the cost of planning policy on entrepreneurship and we want you to be involved.
Is the cost of housing or commercial space too expensive for you to build your business where you want? If so, get in touch with us to let us know your experiences, as we will need some case studies for the report.
Before that, we will have a report out early next year on reforming copyright from Dr Anton Howes. I can’t go into too much detail, but if you’re an expert in intellectual property or journalist who wants to look at an embargoed copy do get in touch.
Creative thinking
The Deutsche Bank Awards for Creative Entrepreneurs is accepting submissions from 18-30-year-old creative entrepreneurs driving positive impact through their enterprise. The prize pot is £60,000 across five winners, and £100,000 worth of business support. Find out more on their website, and forward this onto any young creative entrepreneurs you think should apply.
Sign up to the Friday Newsletter here.
The easy option
Over on my Substack, I’ve written about why technical fixes are underrated. Specifically, I take on an argument made in The Guardian last week that we should avoid the technical fix of lab-grown meat.
Here’s an excerpt:
Moral progress is often tangled with technological progress. We are more likely to do the right thing when it’s easy. It is hard to imagine the practice of sending eight year olds up chimneys would have been abolished when it had, if not for inventions such as George Smart’s mechanical chimney sweep.
Kleeman’s view of human nature, i.e. malleable, altruistic, and open to persuasion, may seem attractive, but it doesn’t seem accurate.
Reading between the lines, Kleeman appears to think that some preferences can be intrinsically bad. It’s not enough to eliminate the associated harms of acting upon them, you need to get rid of them altogether. I think this is a strange view in general, but a particularly strange one to apply to meat eating. After all, it would presumably apply to oat milk and the Impossible Burger as well cultured meat.
Even if it were possible, at some sacrifice, to get the world to adopt a vegan diet (or at the very least, limit meat consumption to a meal a week) on ethical grounds alone, it is not clear why this is preferable to a world of no-kill cultured meat.
Twenty Hands
Weirdo and misfits are presumably no longer needed. Number 10 is looking to hire 10 Innovation Fellows to accelerate the adoption of cutting edge tech in government.
The Government wants to harness the power of technology and data to improve public services, and is seeking the best digital and tech talent from industry, academia and civil society.
Taking inspiration from the US Presidential Innovation Fellowship Programme, the No.10 Innovation Fellowship Programme will see around 10 Fellows enter government each year. Since 2012, the US version has been matching outstanding technologists with federal leaders to improve the way government builds, designs, and delivers public services. It might be worth checking out their projects and fellows to get a sense what the UK government is looking to replicate. The US fellows are quite eclectic, so I wouldn't discount yourself without checking first.
Number 10 claims to be offering unparalleled opportunities to deliver the type of high impact technology and data projects that are only possible in government. You’ll be matched with a government department; have access to senior decision makers; and help tackle public sector challenges of national importance.
I wouldn’t normally lead a newsletter with a job advert, but I think this is important enough to do so. While I’m sure there will be frustrations working in Government, the upside for the country could be potentially huge if the Fellows are the very best the UK has to offer. The contracts are for 12 to 14 months and there’s more information here.
Queen Be
Octopus recently released Spinning out Success. It reveals universities’ success at turning academic achievements into thriving companies, and identifies what works in supporting investor-ready spinouts. Queen’s University Belfast came top for the second consecutive year, with Cambridge University second, and Cardiff University third.
As James Hurley explains in The Times: “The ranking considers universities’ effectiveness in producing intellectual property and the creation and eventual sale of spin-out companies, relative to the institution’s total funding, so smaller universities that get more bang for their buck can outrank more illustrious rivals.”
Read All About It
Sam Dumitriu has written a thoughtful article on what the Moderna vaccine tells us about complaints about stock market short-termism – namely, that they're often overblown. As always, it’s a great article. It’s not on our website, but has gone out through Substack – an increasingly popular platform for newsletters. You can access it by signing up to Sam’s Weekly Thoughts here.
History buffs should also sign up to Age of Invention, the Substack of Anton Howes, our Head of Innovation Research. Anton’s Substack recently won a prestigious Emergent Ventures prize.
Even before Sam’s Substack, we already had quite a few newsletters, including this one, our monthly APPG for Entrepreneurship newsletter, our fortnightly Female Founders Forum newsletter, and our ad hoc Policy Updates. You can sign up to those you're interested in by joining us (for free) as a Member, or we’ve just created a Newsletters page on our website, which is a little quicker.
The idea behind all these newsletters isn’t to overload your inbox, but to ensure you get more of what’s useful and less of what’s not. We’re even experimenting soon with a sector-specific newsletter, so I hope you take this chance to experiment with what everything we have to offer.
Masters of none
Entrepreneurship is essential in a modern economy, yet economists devote surprisingly little time to understanding entrepreneurs. Ed Lazear, who sadly passed away this week, was one of the exceptions. He’s best known for serving as Chairman of the Council of Economic Advisers during the financial crisis and creating the subdiscipline of personnel economics. But he also wrote a widely-cited paper on what sets entrepreneurs apart from the rest of us.
It is tempting to argue that skills such as creativity or attitudes to risk best predict who becomes an entrepreneur, but Lazear’s key insight was that entrepreneurs are jacks-of-all-trades. Entrepreneurs don’t have one special skill, but are instead quite good at many different things.
To be an entrepreneur, you need to not only be good at management but also be able to understand a field well enough to identify talent and opportunities for investment. Looking at graduates, we should expect the students that studied a wide range of subjects to be more likely to become entrepreneurs. A good example might be Steve Jobs, who as well as learning to design computers famously took calligraphy lessons. Entrepreneurs will also tend to have more varied job histories.
Lazear’s theory helps shed light on questions such as why some professions see high degrees of entrepreneurship (e.g. insurance) while others don’t (art). The ability to understand complicated insurance policies is likely to be correlated with other key business skills such as accounting or management. By contrast, artistic ability is less likely to correlate with business skills so artists are more likely to specialise.
Another key feature of Lazear’s model is that at the very highest income levels, entrepreneurs will be over-represented while at lower income there’ll be an even mix of entrepreneurs and employees.
To test his idea that what makes entrepreneurs special are their balanced skillsets, he used data from Stanford Graduate School of Business’ survey of alumni. As his theory predicted, the graduates who went on to start businesses tended to take a wider variety of courses, tended to do equally well across courses, and when they entered the world of work they were more likely to have taken on different roles. Likewise, at the top income levels a greater share of alumni were entrepreneurs.
Other economists have tested Lazear’s jack-of-all-trades hypothesis against different data and found it bears out. Joachim Wagner applied it to a large representative sample of the German population and found that individuals who have worked in different fields and have multiple areas of study were more likely to start businesses. While Orazem, Yu, and Jolly looked at Iowa State alumni from 1982 to 2006 and found that alumni who selected a broad college curriculum and had a varied work career were more likely to become entrepreneurs.
It is tempting to search for a single skill that sets entrepreneurs apart. But Lazear's theory and the data that backs it up show that entrepreneurship isn’t just about creativity or an attitude to risk, rather it’s about having the ability to do multiple things well.
Carbon Copy
While innovators are overcoming the immediate threat of the pandemic, the Government also wants to set more of them to work on the longer term challenge of combating climate change.
To this end, the Prime Minister announced a ten-point plan this week, which is a smorgasbord of policies – mostly funnelling more money into areas where the Government thinks the UK is already leading the way. It’s ambitious and no doubt welcome for those entrepreneurs running offshore wind farms, producing electric vehicles, capturing carbon, and the many other technologies that will see the cash.
But while more funding is one way to solve the problem of climate change, it shouldn’t be the main or only policy lever.
The main lever for cutting carbon emissions should be pricing carbon. Unlike pet projects, this let’s the market decide the best way to cut carbon, with behavioural changes and business decisions rippling throughout the economy. It means the lowest hanging fruits are picked first and creates an incentive to innovate. If you’re concerned about its effects on competitiveness and are worried that it will just shift emission overseas, then it can be border adjusted, as is being considered in the EU.
Though pricing carbon should be the main lever, as argued in Green Entrepreneurship our recent report with the Enterprise Trust, there are plenty more tweaks in that report the Government could make beyond funding, including simply stopping subsidies to fossil fuels companies.
