New Needs Friends

To misquote Anton Ego, voiced by the late, great ​​Peter O’Toole in Ratatouille: “Not everyone can become a great entrepreneur; but a great entrepreneur can come from anywhere.”

It’s one of the driving forces behind the work we do. Well, not so much the 2007 Pixar movie, but more like the brilliant research of John Van Reenen. His work on Lost Einsteins teaches us that there are large disparities in innovation rates by socioeconomic class, race and gender – children at the top of their third grade (ages 8-9) mathematics class are much more likely to become inventors if they come from high income families than if they come from poorer backgrounds, for instance.

Similarly, Georgetown University’s 2019 report, Born To Win, Schooled To Lose, argues that due to striking disparities “it’s better to be born rich than smart” in the US now and that “the most talented disadvantaged children have a lower chance of academic and early career success than the least talented affluent children.”

This is why we have been running the Female Founders Forum with Barclays for several years now, and more recently the Inclusive Innovation Forum with Morgan Stanley. We’ve built our research and campaigning on the expertise of those in the entrepreneurial ecosystem and over the coming weeks will be finalising our next steps. If you have any thoughts on what you think we should be doing, now is the time to get in touch.

For its part, this week the British Business Bank released its report Finding What Works on how to improve diversity in venture capital investment. The research suggests three pathways for enhancing diversity in venture capital firms.

First, by increasing diversity among key decision makers – particularly Investment Committees. Second, by increasing the pipeline of investment opportunities from underserved founders. Successful firms are already actively seeking out diverse founding teams by engaging scouts with their own diverse networks to source investment opportunities, and using incubators and accelerators for earlier stage firms. And third, by measuring and delivering on progress.

It’s a solid report. Of particular note is a ranking of the perceived effectiveness of 14 actions VCs could take. It could be interesting to ask founders, or smaller funds to rank the same actions, as well as considering if any 'actions' are missing from the list.

Young Turk
With support from the Association of Business Executives, we’re undertaking an ambitious project to sketch out what the world’s most pro-innovation visa system would look like. 

Luckily, the ambition of the project is matched by that of its author. Derin Kocer was previously a journalist and remains the youngest-ever byline holder of Independent Turkish. He has a Substack on international politics you can subscribe to. 

Get in touch with Derin with any insights on what would go into building a pro-innovation visa system – not just for the UK, but the whole world. We will be launching the report at 3.30pm in the House of Lords on 6th September. Patrons, Advisers and Supporters may want to save the date in their diaries before the invites hit your inboxes.

Like & Subscribe
The Department for Science, Innovation and Technology has just launched a newsletter and it’s better than most of these sorts of things. Most impressively, it includes the names, job titles and email addresses of people you can reach out to, which addresses a common complaint from entrepreneurs. Next step, office hours?

On the topic of newsletters, if you’re not subscribed to Dr Eamonn Butler’s sardonic takes on the latest political machinations you’re missing out. To celebrate Adam Smith’s 300th birthday, the ASI has opened up an essay prize asking: what Adam Smith would write about today? They are looking for 1,500 words, and are offering prizes up to £3,000. You can find more on their website (scroll down).

Read the full newsletter here, and sign up here.

Right Round, Baby

Much to the surprise of many, the Government is putting its weight behind reforming university spinouts. More than anyone else, Air Street Capital’s Nathan Benaich can be credited – or blamed, for those lobbying against change – with putting this on the political agenda.

As Benaich explains on Spinout.fyi, this kicked off in May 2021, when he wrote an op ed in the Financial Times (Paywall). Off the back of this, he’s built a database of founders’ experiences spinning out. According to this data, most founders are dissatisfied – principally because of how long it takes: “The negotiation process is too long and cumbersome: 66% of spinout deals take longer than 6 months to complete, and 27% more than a year. In comparison, startup seed rounds typically take 3 months.” In addition, Benaich finds that UK universities take 19.8% of equity on average, compared to 7.3% taken by European universities and 5.9% taken by US universities.

This wasn’t a new issue, but it’s only recently gained political attention, with the Government keen to hear from the founders of spinouts. We’ve engaged with the team working on this consultation and are impressed. Entrepreneurs shouldn’t just respond if they have a negative account of working with their tech transfer office – a positive or neutral experience is just as valuable. After all, one of the big takeaways from Benaich’s data is that there is significant divergence between universities on everything from golden shares, royalties, upfront payments, exit fees, and much else besides.

You can access the consultation here. Please share it with anyone you know who has spun out a company from university.

For our part, we are ready to roll on a report on spinouts. Anyone interested in getting a briefing before it hits your inboxes should drop Eamonn Ives an email. 

Raking Progress
With news that OpenAI will open its first foreign office in the UK, and following on from the much-needed upgrade of both people (bringing in the super-smart entrepreneur Ian Hogarth) and bodies (scrapping the AI council) advising the Government, there are reasons to be optimistic about the role that the UK’s entrepreneurial ecosystem can continue to play in building this foundational technology. 

A lot has been written about the transformative power of AI – but much of the time people are arguing past each other. For a considered, good faith debate, I recommend reading what started as a Google Doc conversation between Tamay Besiroglu and Matt Clancy (a previous author of our report on the future of work), with the former arguing that we will likely see a rate of growth that far surpasses anything we’ve previously witnessed, while the latter isn’t quite so optimistic.

Our Man in Alba
Dr Anton Howes, our Head of Innovation Research, has relocated to Edinburgh. As such, you could argue – and I’m going to do so – that we now have a Scotland office. If you’re based in Scotland then do reach out to him, as he’ll be embedding himself in the local ecosystem.

Anton is a noted historian of the industrial revolution (sign up to his award-winning Substack here). While he’s up there, he’ll be tasked with spearheading a rerun of the Scottish Enlightenment, which boasted the genius of Adam Smith (the founder of economics born 300 years ago), David Hume (the great empiricist) and James Watt (a pioneer of intangibles assets). No pressure, Anton!

Sign up to my Friday Newsletter here.

Watch This Space

Building on our joint reports on access to finance, government, people and markets, today we released our fifth report with Enterprise Nation on access to space. Not the final frontier this time (we've already done did that through with the APPG for Entrepreneurship); but closer to earth, whether that’s an office, coworking, shop, cafe, or other space.

A fair amount of the report is devoted to the grossly exaggerated predictions of the death of the high street. As we write in the opening of Access All Areas: Space, disruption isn’t new: “Ever since the Industrial Revolution, commercial space has changed as dramatically as the economy has. When it comes to retail and hospitality, new products and services and resulting new consumer demands have been a constant challenge, as well as opportunity. Shop numbers have been steadily declining since at least the 1920s, while mass car ownership transformed the way we live, with the country’s first out-of-town shopping centre, Brent Cross in Hendon, built in 1976. In fact, since the 1960s, we’ve gone from high streets and town centres dominated by essential retail, to one where discretionary social and experience are taking centre stage.”

In the face of this creative – and not-so-creative – destruction of the high street, successive governments have tried to help. Business Improvement Districts were introduced in 2003, whereby local businesses vote to invest together in their area; the Portas Review of 2011 saw retail expert Mary Portas conduct an independent review on the future of high streets; we’ve seen a growing number of reliefs and increasing amounts of cash, including the £675 million Future High Streets Fund, the £3.6 billion Towns Fund – which, following accusations of “pork barrel” politics has been rolled into the Levelling Up Fund, a pot of £4.8 billion given to local authorities in England for infrastructure projects that promote economic growth and regeneration.

While successful regenerations require public money, they're by no means the only policy lever though. 

The paper argues for local authorities to be empowered by giving them more responsibility over Business Rates reliefs and exemptions for small businesses and charities. This would empower those with a better understanding of what’s needed, such as creating locally administered Community Ownership Funds to save businesses, or funding charities and social enterprises that work in the community directly.

Also, while charity shops are a positive and integral part of many high streets, because they are tax advantaged small businesses can’t always compete. Depending on their nature and number, too many charity shops can hollow out a high street, even in economically vibrant areas, making them less diverse and reducing its overall value and attraction for visitors.

Ultimately, we should trust those who are embedded in our communities with the discretion to know what’s needed to incentivise and protect spaces for local businesses.

The paper also calls for the Localism Act 2011 to be enhanced, granting greater authority to community organisations that have proven their long-term sustainability and presented a strong business case for assuming ownership of dilapidated buildings within their vicinity. This is especially relevant when these structures pose a detriment to the overall appeal of the local high street. 