Read Eamonn Ives, author of Green Entrepreneurship, on why carbon pricing would incentivise polluters to solve the simplest problems first at the lowest cost. And after our successful launch of Green Entrepreneurship with Bim Afolomi MP earlier this week, register here for our launch with Luke Pollard MP, Shadow Environment, Food and Rural Affairs Secretary.
World goes round
While at the margin entrepreneurs are motivated by money – which group isn’t? – having met thousands of them over recent years, it’s not what gets them out of bed in the morning.
The great British public doesn’t agree, with a YouGov survey finding that 40% of respondents chose ‘money-motivated’ as a key descriptor of entrepreneurs, and 50% thinking money was the biggest motivator for entrepreneurs.
The survey was commissioned by the Entrepreneurs Institute at King's College London, which also asked 100 of their own ventures what motivated them, finding that a majority said that solving problems and driving change were at the heart of their endeavours.
Personally, I don’t think there is anything much wrong with being motivated by money. After all, someone wiser than me once said that individuals in pursuing their own self interest act as if they are led by an invisible hand to promote an end which was no part of their intention. However, some people don’t subscribe to this world view and we don’t want them being put off becoming entrepreneurs just because they don’t feel like money matters (or should matter) to them.
Unhidden GEM
The latest Global Entrepreneurship Monitor report has just been released. It reveals that last year nearly 1 in 10 working age adults were in the early stages of starting or running a business, with women catching up with men.
However, the author Professor Mark Hart of Aston Business School thinks this progress is in jeopardy because of the gaps in support for people in the early stages of running a business since the pandemic.
According to Professor Hart: “While the pandemic has hit all businesses hard, the decision by the Government since March to exclude three million early-stage entrepreneurs and company directors from any financial support has created an arbitrary and unfair distinction that can only harm enterprise.”
Read the press release here, and the full report here.
Strong Medicine
Finally some good news! A vaccine that’s 90% effective – or perhaps even 97% – is certainly a reason to celebrate. While this sort of timeframe was predicted by many – including me last month – the Government and media have been mostly silent about the prospect of a vaccine up until now, so it's come as a big surprise to many.
It was especially good news for those who believe in the power of entrepreneurship. As detailed in the Guardian, alongside Pfizer the vaccine was developed by BioNTech, a small biotechnology company. And it's fantastic news for those of us who believe in the power of immigration. BioNTech was founded by two scientists, Uğur Şahin and Özlem Türeci, who were both born to Turkish immigrant parents, and the Austrian oncologist Christopher Huber.
If the parents of Şahin and Türeci were still in Turkey, they wouldn’t be in an environment conducive to unlocking their talents. This is because equally talented people are more productive in wealthier countries. And as shown with the creation of this vaccine, the value isn’t restricted to one country but will benefit humanity at large. This is because innovators are only able to capture a tiny percentage of their new product or service, and only for a limited time.
We’ve been thinking about how the UK can attract the best and brightest for a while. Some of our ideas were captured in our influential Job Creators report, which revealed that 49% of the UK’s fastest growing companies had at least one immigrant founder. But this week we built on those ideas in a briefing on How the UK can Attract the Best and Brightest. It argues that we should attract scientists to the UK by replicating low-bureaucracy grant funding systems such as the Howard Hughes Medical Institute; reform the under-utilised Startup and Innovator Visas; expand the Enterprise Management Incentive (EMI) scheme; and better promote the UK abroad as a place to start and grow a business.
On this theme, we have a webinar with Kevin Foster, Minister for Future Borders and Immigration on 24th November, which you would be welcome to attend. It’s only 45 minutes long, so should be an efficient use of your time. Sign up here.
Play it again
This week, Research Director Sam Dumitru has written two articles you should add to your reading list. On our blog, he makes a considered case for allowing dual-class share structures and removing the 25% minimum free float requirement for premium listings. This is in response to Rishi Sunak announcing that a taskforce will look into reforms to make the UK’s listing regime more attractive to tech. Sam would be keen to hear any thoughts you have about this, as it’s an area where we might undertake more research.
A strategist in the Thematic Research division at Deutsche Bank temporarily grabbed the headlines when he suggested a 5% tax on remote workers. Sam asks: is this the worst policy idea of the pandemic? His answer is an unequivocal yes. In fact, based on our recent report, Sam can think of a few reasons why remote working should be accelerated. I would recommend reading it in full.
Life’s a pitch
Next week is Global Entrepreneurship Week. There are too many events to tell you about all of them, but two worth checking out are Reset for Growth, featuring Russell Dalgleish, Lord Leigh of Hurley, Sam Dumitriu and Dr Christopher Haley of Nesta. Our friends at Nesta also have an event on boosting startup-third sector collaboration. But this is just the tip of the iceberg – head over to the GEW hub to find out more (you have to scroll down and sign up at the bottom to see all the events).
To coincide with Global Entrepreneurship Week NatWest has launched Life’s a Pitch. The bank is running hundreds of free virtual pitching workshops to help participants structure, write and deliver a 60-second pitch. Sign up here and submit your final pitch via YouTube by 30 November 2020 for a chance to pitch at the live Grand Final Event in early 2021 and win the grand prize of £10,000.
Next week is also the European Startup Festival, with speakers such as Roger Dooley, Mitch Joel and Tim Urban. Find out more here.
Take the slack
If Entrepreneurs’ Drinks with George Freeman MP, Dr Alan Whitehead MP, Chi Onwurah MP and Nadhim Zahawi MP aren’t enough to tempt you to get further involved in our work, next week we’re opening up a Slack Channel to our Advisers. It’s a bit of an experiment, but we hope it will be a useful way to connect with us and other Advisers in the network.
If anyone has any advice on running a more open Slack channel like this, I’m all ears. Also, if you want to find out more about becoming an Adviser, drop me an email so we can arrange a time to chat over Zoom.
Sign up to our newsletter here.
The case for allowing dual-class shares structures
The UK hosts one of the world’s deepest public capital markets. Businesses from across the world list on the London Stock Exchange’s Main Market and its reputation among institutional investors is top-notch. But policymakers are concerned that the market is no longer a draw for some of the world’s most innovative businesses. It’s part of a broader concern that while many great tech businesses are started in the UK, many sell up to US tech giants. Autonomy (acquired by HP in 2017) and DeepMind (acquired by Google in 2014) are probably the two most famous cases.
Rishi Sunak aims to change that. This week, he announced a taskforce to look into reforms to make the UK’s listing regime more attractive to tech. The biggest question for the taskforce to tackle is whether or not to allow dual class share listings.
In recent years, when tech companies have gone public, their founders have been reluctant to give up control. They’re afraid their long-term vision will be bogged down by short-termist stock markets preoccupied with quarterly returns. To access the benefits of public markets without relinquishing control, tech companies have employed a dual class share structure. Take Facebook: everyday shareholders own Class A shares worth 1 vote per share, by contrast Class B shares controlled by Mark Zuckerberg and other Facebook insiders are worth 10 votes. As a result, Zuckerberg controls 60% of the voting shares at Facebook. The situation is similar at Google. Tesla is slightly different, but has strict super-majority rules that ensure that any proposal opposed by Elon Musk must be backed by 89.5% of outside shareholders.
Another way founder-led tech businesses can retain control is by only floating a small percentage of their shares when they IPO. For instance, when LinkedIn floated in 2011 they only released 9.4% of their shares. On this, Google was a trendsetter having only issued 8.3% of its shares when it floated in 2004.
Both of the above arrangements would bar a business from a Premium Listing on the London Stock Exchange’s Main Markets, which means the company could not join any FTSE indices.
Should this change? On the one hand, the London Stock Exchange’s shareholder friendly rules are a hit with institutional investors. Without strong protections, there is a risk that investors would be unable to protect their interests when they conflict with management. George Dallas of the International Corporate Governance Network, who opposes the move, alleges that allowing dual class shares would “erode accountability to management and have the effect of entrenching managers and controlling owners.” It certainly isn’t hard to find examples in the 1970s where management took advantage of shareholders, investing in vanity projects and empire building. Whatever you think of Michael Milken and his ilk, his opponents such as RJR Nabisco’s Ross Johnson were hardly deserving of sympathy.
On the other hand, founders are attracted to dual-class share listings and small floats because they allow them to retain control and execute their long-term vision. They fear that a narrow focus on short-term quarterly results can lead to under-investment in research and development and long-run irrelevance.
Fears around stock market short-termism may be overblown, but they are clearly taken seriously by tech founders. With VC markets allowing businesses to stay private for longer, there is a clear need for greater flexibility in public markets. In the US, Lean Startup author Eric Ries has responded by founding the Long-Term Stock Exchange and received backing from major VCs such as Marc Andressen. It’s designed to allow Silicon Valley businesses to access the benefits of public markets, such as allowing employees to easily sell their shares while prioritising patient capital.
There is a broader political case for making it easier for innovative founder-led businesses to list. We risk undermining a culture of shareholder capitalism if ordinary investors are shut out from the fastest growing parts of the economy.
On dual-class shares, the UK is an outlier. The US has allowed the arrangements for a while and recently Singapore and Hong Kong have liberalised rules allowing founders to have greater control in certain circumstances.
Some may argue that reform is unnecessary. After all, Deliveroo and Darktrace are both set to IPO on the London Stock Exchange. However, some businesses are clearly frustrated. The Hut Group’s recent £5.4bn IPO did not achieve a premium listing and as a result, investors in FTSE indices will miss out.
With existing rules deterring tech businesses from listing in London, the burden of proof should be on opponents of reform to prove harm. Yet, a range of studies suggest that relaxing the UK’s rules on premium listings carry little risk to investors.
One study in the Stanford Law Review, which looked at 34 years of data of board staggering and destaggerings, found that staggered boards are “associated with a statistically and economically significant increase in firm value”. Stronger boards, which give shareholders less direct influence, deliver better returns. It is worth noting that past cross-sectional research found the opposite, but unlike this study, that research did not control for the reasons why boards staggered or destaggered.
The situation is analogous to dual class share ownership. While staggered boards reduce the ability of shareholders to kick out management when quarterly results disappoint, they also give management more flexibility to focus on the long term.
Additional research casts doubt on the merit of the London Stock Exchange’s 25% minimum free float requirement for premium listings. A study to be published in the Journal of Banking and Finance finds that companies that float less than 20% of their shares outperform the market over the long term. The status quo is in some ways, the worst of both worlds. The researchers find that while small floats do best, big floats also perform well. It’s the inbetweeners selling between 20% and 40% that perform worst.
This is not to advocate a free-for-all, however. We may be better off charting a middle course as Hong Kong and Singapore have. As the SEC commissioner Robert Jackson Jr notes: “Nearly half of the companies who went public with dual-class over the last 15 years gave corporate insiders outsized voting rights in perpetuity. Those companies are asking shareholders to trust management’s business judgment—not just for five years, or 10 years, or even 50 years. Forever.”
He analysed 157 dual-class IPOs form the past 15 years and found that businesses that had sunset provisions on their dual-class shares performed better over the medium to long term.
There’s a strong case for reform and liberalisation. The taskforce should update outdated rules on dual-class shares and minimum float requirements, but consider sunset provisions to protect investors. Doing so would preserve London’s position as a world-leading financial centre and allow more retail investors to gain a stake in Britain’s most innovative businesses.
How the UK can Attract the Best and Brightest
The UK government has a long and proud history of attracting top scientific and innovative talent, not just through liberal immigration rules for skilled workers, but through proactively identifying and persuading them to settle in the country – a policy of promigration.
In the late sixteenth century, for example, it hired hundreds of German metallurgical experts, giving denizenship rights to them and their families, in order to start Britain’s copper and brass industries, which soon became world-beating. It poached France’s textile workers and engineers, and in the seventeenth century proactively acquired civil engineering talent from the Netherlands. In the eighteenth century, the government was so keenly aware of the importance of talented individuals to innovation, that it banned the emigration of skilled workers (we don’t advise this), and spent vast sums ensuring that those who had already emigrated to France could be persuaded to return.
If it had not been for the government’s proactive approach, then Isambard Kingdom Brunel may never have become a British engineer. His father, the prominent civil engineer Marc Isambard Brunel, was an immigrant from France who was even bailed out of debtors’ prison by the British government on the condition that he remain in the country and not emigrate to Russia.
In this briefing, we identify four policies that will enable Britain to rediscover its tradition of actively seeking to draw in the world’s brightest innovators, scientists, and entrepreneurs.
1. Attract scientists to the UK by replicating low-bureaucracy grant funding systems such as the Howard Hughes Medical Institute.
By some estimates, researchers spend half of their time writing and applying for grant-funding. However, some of the most successful research funding initiatives have focused on identifying promising individuals, as opposed to evaluating each individual project proposed and regularly monitoring the researcher’s progress. For instance, Yale’s Institute for Advanced Studies (IAS), responsible for two-thirds of Fields Medalists and 34 Nobel Prize winners, famously gives researchers no teaching responsibilities, and research is not directed or contracted. It was instrumental in the transfer of scientists from Europe to the US.
The UK could learn from the IAS and other institutes, which prioritise funding individuals over projects, and draw in high-impact scientists by limiting their administrative workload and allowing them to work on the research projects they are most interested in.
Research from Azoulay et al. suggests that this low-bureaucracy approach can lead to higher researcher productivity. They studied the Howard Hughes Medical Institute, which supports more than 300 researchers for at least 5 years based on their personal qualifications – not what the project they are working on. The researchers receive limited oversight once approved. HHMI grantees wrote 50% more papers in the top 1% of their field (as measured by citations), when compared with similarly qualified researchers who went through standard project-based grant funding.
The UK should consider developing a similar individual-based funding programme for early career researchers, and make strenuous efforts to promote the scheme overseas.
2. Reform the under-utilised Startup and Innovator Visa by allowing endorsing bodies to charge for applications.
While just 14% of UK residents are foreign-born, 49% of the UK’s 100 fastest-growing startups and 11 out of the UK’s 16 startup unicorns (pre-IPO startups with a valuation of over $1bn) have at least one foreign-born co-founder.
To attract international entrepreneurial talent, the government created the Innovator and Start Up visas, which aim to give incubators, accelerators, and venture capital firms a key role as external endorsing bodies. These organisations should be well placed to identify top talent, but serious flaws in their implementation have made it even harder for entrepreneurs to come to the UK than through the much-criticised scheme it replaced. In the first quarter since the Innovator visa route opened, just two applications were successful, and at least four of the initial 30 endorsing bodies have already dropped out.
The new visa routes have been blighted by poor consultation, communication, and unclear guidance. Most critically, not allowing endorsing bodies to charge immigration fees has meant the schemes are underpromoted by legitimate organisations and have been partially hijacked by a few organisations that charge thousands for supplementary services through the back door.
The system could be fixed by allowing endorsing bodies to charge fees to applicants for the visa (which could be capped, if deemed necessary). A significant number of more credible organisations would apply to become endorsing bodies, who would have an incentive to actively promote their scheme through their networks – including internationally. These are the incentives we see functioning in the Government Authorised Exchange (GAE) visa (Tier 5) scheme, for which endorsing bodies charge reasonable fees due to their being enough of them to create a competitive market.
In addition, allowing endorsing bodies to charge fees would diversify away from the accelerator model, a few of whom have an incentive in endorsing entrepreneurs through this route because they’re taking equity in the companies they invest in. While accelerators can be beneficial for some, a lot of entrepreneurs don’t see them as useful for their business, for example, serial entrepreneurs who have already received Venture Capital investment, and don’t want to give away equity unnecessarily.
3. Expand the Enterprise Management Incentive (EMI) scheme, where stock options are taxed as capital gains (not income), to businesses with 250 to 500 employees and £100m in assets to attract in-demand product managers to the UK.
Due to the relative immaturity of the UK’s tech sector, at least compared to Silicon Valley, there are relatively few senior product managers and domain experts who have scaled startups from 10 to 10,000 people. As a result, most UK unicorns and scale-ups will seek to hire managers from Silicon Valley.
The salaries of such managers are typically very high, as British startups must compete with Silicon Valley wages to draw talent to the UK. They can, however, attract talent by also paying workers with stock options for the chance of a large payout down the line. The UK’s tax treatment of stock options, through the Enterprise Management Incentive is attractive, with stock options taxed as capital gains (not income) and qualifying for Entrepreneurs’ Relief. The EMI scheme may also stimulate VC activity, as there is solid econometric evidence that countries with lower rates of taxes on stock options see increased venture capital activity.