Following in the footsteps of Andrew Dixon and others, the paper also calls for the business rates system to be scrapped and replaced with a tax on the underlying land values, not productive investment. For example, the proposed Commercial Landowner Levy would cut business taxes in the vast majority (92%) of local authorities – particularly outside the South East – helping to rebalance Britain’s divided economy. After decades of consultations and dithering, one way or another, whoever forms the next government really needs to fix business rates.

The report also sees potential for central and local government, as well as its arm's-length bodies to work with established coworking partners to set up places within their property portfolio. For example, Network Rail and The Office Group have opened drop-in workspaces in King’s Cross, Liverpool Street and Leeds stations as part of The Station Office Network, an initiative intended to provide mobile offices in train stations throughout the UK’s major cities.

Sage Advice
This week Sage released A Blueprint for Digital-led Growth. Two ideas piqued our interest. First, it calls for the Government to ensure that as part of Open Finance, credit agencies should make Commercial Credit Data Sharing available to businesses so they can understand and improve their own creditworthiness and help facilitate lending needed to grow.

Second – and this is familiar territory for regular readers – we agree that the Government should create a government-backed API-driven digital ID that businesses can use to verify their identity with banks and accounting providers, among others. While the Government is progressing things like the Digital ID Trust Framework, Digital Service’s One Login, and a new ID verification process for Companies House, the history of digital identity in the UK and abroad teaches us that this needs much more coordination.

And the Award...
There is still time to get your nominations in for the Barclays Entrepreneur Awards. Nominate your own business or others – there’s a category for most stages and types of business. The awards have been running for eight years – about as long as our partnership with Barclays on the Female Founders Forum – and we’ve seen first-hand the value of getting the deserved recognition and profile that winning an award like this can give you and your business.

This is the opening of our Friday Newsletter – sign up here.

Capital Projects

“There is an extraordinary stat. Something like half of all our fastest-growing innovation businesses have a foreign-born founder, so that tells you you need a visa system that attracts the best and brightest to the UK.”

This is a quote from Prime Minister Rishi Sunak at the opening of London Tech Week, which took place this week. We revealed this “extraordinary stat” – that nearly half the fastest-growing businesses in the UK have a foreign-born founder – in our Job Creators report. Such facts have helped make the case for the High Potential Individual (HPI) visa and are helping us make the case for its extension and further reforms.

That statistic came from Beauhurst’s data via a Syndicate Room report, while the writing of the report was sponsored by Sukhpal Singh Ahluwalia, a successful immigrant founder who came to the UK as a refugee having fled the regime of Idi Amin in Uganda. This data needs updating as it’s from 2019. If you’re an individual or company and believe in the importance of keeping the door open to foreign-born talent, drop me a message to see how we could work together on this project.

Both Rishi Sunak and Keir Starmer spoke this week about how London is a centre for tech. Their positivity was confirmed a few days later in Startup Genome’s GSER 2023 report – a comprehensive analysis of the current state of startup ecosystems worldwide – which ranks London joint-second with New York City, with only Silicon Valley ahead.

The numbers speak for themselves. While the likes of Berlin, Amsterdam, Paris and Stockholm are impressive, the economic value of London’s ecosystem is more than Paris (second), Berlin (third) and Stockholm’s (fourth) combined: £364 billion versus £326 billion. It’s also worth more than their combined early stage funding: £18 billion versus £16.7 billion, and exits in London are valued more than all four combined too: £100 billion versus £95 billion. In other words, it’s not even close. 

As the report states: “London remains Europe’s leading tech startup ecosystem. The region has seen an upswing in exits over $50 million, with several high-value exits over $1 billion, including fintech Wise ($12.2 billion), Deliveroo ($10.5 billion), and Oxford Nanopore Technologies ($4.6 billion). In addition, Europe’s largest Fintech unicorn, Revolut, is based in London, boasting a valuation of $33 billion, while SumUp and Rapyd are valued at $9 billion and $8.7 billion respectively.”

We all know there’s room for improvement, but we do this from a position of strength: as the UK’s unequivocal leading entrepreneurial ecosystem. It’s why a16z (perhaps still better known as Andreessen Horowitz) has just chosen to base its first office outside of the United States in the capital.

London isn’t an island though. For example, a16z is adamant that the value it sees in its bet on blockchain will involve it working with universities up and down the UK. And the Startup Genome report ranks the Manchester-Liverpool region sixth as an emerging ecosystem, with Bristol, Edinburgh-Glasgow, Birmingham, Durham, and Belfast also getting very honourable mentions.

The government has a role to play in supporting these other ecosystems, most critically through infrastructure. As Marc Andreessen (the “a” in a16z) persuasively argued back in 2020: It’s time to build. There remains much to do though. As our Adviser Sam Dumitriu recently showed, it’s too hard to build new homes, factories, labs, roads, railways, airports, and energy infrastructure like wind farms, grid connections, and nuclear power stations. While Mustafa Latif-Aramesh and Angus Walker detail in The Telegraph (paywall) the ways in which large infrastructure projects are increasingly being held up in the UK. Just read the Wikipedia article on Northern Powerhouse Rail for a textbook case of political mismanagement and Cheems Mindset.

It’s time to celebrate our successes and build on them – literally.

Group Think
The All Party Parliamentary Group (APPG) for Entrepreneurship – for which we’re the Secretariat – published its latest newsletter this week. Among other things it included an update on our new Officers: Anna Firth MP, Virendra Sharma MP, Paul Howell MP, Brendan Clarke-Smith MP and Ben Bradley MP.

Sign up to the APPG monthly newsletter here, and feel free to drop me an email if you’re keen to see how you can get involved in the APPG.

Norton Anti-Vibes

In 99.9% of circumstances, a Hollywood celebrity should be the last person you turn to for policy advice, which is why I wasn’t expecting much going into an event with Uber and Edward Norton. I was planning to gloss over the policy with the hope of getting a slither of insight about his films. Luckily it turns out Norton is in the 0.01%.

Norton didn’t rely on emotive arguments, but on sound economics to argue for a better world. He wants to ensure the environmental costs of doing business are internalised by companies, and defends the creation of markets to protect environmental assets. Unlike too many environmentalists, he understood how to think at the margin and cautioned against making perfection the enemy of the good. As he has stated back in 2019 when probed about Uber:

“Does any form of car-based transportation within urban environments need to grapple with the challenges of congestion and pollution and the nature of employment? Of course. But the New York City medallion system should be cancelled tomorrow. It is not egalitarian. It is terrible economically for the drivers. It drives empty cars around polluting and congesting the city. This notion that Uber is not an improvement off of where we were is absurd. Does it need to get better? Absolutely. But there is no way you can tell me that the experience of riding in a New York taxi is anything other than debased compared to ride-sharing services.”

The critical point for Norton is that the creation of ride-hailing services put us on a path to a better world. It didn’t come overnight, but without this technological shift there was no escaping the inherent inefficiency of customers and  cabbies being unable to coordinate. There is no putting the genie back in the bottle. And while there are individual losers and new policy challenges thrown up, ultimately we are much better off for this technology existing.

There are many areas of the economy that could be equally transformed. We’ve written about drones, copyright, and most recently in our Operation Innovation collection Meri Beckwith wrote an essay on clinical trials. The co-founder of Lindus Health – who has just raised money from the likes of Peter Thiel to accelerate their use of machine learning and data science to revolutionise clinical trials – paints a bleak picture of ethics committees in the UK. For example, when discussing whether to allow a clinical trial for a new drug for Stage 3 cancer to proceed, the committee, which only meets every eight weeks, spent the session complaining about the font used in various documents giving no time to discuss the drug. Beckwith suggests paying ethics committee members and making it easier to use private ethics committees like in the US.

During next week’s London Tech Week I’ll raise these and other cases at a roundtable with George Freeman, the Minister of State for Science, Technology and Innovation (who has himself identified a fair few obstacles in his TIGRR report) organised by the excellent Regulatory Horizon Council.

When it comes to regulatory hurdles like this, we rely on you – our network of thousands of founders – to let us know what conditions are like on the frontier of innovation. In turn, government relies on us, and organisations like us, to frame these individual experiences as part of a bigger picture and suggest solutions. So whether you’re a business owner, investor or anyone with knowledge of something holding business back, now is the time to get in touch.

Norton said it best upon his decision to devote more time to entrepreneurship, investing and environmentalism than acting: “I don’t want to look back on my life and see the large majority of it coloured with me playing pretend instead of actually doing things.”

Mighty Oaks
Mid-sized businesses should be Goldilocks for governments – big enough to boost productivity and create jobs, but small enough to be nimble and innovative. 