But other nations, such as France, are now developing similarly attractive ways of taxing stock options. And UK scaleups face a further problem. To qualify for EMI, they must have under 250 employees and £30m in assets. Many startups believe this requirement, set in 2000, is out of date. In fact, three quarters of startups have cited a ‘brain drain’ of talent to large tech firms over the last 5 years because their growth and success has unintentionally locked them out of the EMI scheme.
To prevent this brain drain overseas and allow scale-ups to compete for the highly sought-after product managers, the government should increase the current limits of EMI from a £30M asset capitalisation to £100M, and from 250 to 500 employees.
4. The UK isn’t properly promoted abroad and the visa system is too slow and complex.
The UK government doesn’t adequately promote itself abroad to leading innovators and scientists. Due to mid-stream changes to the criteria of the Highly Skilled Migrant Migrant Programme, the scheme was accused of false advertising. But the wrong lesson was learned from this episode. Instead of redoubling efforts, we are now failing to promote the UK’s competitive visa system, as well as its other significant advantages.
To attract the very best and the brightest, we need to properly promote the UK abroad, such as the ease of access to capital, its universities, other talent, and tax breaks, as well as the relevant visa routes. The UK’s forward-looking approach to regulation, through such innovations as regulatory sandboxes, should be especially highlighted. Such promotion should be done centrally but delivered locally, by every relevant arm of government (e.g. the Global Entrepreneur Programme, embassies etc.) in concert with the private sector (e.g. universities with foreign campuses, and UK business organisations with an international reach).
To aid in these efforts, the government also needs to offer more clarity and certainty on the timeframe for visas – it is often a deciding factor in people’s choices to immigrate. Top talent is being dissuaded from the Global Talent visa (formally the Exceptional Talent visa), Innovator visa, and Investor visa due to their complexity and the time it takes to process applications.
In addition, the complex rules associated with keeping your visa (e.g. Start Up and Innovator visas) and for moving between different routes, put off many people from applying. Many entrepreneurs understandably don’t want to take on the added risk of not knowing how or whether they can stay in the country. For example, a startup founder who used to work at Entrepreneur First told us: “The number of people we were offering who were on Tier 4s or Tier 2s, who couldn't switch to a Tier 1 without going back to their home country was painfully low”.
Additionally, many leading innovators may need to look after their parent(s) at some point and we risk losing them to emigration (or them never coming in anticipation of this). The current system requires too much bureaucracy for close relatives to prove that they are a dependent, with very few able to move to the UK. The government should consider relaxing the rules on dependency provided funds are available for support, with an additional NHS surcharge applied to cover the cost to the government.
Sound of Victory
Barring a Pastor Paula White-Cain induced miracle, Joe Biden will be the next President of America. Many US entrepreneurs seem to be on the verge of celebrating – particularly immigrant entrepreneurs – but a case can be made that UK entrepreneurs will also be better off with someone else in the White House. In fact, our Adviser Andrew Dixon does just that in a City AM debate:
“Over the last four years, time and time again, Trump has undermined global cooperation — in everything from pulling out of the Paris Climate Agreement and the Global Compact for Migration, to his sustained efforts to weaken the WTO and Nato. Trump’s populist “America First” approach to international relations has undermined the prospects for global trade — and directly impacted British businesses.
After the pandemic has been defeated, huge global challenges will remain — from the demographic (such as ageing western populations and rising regional and intergenerational inequality) to the technological (like the rise of artificial intelligence, automation, under-employment, the power of Big Tech and the appropriate antitrust response).”
A fair COP
On Monday we released Green Entrepreneurship with the Enterprise Trust. We launched it to coincide with when COP26 was supposed to take place in Glasgow, but we want it to influence the environmental policy agenda between now and next year's meeting.
Innovation has been key in the UK’s success over recent decades. As Business Secretary Alok Sharma explained this week: “Over the last 30 years, the UK economy grew by 75%, and yet we also cut our emissions by 43%. We were the first major economy to legislate for achieving Net Zero emissions by 2050.”
Despite positive action by multiple governments, the report argues that incentives still aren't aligned as well as they could be to spur entrepreneurs to innovate. I won’t go through all twenty recommendations, but one of my favourites is perhaps broadest and something we have argued for in the past: making the Annual Investment Allowance unlimited.
The Annual Investment Allowance allows businesses to write-off the costs of new plants and machinery, but currently those who exceed the limit have a reduced incentive to invest in energy efficiency. The report also suggests further thought could be given to broadening out the qualifying lists.
As I write in Forbes, Green Entrepreneurship also has some inspiring case studies of UK entrepreneurs whose innovations will help the environment. Businesses like Too Good To Go, the Uber for unwanted food; Electron, whose platform helps optimise the network capacity for renewable energy; Ryse Hydrogen, which is at the forefront of Britain’s green hydrogen industry; and Saturn Bioponics, which uses fewer resources by growing food vertically in 3D hydroponic towers.
If you want to find out more, we also have a couple of events to launch the report with Bim Afolami MP and Luke Pollard MP that you’re welcome to attend.
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Wage Against the Unseen
With the Office for Budget Responsibility predicting that unemployment will surpass the peak of joblessness in the 1980s, over the next few months this issue will come to dominate politics.
We aren’t in the same world as we were before the pandemic hit. Through no fault of our own, on net we have become less productive – particularly anyone working in sectors like retail and hospitality. This is simply a result of customers’ understandable reluctance to shop and eat out, and restrictions like the Rule of Six, Tier Two measures, and curfews that are aiming to stymie the pandemic.
Sadly, the National Living Wage could exacerbate the problem, with the weight of evidence suggesting minimum wages around the world cause unemployment. This isn’t a surprise as it’s predicted by the theory, and it’s why we have a Low Pay Commission to advise the government of the level we should set it to avoid too much damage.
The Living Wage is set to rise in April, but the Low Pay Commission may soon suggest an emergency break in an effort to reduce unemployment. However, the government may choose to increase it anyway. And you can understand why. On the face of it, it looks very mean-spirited and the disemployment effects aren’t easily observable.
But there is a way out of this impasse. As Research Director Sam Dumitriu argues for CapX, there is a third way: the taxpayer could split the difference. Drawing on the work of Prof David Neumark, Sam suggests creating a Living Wage credit to reduce the unwanted side-effects of a higher minimum wage.
Sam explains: “What if employers got a refundable Living Wage credit worth up to half the difference between the National Living Wage and what the National Minimum Wage was in 2016. It would be a significant subsidy to employers, but it could prevent job losses and allow businesses to stay open when trading under significant restrictions. To reduce the cost of the scheme, it could be targeted at certain sectors facing restrictions, similar to the Job Support Scheme Open. phased suggests limiting the subsidy to people without a university education. The subsidy would be phased out gradually as workers move up the wage scale.”
I think it’s a cracking idea, not least because it’s something people across the political spectrum could back due to its progressivity. As well as increasing unemployment, National Living Wages can lead to lower profits for business owners. But this isn’t just hitting the wealthy, but also the many marginal business owners struggling to get by. In contrast, the tax system is more progressive, meaning the richest will pay relatively more. Also, as we come out of the recession, it could be better targeted at people who really need it, such as the long-term unemployed.
Charter schooling
Our friends at the Small Business Charter have got in touch to share news of an initiative to help small and medium-sized businesses survive and thrive beyond COVID-19 which they’re running with the Department for Business, Energy & Industrial Strategy.
The Small Business Leadership Programme is free to participants and will be delivered by top business schools across England. The programme will support senior leaders to enhance their business’s resilience and recovery from the impact of COVID-19, and develop their potential for future growth and productivity. Find out more here.
In the SheEO
SheEO is looking to give away some cash to women-led businesses turning over between £40,000 and £2m. You would join a portfolio of 73 other ventures in Canada, the US, New Zealand and Australia. The deadline is Monday and all the details you need are here.
Late payments
The Government has opened a consultation on increasing the scope and powers of the Small Business Commissioner. They are seeking views on strengthening the Commissioner’s ability to provide small businesses with mechanisms for redress, in respect of late payments. The consultation will remain open until 24 December 2020 and you can respond here. If there is enough interest from the network, we could coordinate this to save time. Just let me know if you would respond to a survey from us on this – if there is enough interest I’ll let you know how this will work next week.
Folk tales
Were you born outside of the UK, have settled in Norfolk or Suffolk and subsequently created a thriving business? If so, Warren Page would like to hear from you. He is embarking on a photographic project and wants to illustrate the diversity of sectors and nationalities involved to show the positive effect migration in his area. The project is backed by Suffolk/Norfolk Director magazine and they will run it as a feature early next year. I appreciate this opportunity is quite niche, but even if it’s not one for you it would be great if you could pass it onto someone who might be able to help. Warren can be contacted here.
A fair COP
Next week was supposed to be COP26 in Glasgow. The pandemic has put paid to that, but not the need to protect the environment. Alongside the Enterprise Trust, we’ll release a report on Monday on how entrepreneurs can solve – nay, are already solving – the biggest environmental challenges we face. It’s got 20 policy recommendations so that we can speed this up and properly align the interests of business and the environment.
I can’t say anymore for now, but if you would like me to send it to you on Monday morning, just let me know. If you’ve already told us that you're interested in the environment when you signed up, we will send it to you. And if you’ve not let us know what you’re interested in yet – let us know here.
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Building Business Resilience
In this year’s Female Founders Forum report, Resilience and Recovery, we combined discussions with female founders and original data analysis, to identify the reasons why female entrepreneurs have been disproportionately impacted by the COVID-19 pandemic. This report was created in partnership with Barclays, who have launched a major new commitment to support 100,000 women to start up and run their own businesses over the next three years. You can read the two page summary or full report here. In this week's newsletter, we cover highlights from our recent Attracting & Retaining Talent webinar and provide updated guidance on government support schemes and opportunities.
Female Founders Forum 2020 Digital Events
In our next session on Thursday 5 November 2020 from 10am – 11:30am, we will be discussing Building Personal & Operational Business Resilience. You can still sign up for the event here.
We will be joined by Anna Sofat, multi-award winning financial planner and founder of Addidi Wealth. We will also hear from Tamara Lohan, who co-founded the boutique hotel travel specialist company Mr & Mrs Smith. As we mentioned in the last Newsletter, we will be running a series of events over the coming months:
Cementing Your Story webinar - 10am - 11.30am, Tuesday 4 December 2020 - sign up here
Female Founder Highlights
Here is a quick round-up of this week’s news highlights, featuring some of our inspiring Members:
This year’s Female Founders Forum report - Resilience and Recovery has been featured in Sifted, City AM, The Telegraph, Startacus, Startups Magazine, The Scotsman, Verdict and Angel News - just to name a few. Go read the report now.
You can also read more about why Barclays is pledging to support 100,000 women start up and run their own businesses over the next three years here. Also, find out more about CMe Media, which is just one of the inspiring founders we profiled in the Resilience and Recovery report and who Barclays has supported throughout the pandemic.
In our latest blog, we covered highlights from our webinar on Attracting & Retaining Talent with expert panel: Eugenia Migliori, Principal Policy Adviser at the Confederation of British Industry, Aimee Bateman, founder and CEO of Careercake.com and Tugce Bulut, founder and CEO of Streetbees. In this session we explored how to build an open and inclusive workplace for growth. Read the blog here.
Government Support
Kickstart Scheme - funding to create new job placements
The government has published new guidance for organisations who want to be a Kickstart gateway and help other employers apply for the Kickstart Scheme.
If you are an employer looking to create jobs for young people:
Apply for funding here if you are looking to create 30 or more job placements
Apply for funding here if you are looking to create 29 or less job placements
Updated Guidance: Deferring your Self Assessment Payment
You had the option to defer your second payment on account if you were: registered in the UK for Self Assessment and finding it difficult to make that payment by 31 July 2020 due to the impact of coronavirus. The government has published updated guidance on what you need to do if, after 31 July 2020, you chose to defer your second payment on account for the 2019 to 2020 tax year.
New Guidance: Test & Trace Support Payment Scheme
If you have been contacted by the NHS Test and Trace and told to self-isolate on or after 28 September 2020 you could be eligible for a £500 Test and Trace Support Payment. This guidance sets out who can claim support and explains how to apply.
Barclays Support and Opportunities
Launch of Barclays’ second ‘Investing in Women Code’ commitment
To help female-led businesses continue to recover from the pandemic and tackle the gender funding gap, Barclays has announced a major new commitment to help 100,000 women start up and run their businesses over the next three years. The second in a series of three-year commitments will see Barclays target local events and mentoring via Barclays’ UK-wide network of Eagle Labs and Rise hubs, increasing training and tools for Barclays’ coverage teams, as well as dedicated regional champions across the UK. You can read more about the launch of this second commitment here.
Barclays Money Management Hub
With many customers facing turbulent times, and so many coming to the end of loan repayment holidays, Barclays have created a dedicated Money Management Hub to help businesses keep their finances healthy. It’s continually evolving with lots of useful tips to help businesses budget and plan cashflow, as well as articles and guidance to help consider challenges businesses may be facing.
Eagle Labs Virtual Events
Barclays’ programme of virtual events covers a range of topics from cashflow management to building resilience to help entrepreneurs and start-ups navigate these uncertain times. Forthcoming events include a session on thinking differently about social media marketing and an event to demystify AI, machine learning, and machine intelligence. All events are free to attend and open to anyone. For more information visit the Eagle Lab event page.
Barclays Coronavirus Support Hub
The Barclays COVID-19 Support Hub provides the latest information, tools, and guidance to support businesses throughout the COVID-19 pandemic. This hub includes information about Barclays’ products, webinars, Facebook Live events, and more information on how to access government schemes. You can also download Barclays’ coronavirus checklist to support your business resilience planning throughout this period. There is also an updated FAQ section on this hub.
Showing Up
The economist Tyler Cowen is skilled at explaining how the world works and has an uncanny knack of spotting important trends. It’s why so many people read Marginal Revolution, listen to Conversations with Tyler and take what he writes seriously – especially his critics.
One recent idea – crucially raised before the pandemic – was what he called State Capacity Libertarianism. It articulated a change that many defenders of a more limited government have seen over the last decade or so – not least in themselves. While (now former) libertarians still acknowledge that a rapid increase in the size of the state can be very dangerous, many have shifted their thinking by acknowledging that high levels of state capacity are not inherently tyrannical. Tyler uses the examples of Denmark and Singapore.
The pandemic has made the issue of state capacity only more relevant. It’s not that larger governments have done well and more limited governments have done badly – it’s that the question of the size of the state is suddenly much less important to most people compared to how well it functions. It’s reasonable to demand why many East Asian countries, Australia, New Zealand, Germany, Estonia et al. have been much more capable at fighting the pandemic than many others – including the UK.
The issue of state capacity reared its head in a recent discussion the Founders Forum had with Camilla Cavendish (FT), John Micklethwait (Bloomberg News), Adrian Wooldridge (The Economist), Megan J Smith (former CTO under President Obama), Toomas Hendrik Ilves (former Estonian President), Daniel Korski (PUBLIC), Peter Mandelson (Global Counsel) and Andrew Griffith MP.
It’s worth reading the brief summary, but I want to move onto another point made in the final line of this article, namely: “It is now up to politicians to give entrepreneurs the ability to participate and be heard.”
It’s something you hear all the time, but how should entrepreneurs – or those supporting them – go about doing this? The webinar that the article relates to was organised by Founders Forum, an awesome organisation co-founded by Brent Hoberman. Brent is famous for starting lastminute.com and selling it for $1.1bn and is a textbook example of how to influence policies to support entrepreneurship. Just to give one example, while others were involved (including us, in a small way), the Future Fund, which is supporting many equity-backed companies through this crisis, may not exist if it wasn’t for Brent’s hard work lobbying for it.
So there’s your answer: build a tech company, sell it for a fortune, then give back! Of course, Brent’s incredible success affords him that luxury (although very few in the same position give back to the extent he does), but that doesn’t mean you can’t have an impact at the margin.
Another (easier) way to give back is just by engaging with us and other groups like us – sharing your insights on our webinars, surveys or the other calls for action I put out every week to help bridge the mismatched worlds of politics and entrepreneurship.
And if you’re looking to engage a bit more actively, you might want to consider becoming an Adviser. I say this now because we are just in the process of confirming evening virtual drinks for our Advisers (which have taken over from our dinners) with Bim Afolami MP, Bill Esterson MP, Katherine Fletcher MP, George Freeman MP, Alan Mak MP, Chi Onwurah MP, Alan Whitehead MP and Nadhim Zahawi MP. I don’t think the problem is politicians not being willing to speak to entrepreneurs – it just needs someone to organise things.