However, without the resources of very large businesses to lobby government, or the weight in numbers (and therefore voters) of small businesses, they are often overlooked by policy. Compared to equity backed tech businesses, much less attention is paid to businesses that are already profitable, but aren’t (yet) large companies.

That’s why we’re hosting a roundtable for profitable businesses turning over £1 million with Shadow Minister for Small Business, Consumers and Labour Markets Seema Malhotra, and Shadow Minister for Business and Industry Bill Esterson. 

Watch This Space

I’ve written before about space and entrepreneurship. However, last year I was focused on the final frontier – or, more precisely, the incredible applications of space technology – now we’re looking at an equally interesting ‘space challenge’ for entrepreneurs a little closer to home. We’ll soon release a new report with Enterprise Nation covering everything from shops and offices, to markets and coworking spaces.

I won’t break the embargo, but it won’t surprise you that the report covers the challenges to bricks and mortar businesses, many of whom have struggled in recent years.

But while the future of retail and leisure has changed dramatically, I remain a bricks and mortar optimist for one simple reason: people think local shops and services are important for their communities. It’s why recent governments have poured money into things like the Future High Streets Fund, Towns Fund, and Levelling Up Fund. They’re responding to voters, and while some might argue that revealed preferences show that people would prefer to shop online, both can exist alongside each other. 

Just consider Westfield, whose Stratford and White City locations offer the whole shebang: retail, dining, leisure, offices, hotels and residential. The future of bricks and mortar is about this sort of diversity. The two centres generate significant additional expenditure for the benefit of local businesses, including an estimated £18m-£25m annual spend by centre employees.

Westfield is also keen to open up their space to more entrepreneurs, which is why we’re partnering with them on their Grand Prix competition, which offers creative and eco-conscious food, fashion, beauty, home, leisure, and services brands the chance to win a free retail space.

The winner will get a pop-up shop or kiosk for one year, £50,000 contribution to design and fit it out, £200,000 worth of media promotion, and a chance to compete for the European prize in Paris to kickstart European expansion. Your company should have been incorporated less than seven years ago; operate fewer than five UK stores; be able to operate a physical point of sale; and sell goods or services to individual consumers. Entries are open until 30th June.

Point of Order

The Government didn’t need to wait for the ONS to release the migration figures to begin taking action to reduce the number of people able to come into the UK. Two days prior to those statistics coming out – which showed a record 606,000 people came to the UK on net in 2022 – the Home Secretary Suella Braverman was informing the House of Commons of her 6-point plan to drive the numbers down.

At the top of her list was the intention to remove “the right for international students to bring dependents unless they are on postgraduate courses currently designated as research programmes.” Enforcement will also be beefed up, with “unscrupulous” education agents clamped down on. 

The exact impact this will all have is uncertain, but needless to say, the UK will now be viewed less favourably among prospective students looking to study abroad. And while these reforms were all related to foreign students, in the coming weeks and months, be sure to expect further agitation from migration hawks clamouring for measures to reduce the numbers of other types of immigrants as well. 

Debates on immigration are all too often typified by feelings rather than facts. And as someone who comes down on the more liberal side of the argument, I think it’s worth pointing out what research we have published in this space, to give a little in the way of concrete evidence. 

A statistic of our own which we’re particularly proud of sheds light on the share of fastest-growing companies set up by people who have moved to the UK. In 2019, we found that this stood at 49% – in other words, half of the country’s fastest-growing companies had a foreign-born founder or co-founder, despite immigrants making up only about one seventh of the total population. It’s a figure that’s been used by the Prime Minister no less, and underscores the importance of foreign talent when it comes to the forefront of success in business.

Beyond company founders, immigrants have been indispensable to the growth of many businesses – especially where they can provide scarce skill sets. To best enable this, we need a visa system which is fit for purpose. Some readers might be surprised to hear that there are instances where the UK has moved in a more positive direction on this lately. One example is the creation of the High Potential Individual (HPI) Visa, which allows graduates from leading universities to move to the UK for two years without a job offer. Yet even here, there’s room for improvement – and in True Potential, we explained how to do exactly that. At present, the HPI Visa’s methodology for which universities it covers gives more weight to student-teacher ratios than how students do in the world of work upon graduating, which is surely what we should be interested in. As a case in point, India’s prestigious Institutes of Technology are currently excluded, despite the fact they count the CEOs of IBM and Google among their alumni. Do we really want to be throwing up barriers to these sorts of people?

As well as – and perhaps because of – visa complexity, something else we’ve been highlighting recently is the seeming inability of the Home Office in simply fulfilling its end of the bargain when it comes to approving applications. In Operation Innovation, our handbook for building a more innovative Britain, Coadec’s Bella Rhodes notes: “too often we speak to startups where the decisions have been delayed by three months or more. The problem is not policy intent – it is red tape and delays within the Home Office.”

Having spent a decade as the voice for Britain’s entrepreneur community, we don’t need to be persuaded of the value of immigrants to individual companies, and the economy at large. Perhaps the fact that so many politicians have comprehensively failed to get numbers down suggests, in a weird way, that they don’t either. And thank goodness for that.

Investors Calling
For a while now, we’ve been researching university spinouts, and how best to support them. The Government have started looking at this too, and we’ll be inputting our findings to them. With so much of the focus on founders and technology transfer offices, we’d like to find out more from investors. If you’ve invested in spinouts and would like to share – in confidence – your experience of dealing with them and TTOs, you can get in touch with us here. 

Also, in case you missed it, we’ve recently joined forces with FieldHouse Associates to provide a free forum for investors who want to make a positive impact on UK policy. Learn more here. 

Great Schemes of Things

Sometimes we need to turn to the past as a guide to the future. That’s why this week we published Blueprint for a New Great Exhibition, a report by our Head of Innovation Research, Dr Anton Howes.

As I wrote in Forbes, exhibitions of industry have a long and successful history of being used by policymakers to showcase and inspire innovation. Recent attempts to replicate such exhibitions, however, have not always lived up to their goals – and have been far removed from the momentous success of events such as the Great Exhibition of 1851. 

This isn’t jingoistic yearning for a long-gone ideal. It’s about applying what has worked in the past to the modern world. As Anton writes, visitors would “see drone deliveries in action, take rides in driverless cars, actually use the latest in virtual reality technology, play with prototype augmented reality devices, and see organ tissue and metals and electronics being 3D-printed in front of them. They would see industrial manufacturing robots in action, have a taste of lab-grown meat at the food stalls, meet cloned animals brought back from extinction, and themselves perform feats of extraordinary strength wearing the exoskeletons that are already in use in factories and warehouses. Visitors would naturally get to meet the inventors and scientists and engineers who developed it all, too. They would browse the latest in fashion, art, and architecture, seeing them alongside historical examples. And the whole thing would be powered using only the cutting edge of clean energy technology, much like how the great new Corliss Engine drove the 1876 Centennial Exhibition in Philadelphia, or how Westinghouse’s alternating current powered the 1893 Chicago World’s Fair. Visitors might also be able to view air CO2 removal machines in action.”

While focused on the future, the paper makes the case that it shouldn’t be online. Perhaps one day such an event is best hosted in the metaverse – but that day isn’t imminent. Showcasing innovations of driverless cars, lab-grown meat and drone delivery online would be an abstraction that subtracts significantly from the goal of inspiring innovation.

We think it should be privately funded – and not just because of the state of public finances. The recent UNBOXED festival – dubbed the ‘Festival of Brexit’ – could be a Harvard Business School case study in failure: bureaucratic, politicised, and lacking in clarity of vision and oversight. The Great Exhibition of 1851, for example, albeit organised under the direction of a Royal Commission to give it official credibility while maintaining some arms-length distance from the government, was privately financed. 

The Great Exhibition was centred around the prefabricated majesty of Sir Joseph Paxton’s Crystal Palace, which was moved from Hyde Park to an area of London now (unsurprisingly) known as Crystal Palace, but was sadly destroyed in a fire in 1936. Previous World’s Fair structures with an enduring legacy include the Eiffel Tower in Paris (1889), the Space Needle in Seattle (1962), and the Atomium in Brussels (1958). We would need an equally majestic building today and played around with Midjourney to come up with some AI-generated designs to poll the public on Twitter (I’m still annoyed the glass building didn’t win, proving these things aren’t best decided by committee).

Our next reports will cover things like reforming visas and spinout policies, and unlocking commercial space for startups and institutional funding for deeptech policy. But the culture of innovation also matters. If you don’t stop and look around once in a while, you could miss it.

Job Creators II 
We're busy crunching the numbers, updating our incredibly influential Job Creators report, in which we looked at the fastest-growing companies by valuation, finding that half the fastest growing companies have at least one foreign-born founder. It got significant press coverage, including the second page of the Financial Times, and the headline statistic has been used by the Prime Minister on a number of occasions. We're open to partnering with a sponsor on this. Get in touch if you're keen to help.

Free Forum
As previously mentioned, we’re building an Investor Forum to provide a free forum for investors who want to make a positive impact on UK policy. It’s for UK investors at any stage, sector focus, or location. We will support you on an ad hoc basis through events, surveys, research, and other ways as the community develops. Join us.

First Draft

LabourList, the party’s grassroots website, has revealed Labour’s draft policy platform. It gives a long summary of the 86-page policy handbook, which is split into six sections: a green and digital future, better jobs and better work, safe and secure communities, public services that work from the start, a future where families come first, and Britain in the world. I’ve read it, so you don’t have to (though you might want to).

These policies still need to be agreed by the National Policy Forum, with amendments subject to approval at Labour’s party conference. Finally there will be a Clause V meeting, where the party's National Executive Committee and Parliamentary Labour Party agree on the final policy platform.

First and foremost, when it comes to policies supporting entrepreneurship, there is little in this document that would be out of place in a Conservative manifesto. This is good to the extent that continuity of good things is good for business; this is bad to the extent that there’s a lot that needs fixing. The art of good governance is identifying and successfully reforming the latter.

For example, Labour will promise to tackle late payments and scrap and replace the current system of business rates. Of course, these are things which the current and past Government has promised too. On business rates, I’ll be pushing Labour towards the most thought through proposal, which was led by our Adviser Andrew Dixon: Introducing the Commercial Landowner Levy.

As per the current Government, Labour wants to “unlock the supply of patient capital for fast-growing digital businesses”. I would replace “digital businesses”, which is too broad, with “deep tech”, which is what the new LIFTS programme will aim to do. We will also be pushing for Labour, if elected, to conserve the Conservative Party’s support for Focused research organisations (FROs), which would give entrepreneurs, scientists, and engineers a new pathway for developing the sorts of transformative technologies which will be required to tackle pressing public problems.

Labour wants to “ensure the UK capitalises on its world-leading universities and research base to grow the number of spinouts”. This is something that the current Government is suddenly – and somewhat surprisingly – animated about – as mentioned last week, there is a consultation on the topic. This is a technocratic enough issue that hopefully we will see continuity if Labour come to power.

There are nods to traditional Labour policies. The unions, who contribute over half the party’s donations and loans, feature heavily. As such, some of the language feels very 1970s, but it’s not inherently bad, and could be positive if they can, as the document suggests, carefully fix the awkward fudge on worker and employee status (without damaging flexibility for those that want it).

As the Labour Party needs to keep the unions onside, the Conservative Party is held hostage by its Nimby voters on one of the biggest issues of the day: planning reform (see here). Labour is promising to build. We can but hope.

One area that piques our interest is around data and IP reforms. Labour wants to: “ensure our world-class researchers and businesses have the data and computing infrastructure they need to compete internationally”, “ensure our intellectual property system is fit for the digital age”, “make it easier for public services to adopt innovative technologies by removing barriers to data-sharing and smart procurement”, “use new capabilities in data analysis and AI to deliver better public services”, and “introduce robust regulation that opens up data while enshrining consumer rights.”

This is potentially along the lines of what we’ve been calling for across numerous reports. If expanded out it could be genuinely transformative. We could make the UK the best place in the world for AI research while aping digital states like Singapore, South Korea, the Scandinavian and Baltic States, but with larger populations and an already more advanced entrepreneurial, financial and research ecosystem.

That said, according to the draft platform, Labour would “bring about the biggest wave of insourcing of public services in a generation.” While the UK has undertaken many failed procurement projects, it’s also failed on as many internal projects. The problem isn’t outsourcing, but the way procurement is undertaken. And while this document states it wants to “cut red tape and streamlining the bidding process to level the playing field for small businesses” it would also burden businesses with social, environmental and labour clauses. These are all worthy goals, but they are better pursued in ways that won't hold back the innovation and economic growth that will let us pay to achieve these same goals.

I could go on. But I’ll wait until future weeks. On Wednesday we’ll be speaking with Stephen Kinnock MP, the Shadow Minister for Immigration, so will hopefully be able to understand its business offer better then. Get in touch if this is a topic you care about – we might be able to squeeze you in.

Battle Royal

Whether you’re a flag-waving Monarchist or a dyed-in-the-wool Republican, we can (hopefully) all agree that those in a position of power should use it to promote the benefits of an entrepreneurial society.

That's why Dr Anton Howes and Ned Donovan made the case in our paper a few years ago to establish a new order of chivalry to encourage invention and raise the status of being an innovator in the eyes of the public; and that's why I sometimes recommend people from our network for the Order of the British Empire; and that's why I'm letting you know that the King’s Awards for Enterprise opens for applications tomorrow.

The King’s Awards was instituted by Royal Warrant in 1965 with the first Awards made in 1966 under the scheme’s original title: The Queen’s Award to Industry. They are for outstanding achievement by UK businesses in the categories of innovation, international trade, sustainable development, and promoting opportunity through social mobility.

Winners are invited to a Royal reception; presented with the award at their company by one of The King’s representatives, a Lord-Lieutenant; able to fly The King’s Awards flag at their main office and use the emblem on marketing materials; and given a Grant of Appointment and a commemorative crystal trophy.

I’m sure some of you reading this are thinking that Royal recognition is the last thing you want. But that’s not really the point. It’s clearly a big deal for lots of other people and because of this it sets the tone for what society as a whole values. We can (and do) have other incentives for those that don't like the Monarchy.

We think culture matters for building an entrepreneurial society, and as set out in the opening essay of our recent Operation Innovation collection, the second order effects of this have been incredible:
 
“The effect of accumulated innovations has transformed the world at a pace that would have been unimaginable to our not-so-distant ancestors. Even a rate of 2% growth per year – what is now considered slow – if sustained year after year, results in a doubling of measured living standards in just 35 years. The gap in living standards between 1423 and 1723 may have been noticeable to a typical fifteenth-century person, but the gap between 1723 and 2023 would have been beyond even an eighteenth-century person’s wildest imaginings. 

In 1723, the typical Brit would have spent a substantial portion of their wage on lighting and heating their home with sputtering candles and smoky coal. They would almost certainly have had no access to running water, been unable to afford to travel abroad, and only just about been able to fund some pastimes – some limited reading, if literate, and perhaps the occasional and expensive sip of a newly-imported luxury like coffee. Their work would have involved back-breakingly long hours, with little recourse for that broken back. They faced the constant threat of an early death from disease.

Thanks to the incremental and accumulated work of just a few thousand innovators in the intervening three centuries, we now enjoy the widespread availability of electricity, central heating, running water, toilets, cars, rail travel, literacy, television, restaurants, office jobs, and instantly effective treatments for many previously debilitating or life-threatening diseases – not to mention commonly available inventions that to the 1723 Brit would seem tantamount to magic, like human flight, impressively accurate weather forecasting, instantaneous communication with anyone in the world, and now machines that can reason and talk.”

Anton’s next report for us will elaborate on his plan to create a modern-day Great Exhibition. If you want to take a look at an early copy with a view to endorsing it (assuming you like it, of course), drop me an email. 

Right 'Round
We’re responding to the review of university spin-outs. Based on the evidence gathered, the review will provide recommendations for government policy and for institutions aimed at ensuring the incentives are in place to maximise the gains from university spin-outs, and increasing the economic contribution of spin-out companies to local areas and the UK as a whole. Get in touch with Eamonn Ives if you’re as passionate about this policy area as we are.

What a Corker
Over the years we’ve undertaken significant work on policies to support female founders. While we’re busy planning our next activity, check out the first ever National Women’s Enterprise Week from 19 to 23 June, and the Women’s Launch Lab, which is offering 12 free places on a boot camp from 20 to 22 June. Both are the work of our Adviser and entrepreneur Alison Cork MBE. Deadline for applications is 15 May 2023.

Inclusive Innovation Forum: Start-Up, Scale-Up

Welcome to the fourth newsletter of the Inclusive Innovation Forum. Following the roundtable led by the Government’s Chair of the Commission on Race and Ethnic Disparities, we crossed the House of Commons for our fourth roundtable to discuss the findings of the Labour Party’s recent Start-Up, Scale-Up review, which provides crucial insights on how the Party would aim to achieve one of the guiding ambitions of a potential future government: to make Britain the best place to start, and to grow, a business.