You can see our current list of Advisers here, find out more about becoming an Adviser here or just drop me an email to arrange a call/Zoom/Teams etc. to chat about it in more detail.
As Megan J Smith, CTO under Obama, said at the event: “Government is only whoever shows up.”
Tenth time lucky
Julia Lopez MP, the Cabinet Office’s new parliamentary secretary with responsibility for the Government Digital Service (GDS) has unveiled her vision for a single sign-on system through which citizens can access online services throughout government.
It’s a welcome ambition. Her speech was pitch perfect (at least for me): “[T]he key point and core principle is user control. We want to work towards a state where data use in government is set up to ensure that people, when they choose to, don’t need to restate their data on repeat occasions to different parts of government. Instead, data can be accessed, verified and stored when appropriate, in order to provide a proactive and low-friction service to the user.”
Since GDS’s creation under Francis Maude, Lopez is the tenth person responsible for it in little over five years. Let’s hope she is given time to see through this vision. It would certainly make life a lot easier for entrepreneurs if she could. For example, it is estimated that these sorts of reforms are saving business owners in Estonia around 12 million hours every year.
Tiers for fears
If you’ve yet to catch up on the Chancellor’s latest announcement, we’ve got just the Policy Update for you.
As research director Sam Dumitriu writes: “Currently, more than half of England’s population lives in areas in Tier 2 or higher. In his speech in Parliament Sunak addressed the ‘Tier 2’ dilemma. Until today, Tier 2 represented as Stephen Bush puts it 'the worst of both worlds” where “businesses … face significant restrictions on how they operate, but [receive] no economic support.' New measures will ensure that some businesses will no longer be paradoxically better off under Tier 3. The new measures announced also included expanded funding for the self-employed, businesses forced to close due to local restrictions and the Job Support Scheme.”
Read the whole thing here, sign up for future updates here and let me know if you’re an expert who wants to write these on your area of expertise (e.g. tax, visas, regulations), as we sometimes have outside authors.
Resilience and Recovery
In case you’ve not been reading the news (and I certainly wouldn’t blame you for avoiding it), on Monday we released Resilience and Recovery – the latest report from the Female Founders Forum, which we run in partnership with Barclays. It got a lot of coverage, including in The Telegraph, FT Sifted, City AM, The Scotsman, Evening Standard, and loads of other places.
Drawing on Beauhurst data, we find that equity-backed businesses have been disproportionately impacted by the COVID-19 pandemic. But it’s not all doom and gloom – female founders are fighting back, with more than 60% of female-founded, equity-backed businesses now operating with minimal disruption to their business.
The report’s author Aria Babu identifies four trends which explain the discrepancy.
First, women have often had to take on greater childcare or unpaid work burdens during lockdown. While clearly not all female founders are impacted by this to the same extent, one thing that surprised me is that even women who significantly outearn their male partners tend to do more of the household chores, which presumably includes a lot of successful entrepreneurs in lockdown. (For further reading, check out the Women in Leadership report Annabel Denham wrote for the APPG for Entrepreneurship to see how we can even things up – particularly around childcare.)
Second, women are more likely to start businesses in sectors which have been worse affected by the pandemic, such as retail, hospitality, and leisure. Also, female-founded businesses are less likely to be tech or IP-based businesses (28% and 33% for all equity-funded startups), which have been most likely to find opportunities for growth at this time.
Third, in the lead-up to the pandemic the equity funding gap has persisted. According to Beauhurst data, in the past 18 months, the average raise for startups with at least one female founder was less than half of the average raise for startups with all-male founders. In 2020, just 13% of total equity investment went to female-founded startups and when it did, it tended to be for smaller amounts. (For further reading, take a look at Untapped Unicorns, our first Female Founders Forum report, which was one of the first times the UK’s equity funding gap was revealed.)
Finally, women are less likely to seek external finance, though once they received an initial investment, female-founded startups were just as likely to raise additional rounds of funding compared to non-female-founded firms. (For further reading, check out last year’s Here and Now report.)
Resilience and Recovery has 15 recommendations, covering everything from the Department of International Trade publishing statistics about the gender breakdown of SME exporters; the government incorporating elements of crisis planning into the application process new business support schemes; and equalising Statutory Shared Parental Pay with Statutory Maternity Pay.
Barclays has pledged to support 100,000 female-led businesses off the back of the report. And while there’s no silver bullet, there’s a pot of gold at the end of the rainbow. As Juliet Rogan, Head of High Growth and Entrepreneurs at Barclays, says: “Creating an environment where women start and scale businesses at the same rate as men could add nearly £250bn to the UK economy.”
You can read the report or a pithy two-page summary here, and give this Twitter thread a retweet or share elsewhere to show support.
Enterprise Allowance 2.0
As reported by the always excellent James Hurley in The Times, former chancellor Sajid Javid has backed a plan to give the unemployed £100 every week for 12 months to help them to get start-ups off the ground.
It’s a new version of the “enterprise allowance”, which began in the unemployment crisis in the 1980s. The proposed scheme would be available to anyone not presently employed, with a viable business idea and access to £2,000 in start-up capital. Any income earned from the start-up would not affect what the founder might receive via universal credit benefits.
As Hurley reports, the original enterprise allowance funded more than 325,000 individuals, including Julian Dunkerton, the Superdry founder, Alan McGee, the Creation Records entrepreneur, and Simon and Chris Donald, founders of Viz magazine.
Chris Hulatt of Octopus came out with a similar idea recently. Springboard would be a £1 billion Springboard Fund, which would provide a grant of up to £10,000 per individual to help create up to 100,000 businesses and fight the economic damage wrought by coronavirus. One thing I liked about Hulatt’s plan is that it would be combined with mentoring, which I think would be vital for avoiding unnecessary business failure.
Tech (Nation) for good
From its days as Tech City to try to support the rise of the tech cluster in Shoreditch, to its expansion with its Tech North outpost, right through to its national expansion into Tech Nation, it’s an organisation that hasn’t been without its critics – particularly in the media. However, naysayers should take note of an independent impact evaluation from the Department for Digital, Culture, Media and Sport, which suggests that the largely government-backed organisation is making a sizeable difference.
Using a number of different measures, it concludes that Tech Nation’s key initiatives are delivering substantial benefits, identifying a substantial gross value added (GVA) impact 1 to 2 years after participating in Future 50, Upscale, and Northern/Rising Stars.
Evaluations of this sort aren’t always so glowing – just take a look at the one on the Catapult Network from 2017 – so credit should be given where it is due. While this isn’t the last word – one of the recommendations is Tech Nation to collect more and better data – we should celebrate when we have evidence of public money being put to good use.
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Attracting & Retaining Talent Webinar
The Female Founders Forum is hosting a series of webinars to bring leading business owners and parliamentarians together to discuss key policy issues pertinent to female founders in order to to support them through COVID-19 and beyond.
In our latest session on Attracting & Retaining Talent, we explored how to build an open and inclusive workplace culture for growth.
In this session, we heard from Eugenia Migliori, Principal Policy Adviser at the Confederation of British Industry, alongside incredible female founders including Aimee Bateman, founder and CEO of Careercake.com and Tugce Bulut, founder and CEO of Streetbees. We were also joined by Juliet Rogan, head of Barclays HG&E team.
We’ve picked out some of the most thought-provoking insights from the session. You can view this on our YouTube channel.
Highlights & Insights from our Speakers
Tugce Bulut opened with some insights on Streetbees hiring strategy. She mentioned that almost half of Streetbees hiring comes from employee referrals. Hence, their people strategy has been integral to supporting the company’s growth.
“I strongly believe that your hiring strategy starts with your people strategy. Your employees are the best possible advocates you can have for your company to be able to attract the best talent”
She also gave our female founders some tips on retaining top talent, including to listen to your team, highlight your company’s benefits and give your employees space to bring in their expertise:
“When you hire someone, you are bringing them in to build their dream, on your dream”
Aimee Bateman spoke about the importance of finding out what motivates the person you are looking to hire. Are they extrinsically or intrinsically motivated?