Roundtable Insights
The Start-Up, Scale-Up review includes data that reinforces the notion that investing in founders of colour has a substantial and positive economic impact. One respondent to their call for evidence calculated that if entrepreneurship among ethnic minority founders was increased to the average level, this could add a further £15-20 billion to UK GDP.

The discussion was opened by Tom Adeyoola, Co-founder of Extend Ventures, who sat on the panel of the Labour Startup Review. A central theme of the review and Tom’s talk was how to encourage growth. “There are only three ways to generate growth: more people, more productivity, and mining untapped resources. Untapped resources refer to communities and regions that have not been given fair access to funding opportunities. If it is possible to remove structural biases and systemic issues, then there could be improvements on the capability, capacity, and outcomes of UK PLC.”

But, how can we facilitate greater access to capital for entrepreneurs in the UK and ensure that this access is distributed more equitably? Adeyoola thinks we need to follow the money. One of those routes is pension funds: “Pension fund capital is probably the most diverse asset class of capital in the UK, yet Canadian pension funds invest more in UK start-ups than UK-based funds. This means that people in the UK do not receive stakes in the success. It reinforces the importance of connecting capital to broad and diverse sources of capital through the system, to get more alignment around where the money is going”. But convincing pension funds to invest in the venture asset class is challenging, says Amina Ahmad, head of community and content at Diversity VC. Pension funds are known to be more risk averse in the UK – they need a change of culture that enables them to take more risks into startups as an asset. 

According to Adeyoola, we also need to address the issue of equitable access to capital for entrepreneurs. He proposes government develop an Investing in Ethnic Diversity Code – similar to the Investing in Women Code – to bring to light the lack of equity in capital distribution and provide recommendations. It’s also important that the government commits to ongoing engagement with the topic and establishes working groups under each recommendation area to implement them quickly and create real tangible outcomes.

Another way to promote more investment into ethnically diverse founders is to diversify who deploys capital. We should be looking at global tech hubs – like Tallinn, Estonia, for example – that have a founder culture of reinvesting into the ecosystem. As entrepreneurs and senior operators experience a liquidation event, they should be encouraged and incentivised to invest in UK startups. “We need the UK to recycle wealth from the older generation into turbocharging the younger generation — we need to create that virtuous cycle,” says Adeyoola. 

Alongside recycling cash, the roundtable discussed needing more visibility of diverse role models. Investing through a mirrortocracy lens – not on merit but in people who “mirror” other successful people – hinders investment into people of colour. Roundtable participants argued that, alongside increased data and awareness that illustrates the benefits and increased returns of investing in ethnic minority founders, investors need to see more success stories to further convince them. Role models also encourage future entrepreneurs to believe they can also build: “The importance of role models is crucial to show young people how and why they might want to consider, even in a recession, or because of a recession, the opportunities of entrepreneurship,” says Richelle Schuster, Head of Innovation Programme at Leeds City Council. 

Another suggestion raised was putting pressure on entities providing funding to ensure that they invest more equitably across the board. This could look like quotas, a code of conduct or key goals.

In addition, participants largely agreed that there needs to be improved guidance and support for founders to help them navigate more open and diverse funding sources. This isn’t to enable venture capital investors to ignore ethnic minority founders but to provide founders with greater options to increase chances of success.

Sanghamitra Karra, EMEA Head of the Inclusive Ventures Lab, welcomed the thoughtfulness and the research undertaken to provide a snapshot of the start-up ecosystem in the UK for the purpose of the report and the roundtable discussed ways to make the findings actionable irrespective of the party.

Operation Innovation

This week we launched Operation Innovation. The essay collection’s subtitle tells you what it’s all about (and what we’re all about): “How to Make Society Richer, Healthier and Happier.”

As we write in our opening, each essay addresses a key way in which the UK can improve its growth prospects, and all of them focus on how to do this by supporting and harnessing innovation. Some discuss the barriers that prevent people from innovating in the UK, looking at housing, transport, and childcare costs, as well as immigration and taxation policy. Others examine the way we support and fund science and innovation, how we regulate emerging markets, how we build a culture that supports innovators, and how we integrate the things they develop into both private and public services. A few essays deep-dive into specific sectors, such as artificial intelligence, food production, and energy systems. But in all cases we asked authors to push the envelope and point readers towards important ideas that have been overlooked.

This isn’t an impenetrable tome. Each essay is the length of a comment article, which is why others are republishing them, including our opening essay, Tom Westgarth’s essay on why we need to make AI a higher political priority, Dr Lawrence Newport’s essay on how to inspire a culture of innovation, Bella Rhodes’s essay on reforming the visa system, and Matt Clancy’s essay on how to think about science funding. Keep your eyes peeled for more in the coming days.

Taken together, the collection adds up to a serious agenda for innovation, but I’ll restrict myself to two recommendations for today.

First, Meri Beckwith, the founder of Lindus Health, which is an innovator in clinical trials, shares his company’s Kafkaesque experiences dealing with ethics committees, suggesting some changes to make the UK the best place in the world to run clinical research. 

Second, check out Harry Rushworth’s essay on how transport networks can support entrepreneurship through greater agglomeration. It’s one of a number of topics I expect we’ll delve into in more detail in a fuller paper – not least because it’s one of the more concrete ways to realise the ephemeral (in both meanings of the word) goal of levelling up the country.

You can read all the essays on our website here; read, reply, like and retweet our Twitter thread here; read, like and share my LinkedIn post here (also, feel free to connect with me); forward this email onto anyone who you think might be interested in the topic; and become a Supporter or Adviser – if you’re not so already – so we can continue to produce more unsponsored reports like this one.

Real Talk
The big news in business this week was undoubtedly the CMA’s decision to block Microsoft’s acquisition of Activision. Like most people, whenever a story of this nature drops I turn to Ben Thompson’s Stratechery to see what he thinks. It’s not great: “Microsoft is going to appeal this decision; if they fail, and pull out of console gaming entirely, the CMA will have … ensured Sony is dominant in consoles for a very long time to come.” Check out his article from last year on the history of consoles if you really want to understand why a lot of industry experts think this is a bad decision.

While the Government and regulators should be brave enough to stand up to big tech companies, it just as obviously matters if the regulators are making mistakes and if Microsoft and Activision are vehemently talking down the UK as a result. And as Ryan Bourne warns in The Times, with the creation of the Digital Markets Unit we can expect greater interventions. It goes without saying that competent competition regulators should protect consumers – but, as we have argued previously, overreach will be costly for both them and startups.

This is part of a bigger picture of decline though. In recent weeks I’ve had a table full of high-growth founders tell me that they’re planning to move their business abroad and heard anecdotes of the UK’s economic growth prospects being the butt of the jokes at international conferences. This was understandable after Brexit – in the same way that the US suffered reduced standing in the world following the election of Trump – but the US is having the last laugh with the gulf between our countries wealth per capita huge and widening. Eir Nolsøe points out in The Telegraph that back in 2008 forecasters were (reasonably) predicting the UK’s GDP per head would surpass that of the US. Jeremy Driver tells it straight: “The typical British family is now £6,800 worse off than a German family, £13,500 worse off than an American family, and, if we continue our current trajectory, is set to be poorer than a Polish family by the early 2030s.”

I don’t want to get accused of talking Britain down. We shouldn’t mock the ‘Unicorn Kingdom’ campaign as it is celebrating our genuinely incredible tech companies. This isn’t the 1960s and 70s, we aren’t the “sick man of Europe.” Just use Startup Genome’s great new tool for comparing startup ecosystems across the world for proof that we have incredible potential in our nation. It’s just there’s a great deal of ruin too. Too much.

Investors Ready

This week we launched Funding to Flourish in the House of Lords, with well over 100 entrepreneurs and investors listening to speeches delivered by Lord Leigh, the Shadow Business Minister Bill Esterson, and Will Fraser-Allen from the Venture Capital Trust Association (VCTA). As many of you will know – particularly if you signed our letter in The Telegraph backing it – the report was released last month, but this was an opportunity to take stock of what has been achieved in the interim, and what more needs to be done.

Most importantly, following our report the Chancellor committed to maintaining the Enterprise Investment Scheme and Venture Capital Trust relief past 2025, although we need the Government to set out a timeline and details of how it plans to implement the extension of the scheme.

Also, as the report recommends, the financial health requirements are still not fit for purpose. HMRC are increasingly rejecting exactly the sorts of companies these schemes are designed to target: loss-making companies with growth prospects. This needs addressing as a matter of urgency.

There is also an ongoing issue with SAFE Notes not benefiting from these tax breaks. SAFE Notes are commonly used by early-stage startups to raise capital from investors. A SAFE is a contract between an investor and a company that provides the investor with the right to receive equity in the company at a future point in time, usually when the company raises its next round of financing. Y Combinator invented them back a decade ago, but the regulators haven’t caught up.

While this report was driven by the views of entrepreneurs, it was also informed by conversations with investors, as well as the VCTA, EISA and others. That’s why alongside our friends at Fieldhouse Associates we’re launching an Investor Forum to ensure that the views of investors feed into policy in a more systematic way.

Fieldhouse is a public relations and communications agency working with many angel and venture capital investors, as well as with many fast-growth tech startups and scaleups. Many of you will know its founder Cordelia Meacher, who is one of our Advisers. 

We’re joining forces to provide a free forum for investors to have an impact on UK policy, ensuring investors are able to input into government through both The Entrepreneurs Network and APPG for Entrepreneurship, as well as established groups like the VCTA, EISA, BVCA, BAA and anyone else in this space.

It’s for investors in the broadest sense – both individual and institutional. The way this forum develops will be driven by you. So sign up today to let us know how we can work together – and please forward the opportunity on to any investors who you think might want to be involved.

The 25% 
While some policy areas are oversaturated with ideas, others remain remarkably unexplored. The intersection of disability and entrepreneurship is very much underexplored.

That’s why it’s pleasing to see a new report from Small Business Britain.

This isn’t a niche issue. The FSB estimates that 25% of entrepreneurs are disabled or neurodiverse. For its report, Small Business Britain surveyed 500 disabled entrepreneurs from across the UK, specifically those with a physical or mental impairment that has a ‘substantial’ and ‘long-term’ negative effect on your ability to do normal daily activities, as defined by the Equality Act. 

Key findings include that: 37% report they have been discriminated against because of their disability; 33% of disabled entrepreneurs followed the entrepreneurship route out of necessity; 60% did not get any support when starting their business; 59% are worried to take on debt, whilst 48% don’t know the right type of funding; 70% lack appropriate role models; 84% feel that they do not have equal access to the same opportunities and resources as non-disabled founders; and 35% say their disability has positively impacted them as an entrepreneur.

I recommend reading it in full – or, at least, dropping it into Chatpdf (other software is available) and interrogating the paper through chat.

This should be a catalyst for more policy work in this area – including, I hope, through the APPG for Entrepreneurship. It’s something we touched upon in this webinar with Lisa Cameron MP during Covid, but it remains a hugely neglected area of research. 

Operation Innovation
Next week we'll launch a new essay collection that will make the case for the power of innovation to make us all richer, healthier and happier. It something of a manifesto on topics we plan to undertake more research. Eamonn Ives, our Head of Research, has an article out today to give you a taste for what to expect:

“The effect of accumulated innovations has transformed the world at a pace that would have been unimaginable to our not-so-distant ancestors. Even a rate of 2% growth per year – what is now considered slow – if sustained year after year, results in a doubling of measured living standards in just 35 years. The gap in living standards between 1423 and 1723 may have been noticeable to a typical fifteenth-century person, but the gap between 1723 and 2023 would have been beyond even an eighteenth-century person’s wildest imaginings.”

Join us to get a copy in your inbox on Tuesday.

Remote Possibilities

Mods Are Asleep. Well, the political equivalent: Parliament is in recess. To fill the void, here’s something I’ve been turning over in my mind for a while.

During the pandemic, we published a report by Matt Clancy making the case for remote work. Crucially, it didn’t suggest government should overtly incentivise working from home – but it did explain (and correctly predict) the economics of what factors might mean the forced changes would become permanent.

This was published at a time when many business leaders and their representative organisations were making the case – vehemently behind closed doors – that government should force businesses to open up their offices, despite Covid cases being on the rise.

Post-pandemic, many business leaders and politicians can’t seem to make up their minds about what the future of work should look like, with some now wanting to make ‘working from home’ an inalienable right, and others seeming to think returning to the office should be mandatory. They should get more comfortable living with the uncertainty most of us have about the pros and cons.

On an individual basis, everyone reading this will be familiar with the advantages of working from home. Equally, everyone will be familiar with the disadvantages. How we weigh them will depend on a multitude of factors, which is why it’s best that employers and employees continue to work this out for themselves.

As reported in The Times this week, the amount of vacant office space across the UK has increased by 65% over the past three years. It’s not hard to understand why – ONS data reveals we have gone from a country where working from home was a rarity, to one where 16% of working adults reported working only from home in the last seven days, and 28% reported they were hybrid working.

The insights of Friedrich Hayek are important here. Knowledge about what’s best for individuals and companies is so widely dispersed that it cannot be planned for centrally. We should let the employers and employees coordinate this, which means letting entrepreneurs decide what’s best for their business, and employees decide the offer that’s best for them. 

It’s not to say there is no role for government. But that should be in ensuring that infrastructure and regulation in areas like internet, transport, energy, domestic and commercial property, education and so on isn’t leaving people with no choice.

There is no better alternative.

Talking of Work 
Today is the last day to apply to join The Entrepreneurs Network as a Researcher. We’ve had plenty of applications, but if our growing pipeline of projects is anything to go by it won’t be too long before we will be going out to the job market again.

Find out more about the role here. (We won’t be checking the email until Monday so you won’t be marked down if you send it through a little late.)

Talking of Tight Deadlines
The Clinton Global Initiative (CGI) and Equal Innovation have got in touch to invite us to nominate startups that may qualify for CGI Greenhouse, "a unique showcase for path-breaking entrepreneurs at CGI in the areas of inclusive economy, climate resilience and global health."

The company/NGO should fall within CGI pillars of inclusive economic growth, climate resilience, health equity or refugee/humanitarian support. Secondly, the company/NGO should have raised some capital – Seed/Series A, major government grant or major philanthropic partnership.

The deadline is Sunday, so if this is of interest, drop us an email with the name of your startup/NGO, contact information, and a brief sentence about what you do, and we’ll pass on this information over the weekend.

OK, I'll Byte

As you all already know, it’s getting increasingly hard to distinguish between tech and non-tech businesses. And while software – and now AI – eats the world (hopefully not literally), the government has yet to put in the right policies to ensure we can capture all the benefits of progress.

That’s why we’re partnering with two top organisations to talk about the future. Alongside Enterprise Nation, we’ll host ​​Benedict Macon-Cooney from the Tony Blair Institute to discuss A New National Purpose. You may remember it hitting the headlines in February because Tony Blair and William Hague put aside political differences to posit a bold, optimistic policy agenda. Now is your chance to hear more and discuss it!
 
The following week we’ll be partnering with TxP to trail our upcoming multi-authored report on how technological innovation could make us all healthier, wealthier and happier. The event will feature three of its authors: Ben Southwood on corporate R&D labs (read this for background); Hermione Dace on the future of food (read this for background), and Dr Lawrence Newport on building a culture of innovation (watch, like and subscribe for background). I hope to see you there!

We understand that these topics may not be immediately relevant for all businesses (though they are for all of you as consumers and citizens). That's why I want to assure you that we are continuously looking at policies to best support all entrepreneurs, regardless of their size or sector. We have a lot in the pipeline to reflect this. As a recent report from the Adam Smith Institute made clear in making the case for focusing more policy attention on The Forgotten Middle, this isn't just about small versus big.

Now is the Time
Every once in a while I’ll put out a call for new Supporters and Advisers to join us in our mission. Today is such a day.

We want to keep an open, dynamic network, so there won’t ever be a paywall between us and your policy needs. Nevertheless, we wouldn’t be able to do the work we do without the support of our sponsors, Patrons, Advisers and Supporters.

We’re driven by a desire to make the world a better place and we think entrepreneurs have played and will continue to play a critical role in this. If you agree, join us on this journey by becoming a Supporter or Adviser. If you want to chat about this or other ways of partnering with us, please feel free to book a time in my diary.

For those of you already supporting us: thank you.

Pause for Thought

“Should we let machines flood our information channels with propaganda and untruth? Should we automate away all the jobs, including the fulfilling ones? Should we develop nonhuman minds that might eventually outnumber, outsmart, obsolete and replace us? Should we risk loss of control of our civilization?”

These aren’t the ravings of a lunatic, but a public letter signed by many of the world’s leading entrepreneurs and AI researchers – including Apple co-founder Steve Wozniak, former US presidential candidate Andrew Yang, and, of course, Elon Musk – calling for a pause on artificial intelligence research.

For many, these concerns will seem a million miles away from their harmless dealings with ChatGPT. But as I wrote back in here back in 2018, AI technology is a risk worth taking seriously.