“I would be wary of the people who are motivated by the stuff. They will always be looking over your shoulder for the next pay rise or the next startup that could potentially offer them more and be focused on their goals and helping them to win when they leave you”
When it comes to employing people, Aimee stressed it is important to attract people who love your customers and the problem your business is trying to solve rather than just falling in love with the founder:
“Make sure that they love your business, not just you”
She also touched on some of the difficulties she has experienced with existing staff:
“As founders, it is our responsibility to recognise who thrives and who doesn’t and be brave enough to have those conversations with them… having the wrong people in the wrong positions, in the wrong play, is one of the largest reasons why startups fail”
Eugenia Migliori spoke about the disproportionate impact that the Covid-19 has had on women. She reflected on the importance of retaining top talent and the importance of flexible working arrangements to keep employees engaged during the pandemic:
“It will be important for businesses to think about how they retain talent and motivate talent during the pandemic”
Questions & Recommendations
During the Q&A session, we touched on a range of key issues.
One attendee asked our expert panel whether they recruited for cultural fit or cultural add?
Tugce Bulut said that it is incredibly important to Streetbees to recruit people who fit their culture but also stressed the importance of hiring staff with diverse perspectives:
“There are certain values we adhere to that are not open to negotiation. Those are the values that make Streetbees successful… whereas there are lots of cultural components that get richer by adding more people to the team”
Juliet Rogan stressed that it is important for companies to have teams that reflect their diverse customer base.
Aimee Bateman agreed with Tugce and Juliet and touched briefly on the importance of also being aware of your own unconscious biases when hiring staff:
“The only thing that you have to have the same is that core value. Everything else needs to be different. There is not enough conservations happening around unconscious bias and I hope that changes”
Another attendee asked our speakers how they deal with imposter syndrome?
Aimee said that she followed someone's advice on dealing with imposter syndrome which was to give the imposter a name in order to stop overthinking:
“When you feel that moment, say thank you for caring and looking after me but I have got this. That is how I deal with it. Get out of my head and think of it as it’s own person”
Tugce said that is important to distance yourself from people who make you feel like a failure and stressed that failure is an important part of the journey to success:
“If anyone can do it so can you and if you can’t do it, you can still give it a shot”
Another attendee asked the panel about some of the challenges that they have faced with retaining talent while they scale
Tugce stressed the importance of trusting your employees and spoke about Streetbees KPI driven culture and how they constantly look to other companies to learn how to continue motivating their staff:
“In a startup, you are so motivated by your mission and so busy that you sometimes forget about ensuring that you create a motivational environment”
Aimee spoke about Careercake.com’s journey and the importance of introducing processes for employees along the way:
“I wanted to learn from people who have taken it from the kitchen table and exited and learnt from that process to tell me about what kind of processes I should put in place”
Juliet spoke about how she has enjoyed seeing how cultures develop within the startups that her team at Barclays deal with and how she has tried to emulate this within her own team:
“I think that is one of the major advantages that startups have have over large companies is that ability to drive culture through everything they are doing”
Eugenia spoke about some of the work that CBI do, including producing resources to help entrepreneurs attract & retain talent and stressed the important role that government plays in supporting this:
“The government has an important role to play in supporting businesses to scale up their activities”
Aimee touched on the importance of editing your people strategy to your business stage to ensure that you have the right people to support your business in its journey:
“When you come out of startup to scale up mode, you have to up your game and not everyone will want to do that”
We will be continuing the conversation on removing the barriers that female founders face starting and scaling their businesses in our upcoming webinars. You can find out more about the event schedule and sign up for the events here.
Good Judgement
With much of the country already locked down, and the other half seemingly not far away from a similar fate, the government has decided to expand the Job Support Scheme.
From 1 November, businesses across the UK that are required to close their premises due to coronavirus restrictions will be paid two thirds of each employees’ salary (or 67%), up to a maximum of £2,100 a month. Employers won’t need to contribute towards wages, but they will need to cover national insurance and pension contributions.
Over the coming months, the government will be under pressure to pull out all the stops to limit business failure, and we will be making the economic case for why a lot of this will be necessary.
In normal times, business failure is the sign of a healthy, dynamic economy. Of course, business failure is always and everywhere a personal tragedy for those involved in the failure, but the lessons learned and the reallocation of resources to more efficient uses is what makes us richer. This is why all entrepreneurs are heroic: part of a multi-generational project that has been central to lifting billions out of absolute poverty.
But these aren't normal times. As Sam Dumitiru and Sam Bowman argued early on: "If a business was viable before the shutdown, and would have been viable without it, it’s a loss to society and the economy if the shutdown drives them to a bankruptcy they would have otherwise avoided." Clearly there is a limit to what can and should be be saved, but ignore the siren call of liquidationists, whose (sometimes understandable) cynicism of what government can do, is getting the better of them.
As difficult as things are for entrepreneurs right now, this too shall pass. A vaccine isn’t as far away as many seem to realise. For example, superforecasters (who, despite a lot of articles to the contrary, should be listened to) at the Good Judgement project think the odds are very high that by early to mid-2021 there will be both a vaccine and enough doses to inoculate 25 million people.
A vaccine isn’t the only option for avoiding future future lockdowns – just look at countries with highly-functioning track and trace systems – but it’s reason enough to fill your glass half full.
Do you remember?
In case it slipped your mind, the UK is leaving the EU single market and customs union at the end of this year. The Department for Business, Energy and Industrial Strategy has asked me to let you know about some live sessions they’ve put together to help you check the new rules and understand the actions to take.
See the full schedule and sign up for live sessions here. The live sessions will take place at the following times, and will be available to watch again:
Services and investment – 11am, Tuesday 13 October
Retail – 11am, Wednesday 14 October
Automotive – 2pm, Wednesday 14 October
Metals and other materials – 11am, Tuesday 20 October
Electronics and machinery – 11am, Wednesday 21 October
Consumer goods – 11am, Thursday 22 October
Life Sciences – 11am, Tuesday 27 October
Construction – 11am, Wednesday 28 October
Aerospace – 11am, Thursday 29 October
Monday calling
On Monday, we’ll be releasing our annual Female Founders Forum report in partnership with Barclays. As regular readers will know, this is one of our biggest projects and past reports have had a significant influence on policy.
This report looks at the impact of the pandemic on female-led businesses and the amazing resilience of their founders. Any journalists who want to see an embargoed copy should drop me an email. And for anyone who wants a copy when it launches, just drop Jess an email to get it first thing on Monday morning.
Educating Future Founders
We tell our children to dream big... and they do. Young people are bursting with imagination. They soak up knowledge, they take risks and are natural collaborators and inventors. Despite this, when I visit schools around the world, the question I get asked most often by children as CEO of ABE Global is “How can I become an entrepreneur?”
New research that we have supported at ABE from The Entrepreneurs Network shows that students as young as eleven should have the opportunity to learn about entrepreneurship in order to develop the skills and mindset necessary to prosper in the modern economy.
As children begin to return to school post-lockdown, I believe that there should be a sense of urgency if we are to equip them with the skills they need to thrive in the post-pandemic modern economy. If there was ever a moment to inspire a younger generation of entrepreneurs, it is today.
In too many countries, entrepreneurship education remains largely bracketed in universities and business schools, which are only accessible to a small minority. We are missing a trick. As Educating Future Founders argues, there is a lot of evidence from around the world showing that earlier interventions can develop traits that are key to entrepreneurial success, such as creativity, persistence, and communication.
Educating Future Founders also reveals that entrepreneurship education at an early age also has benefits beyond business creation – making people more employable. It suggests there is an untapped opportunity to promote economic development and reduce unemployment by expanding access to entrepreneurship education to secondary school students particularly within developing countries.
This research takes a wide perspective, examining the case for school-age entrepreneurship education across multiple countries and cultures. The results of these interventions speak for themselves but combined for the very first time in one conclusive report, they offer policymakers and educators vital context for rethinking curriculum planning.
With close to 50 years’ experience in business skills development, ABE is delighted to support this exciting research programme because we passionately believe that both children and society stand to benefit greatly from early entrepreneurship education. Educating Future Founders shows that it doesn’t take much to motivate young people to think like entrepreneurs. This report should persuade us all to take immediate steps.
Attracting & Retaining Top Talent
In a post COVID-19 world, it will be extremely important to attract and retain the best talent. In this weeks blog, we cover our upcoming event on building an open workplace for growth, alongside highlights from our members and updated guidance on the government’s support schemes.
Female Founders Forum 2020 Digital Events
In our next session tomorrow, Thursday 8 October 2020 from 10am - 11:30am, we will be discussing Attracting & Retaining Talent. You can still sign up for the event here.