It’s instructive to return to that 2018 newsletter – not least because the current pace of progress suggests that AI experts were actually too conservative with their predictions:

“On average they believe AI will outperform humans in many activities in the next ten years: translating languages by 2024, writing high-school essays by 2026, driving a truck by 2027, working in retail by 2031, writing a bestselling book by 2049, and working as a surgeon by 2053.”

It’s only 2023 and GPT-4 can already perform complex tasks close to human-level performance in everything from mathematics, coding, medicine, law and psychology without special prompting.

So what’s the policy response to the incredible innovation, disruption and hard-to-quantify risk of AI? Assuming it’s not the opening gambit of a policy game of 4D chess, it’s not to call for AI research to be paused, which is a simply unworkable idea (unless you’re willing, like some, to risk nuclear war with China to enforce it). Or to ban ChatGPT, as Italy has just done over privacy concerns.

Better to focus on real issues and workable solutions – i.e. the less dramatic part of the letter calls for AI developers to work with policymakers to dramatically accelerate development of robust AI governance systems. And I don’t just mean “AI ethics”, of which there has been plenty of research. I mean work on actual alignment.

Leopold Aschenbrenner puts the case well, setting out the potential problem and solutions. In essence, governments should be spending a lot more money on this. The need for scalable AI alignment is such that the ambition of our efforts should rival Operation Warp Speed or the moon landing.

If all goes well, before too long we’ll be catching crumbs from the table.

Boxed In
Perhaps we should have got ChatGPT to plan UNBOXED. Despite claims to the contrary, Theresa May’s ‘Festival of Brexit’ has failed. The evaluation numbers have been fudged – relying on three television broadcasts, including claims of “meaningful engagement” with over 6 million people by being included in an episode of Countryfile – to claim success.

As Damian Green, Conservative chairman of the Commons’ Culture Select Committee, has said in response: “As a proposed great national festival, it clearly did not engage mass public enthusiasm, partly because of its lack of an obvious focus.”

This was entirely predictable. In fact, we did exactly that back in 2021. More’s the pity as it gives ambitious festivals a bad name. The Great Exhibition of 1851 inspired wonder in a generation of inventors, makers, creators and entrepreneurs. In contrast to people watching a short segment on a TV programme, almost a tenth of the entire population of Great Britain attended it in person, most of them returning again and again.

Building on a previous essay, our head of innovation research Anton Howes is in the process of putting the finishing touches of a report on how we could put on a Great Exhibition for the modern world. We’ll soon be going out to people for feedback and endorsements, so get in touch if this is something you’re keen to read.

Researcher, The Entrepreneurs Network

Details

• Location: London

• Salary: £28,000-£32,000 depending on experience

• Duration: Permanent

• Application closing date: 14 April 2023

The Entrepreneurs Network is a think tank which champions Britain’s most ambitious entrepreneurs. We are an independent, non-partisan organisation, and support entrepreneurs by:

• Producing cutting-edge research into the best policies to support entrepreneurship;

• Campaigning for policy changes that will help entrepreneurship flourish;

• Hosting regular events to bridge the gap between entrepreneurs and policymakers;

• Updating entrepreneurs on how policy changes will impact their business;

• Making the case in the media for entrepreneurs’ contributions to society.

We are also the Secretariat of the All-Party Parliamentary Group (APPG) for Entrepreneurship, which was set up to encourage, support and promote entrepreneurship and to ensure that Parliament is kept up to date on what is needed to create and sustain the most favourable conditions for entrepreneurship.

We are a small team that punches well above its weight in the think tank scene. Through their written output, events work, and other networking, the successful candidate will have opportunities to quickly rise up, establish a public profile and engage directly with the UK’s leading entrepreneurs and policymakers.

Role

• Assist the Founder, Head of Research and Head of Innovation Research on shaping The Entrepreneur Network’s policy agenda;

• Author briefing papers, op-eds, newsletters, and blog posts on key policy areas;

• Represent The Entrepreneurs Network at events – including delivering speeches and briefings to policymakers;

• Proactively attend events of similar organisations to build a network of policymakers, journalists, entrepreneurs and sponsors;.

• Support and lead in organising events, creating descriptions, researching and inviting speakers, attendees, and sponsors.

Skills

Necessary

• Ability to write persuasively to a high standard;

• Strong understanding of economics and public policy, plus ability to explain complex concepts to a non-specialist audience;

• Excellent attention to detail and ability to work quickly and meet deadlines.

Desirable

• Past experience of writing policy reports;

• Proven knowledge and interest in a policy areas important to The Entrepreneurs Network;

• Relevant connections who could be useful to The Entrepreneurs Network (e.g. policymakers, journalists, potential sponsors etc.)

The ideal candidate will be highly self-motivated with a strong interest in public policy. They may be a recent graduate, have previously worked in a similar role, or have a proven interest in policy. Outside of their job, they will have shown an active interest in entrepreneurship policy.

The ideal candidate will not simply wait to be assigned tasks, but proactively identify new opportunities to drive the policy agenda. Most importantly, their values will be in strong alignment with the values of The Entrepreneurs Network.

How to apply

To apply, please email your CV, a 150 word cover letter, and a list of three blogs/articles/reports you believe every policymaker should read to info@tenentrepreneurs.org.

Tricks for the Trade

“You can’t be what you can’t see.” It’s a neat phrase that highlights how other people often define what we think is possible. Not only does it rhyme and probably reflect your intuition, there is evidence that it’s true.

And what’s true for individuals is also true for businesses.

This week we released a report with Enterprise Nation on Access to Markets. One of the key facts underpinning the report is that businesses that report goods exports or imports are around 21% and 20% more productive respectively than businesses that don’t trade. Why? Well, for a number of reasons. But as the author Eamonn Ives writes in an article on his report:

“A leading theory is that firms which export are generally more ‘receptive’ to innovations – both in the extent to which they can innovate, and because there are more pressures on them to innovate, in order to stay competitive against global competition. Some have argued that the act of exporting also allows firms to learn from each other in how to boost productivity.”

In other words, businesses – i.e. their founders and employees – need to see it to be it. This was certainly something echoed by the entrepreneurs we brought together at the report’s roundtable launch in Parliament (just down the hallway from where ‘f-business Boris’ was being grilled). They talked about how they learned from their international competitors and responded to the increased competition. 

So, how do we get more SME exporters?

First, the report argues that the government should be unstinting in its promotion of free trade around the world. Free trade might be a lite passé these days, but we shouldn’t forget the lessons of our forebears like Adam Smith who demolished the mercantilist worldview in the Wealth of Nations, and Richard Cobden, who tirelessly campaigned for free trade for the good of the poorest and to broker peace between nations.

The second recommendation may seem trite, but it doesn’t make it any less necessary. We must improve the information available to SMEs that are ready to export. At present, so much about exporting is confusing. It’s maddening to hear about the bureaucracy, complexities and contradictory advice stymying wannabee exporters.

There is also clearly a role for the private sector here, which is why it is heartening that to coincide with the launch of the report Enterprise Nation announced its Go Global scheme. With support from Santander, Deloitte and An Post Commerce, this aims to offer targeted guidance to 100,000 SMEs.

Over the years I’ve heard some good things about UK Export Finance (UKEF), so I’m sure it’s deserving of the title of ‘Best Export Credit Agency of the Year by Trade Finance Global in 2021’. But I’ve also heard from entrepreneurs that think there’s room for improvement. Indeed, by its own admission, awareness of UKEF among even its ‘target audience’ of SMEs stood at just 31% in 2020. And more broadly, only around one in 10 SMEs have even heard of it and understand what it does.

The report has further recommendations, but I’ll leave you with a fresh statistic that shows how big a deal this is: “if UK exports had rebounded as strongly as Germany’s following the pandemic, it would be exporting $111bn more than is currently the case.” 

This is the first time we’ve looked at policies around exporting – it won’t be the last.

Change the UK (and the World)
As trailed last week, we’re looking for a new researcher to join us. As the job description states: “We are a small team that punches well above its weight in the think tank scene. Through their written output, events work, and other networking, the successful candidate will have opportunities to quickly rise up, establish a public profile and engage directly with the UK’s leading entrepreneurs and policymakers.”

You'll also have the questionable joy of copy editing this newsletter every week to weed out my inevitable errors!

Find out more here, and please share far and wide.

Inclusive Ventures Lab
Our friends at the Morgan Stanley Inclusive Ventures Lab are accepting applications for their 2023 cohort. The in-house startup accelerator, formerly known as the Multicultural Innovation Lab, promotes financial inclusion and provides access to capital and connections for early-stage technology and technology-enabled companies led by underrepresented founders.