We will be joined by Tugce Bulut, founder of technology company Streetbees which was recently named one of the Top 10 UK Startups. We will also hear from Aimee Bateman founder of Careercake with 15+ years of experience working in talent attraction and development as well as Eugenia Migliori, Principal Policy Adviser on Employment at the Confederation of British Industry.
As we mentioned in the last Newsletter, we will be running a series of events over the coming months:
Building Personal & Operational Business Resilience webinar: 10 am - 11.30 am, Thursday 5 November 2020 - sign up here
Cementing Your Story webinar - 10 am - 11.30 am, Tuesday 4 December 2020 - sign up here
Female Founder Highlights
Here is a quick round-up of this week’s news highlights, featuring some of our inspiring Members:
Tania Boler, founder of Elvie and member of the Female Founders Forum was featured in Vogue speaking about her revolutionary FemTech products. She spoke in the article about how the lack of studies conducted into women’s health and resulting lack of adequate products created with them in mind spurred her into action. Read the full article here
The Social Element, founded by our member Tamara Littleton, wrote a piece on what marketers should know when getting started with social media. The article discusses some key things marketers should consider when choosing which platforms to post content on and how effective engagement can lead to long term success. Read the blog post here
In order to support the hospitality sector during Covid-19, Criton, founded by our member Julie Grieve is offering hoteliers a guest app completely free of charge until 2021 and with no commitment. With their own branded app, hoteliers can reduce touchpoints and put guests' safety first. Find out more here
Government Support
Job Support Scheme
The government has announced a new Job Support Scheme which will be introduced from 1 November to protect viable jobs in businesses who are facing lower demand over winter months due to COVID-19. Under this scheme, which will run for 6 months, the government will continue to pay towards the wages of employees who are working fewer hours due to decreased demand.
In order to support viable jobs, employees must be working at least 33% of their usual hours. The grant will be calculated based on the usual salary of the employee and capped at £697.92 per month. The scheme will be open to businesses all around the UK, even if they have not previously claimed under the furlough scheme. Read more about the scheme here.
Self-employment income support scheme
The government will continue supporting millions of self-employed individuals through extending the Self-Employment Income Support Scheme (SEISS). An initial taxable grant will be provided to those currently eligible under the SEISS and who are continuing to actively trade but face decreased demand due to COVID-19.
There will be an initial lump sum payment made covering 3 months' worth of profits from the period of November to January next year. This is worth 20% of average monthly profits, up to a total of £1,875. An additional second grant, which may be adjusted to respond to changing circumstances, will be available for self-employed individuals to cover the period from February 2021 to the end of April. Read more about the extension of the SEISS here.
Tax cuts and deferrals
The temporary 15% VAT cut for the tourism and hospitality sectors will be extended until the end of March next year. In addition to this, businesses who have deferred their VAT bills will be given more breathing space through a New Payment Scheme, which gives businesses the option to pay back the VAT in smaller instatements.
Barclays Support and Opportunities
Barclays' first 'Investing in Women Code' commitment
Barclays is taking action to close the entrepreneurship gender gap, through a series of measures designed to boost the resources and financial support available to female founders. The first in a series of three-year commitments, launched last month, will see the next generation of female founders supported through the bank’s LifeSkills programme, helping them turn their plans into action. Hannah Bernard, Head of Barclays Business Banking, explains how the bank is backing women in business. You can read more about the first commitment here.
Eagle Labs Virtual Events
Barclays’ programme of virtual events covers a range of topics from cashflow management to building resilience to help entrepreneurs and start-ups navigate these uncertain times. Forthcoming events include a session on thinking differently about social media marketing and an event to demystify AI, machine learning, and machine intelligence. All events are free to attend and open to anyone. For more information visit the Eagle Lab event page.
Barclays Coronavirus Support Hub
The Barclays COVID-19 Support Hub provides the latest information, tools, and guidance to support businesses throughout the COVID-19 pandemic. This hub includes information about Barclays’ products, webinars, Facebook Live events, and more information on how to access government schemes. You can also download Barclays’ coronavirus checklist to support your business resilience planning throughout this period. There is also an updated FAQ section on this hub.
We want to inspire female entrepreneurs across the UK. Do you know any inspiring female entrepreneurs?
If so, please connect them directly to me at jess@tenentrepeneurs.org.
Remote Works
Today we launch The Case for Remote Work in which innovation expert Dr Matt Clancy makes the economic case for why, even when the pandemic has passed, we won’t all go back to the office – or, at least, not as much.
I’m sure you’ve read, heard, or debated the pros and cons of working from home. It’s an inevitable conversation for anyone living through the varying degrees of lockdown. But while we all have preferences on how much we want to work from office or home, and it’s easy (often based on these preferences) to have strong instincts on what the world of work should look like, Clancy’s paper follows the evidence, which strongly suggests the virus has pushed us towards a new equilibrium.
Clancy shows that working from home doesn’t make us less productive. As you might expect, this varies across business size and sector, but there are a decent number of experiments showing that a lot of firms benefit from home working. For example, a Chinese travel-booking company, CTrip, assorted employees by lottery to work from home, finding worker performance increased by 13% at home.
It’s not just call centres: since the pandemic, 29% of American small business owners believe productivity has increased for their remote workers and more than half of hiring managers think remote work is going better than expected. Over 60% of hiring managers are planning to increase their use of remote work in the future. And the times appear to be a-changin', with more than 40% of small business owners aged 18-34 planning to hire full-time remote workers, compared to just 10% of small business owners aged 50 and up.
It’s not just about productivity though. Cities are great places to build businesses because of agglomeration effects – ie. the benefits of having lots of people and infrastructure in one place. It’s why businesses in the same sectors cluster together. However, remote work done well means we can get more of the benefits of agglomeration without the costs. These costs are obvious things like commuting, rental and house prices and transport emissions, but an increase in working remotely could allow people to live away from big cities, which for some people is less preferable than living in the countryside or closer to friends and family. Also, given how obsessed this government is with levelling up, an increase in working from home could help spread wealth a little more evenly around the country.
Clancy isn’t arguing that we’ll all be working from home. Only that this will become more common, alongside working from co-working spaces and satellite offices. (Anecdotally, friends based in Canary Wharf who have nightmare commutes are mostly happier to work from home than we are, based in our convenient TOG co-working space in Victoria.)
The report recommends a range of policies to support the transition to remote work, including tax relief for home working expenses, investment in broadband infrastructure, and better online education. Ultimately, it should be up to each business owner to work out how to organise their workforce and then let the market decide which is more efficient, but government would waste a lot of time and effort trying to turn back the tide.
To accompany the launch of the report, we have a video where Sam Dumitriu interviews the author, alongside Rory Sutherland of Ogilvy UK and Adam Ozimek of Upwork. We’ve also uploaded the recording to Soundcloud. It’s over an hour long, but I think it’s one of the most thought-provoking events we’ve ever done. For those in a rush, Clancy's CapX article is worth checking out, and if you only have a minute this Twitter thread will give you the main points of the report.
As Stian Westlake, Chief Executive at the Royal Statistical Society, and author of Capitalism without Capital, says: “It sets out a clear, intuitive model for how to think about remote work from an economic point of view, and a clear explanation for why a shock, like Covid-19, might change things permanently. What's more, it provides a superb survey of what existing economic research says on the pros and cons of remote work. If you read one economic paper in 2020, make it this one!”
A nation of technologists
Applications are now open for Tech Nation’s flagship growth programmes: Rising Stars 3.0, Upscale 6.0 and Future Fifty 9.0. Rising Stars is a pitch competition for early-stage, innovative tech companies; Upscale is a growth programme for mid-stage tech companies; while Future Fifty a late-stage growth programme. There is a simple tool to help you know which category your company fits into.
Entrepreneurship 101
On 21 October, the APPG for Entrepreneurship will be hosting a panel event to mark the launch of Dr Eamonn Butler's new book: An Introduction to Entrepreneurship for the Institute of Economic Affairs.
Accompanying the launch, the Institute of Economic Affairs will be creating and disseminating a short explainer video, and they are looking for entrepreneurs to take part by filming short clips (up to 30 seconds), introducing themselves and explaining why entrepreneurship matters and the role it will play in supporting the recovery.
The video will be pushed out through social media, as well as played at the launch event. If this is of interest, please contact Annabel Denham. The event will feature Dr Eamonn Butler, Emma Jones MBE, Matt Ridley, Author. You can register for the event here.
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