On the Hunt

A week can feel like an awfully long time. Last Friday, Silicon Valley Bank (SVB) was collapsing. Following a sleep-deprived weekend for Ministers, Treasury officials, and a fair few entrepreneurs, a deal was struck with HSBC for SVB UK. Anyone reading this who helped hammer a deal together before the market opened on Monday deserves a huge pat on the back. Speed was critical – credit where credit is due.

Then we had the Spring Budget, which was very pro-business – just not for all businesses.

First and perhaps foremost, we’re big fans of full expensing, which we think will incentivise productivity-boosting investments. It’s an idea that’s been pushed by economists across the political spectrum for years – everyone from Obama’s adviser Jason Furman, to Dan Neidle (more famous for recently bringing down Nadhim Zahawi over his tax affairs), to Sam Bowman (who back in 2017 described it as “the best idea in politics you’ve never heard of”), to our 2018 report with the All-Party Parliamentary Group for Entrepreneurship. Our only criticism on this front is that Jeremy Hunt shouldn’t have limited it to three years.

Coming into the Budget, many of the country’s most innovative startups were braced for the worst on the changing tax treatment of R&D. As Eamonn Ives wrote for CapX: “For the most research-intensive businesses – those defined as firms for which R&D spending constitutes 40% or more of total expenditure – they will be able to benefit from a new higher rate of tax relief. For eligible businesses, this will return 27p in the pound on all R&D investment. Before the Budget many of Britain’s innovative startups, which plough their budgets into R&D, feared having the rug pulled from underneath them on R&D Tax Credits – so this will be an extremely welcome relief. (It must be noted, however, that this measure will provide little comfort for founders of companies that just fall short of the eligibility criteria.)”

The Chancellor’s ambition to build 12 potential Canary Wharfs across the UK is a weighty challenge. I was quoted in ConservativeHome on this: “Tax breaks and subsidies are all well and good, but critical to Canary Wharf’s success was bold planning policy – building quickly at density. In 1990 the first tower built was the 244m Canary Wharf skyscraper at One Canada Square – then Britain’s tallest building for two decades. This is the sort of ambition we need to see if this policy is going to be a success, but one that recent governments have failed to realise at scale.” As we have argued, it’s time to build.

Our research has also shown how red tape around informal care drives childcare suppliers out of the market, as does confusion around planning permission. As such, aligning staff-to-child ratios in England with Scotland is a positive and common-sense first step, but such is the scale of the problem that further reforms will also surely be necessary.

In general, it’s great to have seen the policy turn towards our agenda of entrepreneurship and innovation. However, as I wrote for Startups.co.uk, I think at the same time we (in the broadest sense of the word) need think more about what can be done to help all businesses. This isn’t about handouts and protecting businesses from necessary failure, but making sure that we have a truly dynamic economy.

Patience Please
Well below the headlines, the Chancellor announced the extension of British Patient Capital’s mandate until 2033. Across three programmes, British Patient Capital now manages assets with a total value of over £3 billion, making it the largest domestic investor into UK venture capital. A consultation on the Long-term Investment For Technology and Science (LIFTS) initiative was also announced. It aims to establish new investment vehicles to crowd-in investment from institutional investors, particularly defined contribution (DC) pension funds. 

It’s great to see successive governments take this seriously. We think it’s vital too, which is why we are partnering with the CBI to investigate the problem of why the UK sees comparatively little institutional investment (from pension funds and insurers) flow into companies through equity, and science and technology startups in particular. Drop our Head of Research an email if you want to have your say.

Aria(vederci)
A byproduct of working with some of the UK’s smartest and ambitious policy experts is that at some point they will want a new challenge.

After a slew of incredible reports, covering everything from early stage investment, procurement, and competition policy, our Head of Policy Aria Babu is moving on to her next chapter. Aria also ran our Female Founders Forum, boosting the number of high growth founders, and writing three significant reports covering the disproportionate impact of Covid-19 on female founders, the state of female entrepreneurship in the high-growth sectors such as e-commerce, fintech, and greentech, and most recently a detailed survey some of female founders who have raised over £1 million in equity.

If I had to recommend one report it would be Strong Foundations, which reveals how our rigid planning system leads to expensive housing, office space and lab space, and how this impacts entrepreneurs. By placing limits on agglomeration, we see fewer of the benefits it can bring for innovation, productivity, jobs, and more.

You can follow Aria on Twitter or connect with her on LinkedIn.

We’ll soon be sharing a job description for a new role, but any smart, ambitious policy people are welcome to get in touch now to express interest, or if you know anyone who might be interested put them in touch.

Quarterly Meetings
Alongside our dinner programme, we’re planning to start hosting quarterly meetings with our Advisers. Whether you’re already an Adviser or just an admirer of our work, drop me an email if you’re keen to host us.

To-And-FRO

This week the government released the Science and Technology Framework, or in current lingo its “plan to cement the UK’s place as a science and technology superpower by 2030.” It covers a lot of ground, but I want to focus on one announcement which we’ve been working on.

As part of the smorgasbord of plans, Rishi announced the government will be “testing different models of funding science, to support a range of innovative institutional models, such as Focused Research Organisations (known as FROs), working with industry and philanthropic partners to open up new funding for UK research. For example, this could include working with a range of partners to increase investment in the world leading UK Biobank, to support the continued revolution in genetic science.”

We’re particularly heartened by this, as we helped popularise the concept of FROs in A New Model Science – a report we produced last year with Convergent Research and the Tony Blair Institute. As our Adviser and former Research Director tweeted in a useful thread: “FROs are a new way of doing science. In effect, they apply the startup model to scientific research.” And as I wrote last year:

“FROs are designed to fill a gap in the market, solving problems too big for a single academic lab to take on, too complex for a loose, multi-lab collaboration to solve, and not directly profitable enough for a venture-backed startup or industrial R&D project to fund. 

Though nonprofits, FROs are entrepreneurial, being run by full-time technical founders who oversee 10-30 employees. They pursue specific, quantifiable technical milestones for a finite-duration (5-7 years). And as they near completion, they translate what they have built into longer-lived nonprofits or venture-backed startup spinouts.

Because these are bigger undertakings than most academic labs handle, and are focused on a very tangible, focused goal, entrepreneurs are as critical a part of FRO founding teams as scientists. As Tom Chivers put it in his first-rate article on our report: ‘If it’s not profitable, the private sector won’t fund it; if it’s too big and complicated, universities can’t do it.’

Three FROs have been launched so far, all in the United States. E11 Bio is building the key tools needed to map the connections between neurons in a mammalian brain. If successful, it could make new treatments for brain disorders possible. While Boston-based Cultivarium is building an end-to-end toolkit for cultivating currently unculturable microbes. This will accelerate the study and engineering of microorganisms for purposes such as medicine and carbon removal, which will be vital if the world is to keep global temperatures stable.”

FROs aren’t the answer to everything. But as Stian Westlake – who backed our report alongside pioneering geneticist George Church – argued in the Guardian this week, ​​the government should run more experiments – including in funding.

Y–EIS!
Following the long-term efforts of many, including Christiana Stewart-Lockhart at the EISA, Will Fraser-Allen and Justine Dugan at the VCTA, Chris Elphick at the BVCA and many more, including all of you who backed our campaign and the APPG for Entrepreneurship’s report, the Chancellor has confirmed that it is the government’s firm intention to extend the Enterprise Investment Scheme and Venture Capital Trusts beyond the current sunset on 6 April 2025.

Unlocking Investment
We are partnering with the CBI to investigate the problem of why the UK sees comparatively little institutional investment (from pension funds and insurers) flow into companies through equity, and science and technology startups in particular.

This is far from an unacknowledged issue, but most research to date has focused on regulatory issues which are barriers to more investment going to these sorts of businesses. We’re especially interested to better understand other reasons for the (lack of) supply of capital – for instance the idea that there is a cultural conservatism against equity investment.

To help inform our research, we want to speak to experts and people working in the industry for their views and opinions. Interviews can be on or off the record, and will only take 30 minutes, conducted virtually. The final output of the research will be a short policy paper which we and the CBI will use to highlight the issue and influence policymakers accordingly.

Get in touch with Eamonn Ives if you want to get involved. And we would be grateful if you could share with others in your network.

We Need to Talk About
Kevin Hollinrake, the Small Business Minister, will be joining EX23 – a Small Business Roundtable event we’re supporting with Enterprise Nation, MSDUK and the FSB. There are also lots of distinguished speakers coming over from the US too. Register for free here. I hope to see you there!