Three Big Ideas is our fortnightly roundup of ideas (and our takes on them) in entrepreneurship, innovation, science and technology, handpicked by the team.
This week, Derin Kocer unpacks why the UK’s fiscal “black hole” can’t be closed by tax rises alone, Anastasia Bektimirova explores how experimental foresight could help policymakers make better calls on emerging tech, and George Patin looks at how AI-powered “vibe coding” is reshaping startup formation.
According to the National Institute of Economic and Social Research (NIESR), “substantial adjustments in the Autumn Budget will be needed to meet the ‘stability rule’.” In plainer, more worrying words, the Chancellor Rachel Reeves will have to hike taxes in October’s budget to make up for a £40 billion deficit.
You may be wondering: why doesn’t the Chancellor simply relax those rules? While they are self-imposed, most economists believe that anything more than minor tweaks could trigger a market backlash. The lessons of recent history are still fresh, and few scenarios are more alarming than a repeat of Liz Truss’s mini-budget — an event it’s hard to describe without using the qualifier “disastrous.”
You may also wonder why Reeves doesn’t simply cut spending. Whatever your view of austerity, the recent U-turn on the winter fuel allowance suggests there is little appetite for a repeat of 2010–2019, when public spending fell from about 45% to around 39% of GDP.
So how does the Government plug that £40 billion gap?
One thing’s for sure – it can’t be on the backs of Britain’s entrepreneurs. Not just because it would be wrong, but because it wouldn’t generate nearly enough tax revenue. The pips are well-and-truly squeaking for those who have already made it, while many of those nearer the start of their journey would be minded to either leave the country or shift ambitions away from entrepreneurship.
NIESR rightly argues that Labour needs to spread the pain with broad-based tax changes. The two obvious contenders are income tax and VAT. NIESR estimates that a 5p rise in the pound on both the basic and higher rates of income tax would close the gap. However, Tom Clougherty makes a more compelling case for broadening the VAT base instead, while compensating lower-income households and introducing pro-growth tax cuts.
As Tom notes, taxes on consumption generally do less harm to long-term growth than taxes on earnings. There is also a clear opportunity to redesign VAT so it raises substantially more revenue while becoming more efficient and less distortive.
By global standards, Britain’s VAT system is unusually narrow. A mix of exemptions, zero-rating, reduced rates, and a comparatively high registration threshold means that only Italy and Romania have a smaller effective VAT base within Europe. The OECD’s VAT Revenue Ratio (VRR) — which measures actual VAT receipts against what could be collected if the standard rate applied to all consumption — puts the UK at 48.3%. For comparison, New Zealand’s broad-based VAT achieves a VRR of 99.2%. If the UK matched that breadth, Tom calculates it could bring in around £150 billion more in 2029–30.
As Tom also argues, one way to make such a reform politically and socially workable would be to use part of the extra revenue to shield lower-income households from the change. For instance, allocating roughly £75 billion to a universal flat-rate “prebate” for all adults could offset the burden on the bottom income quintiles. Another £50 billion could help meet fiscal rules, leaving around £25 billion for further pro-growth tax changes. This approach would combine a stronger revenue base with fairer distribution and space for broader reform.
On one hand, this may sound radical. On the other, it is very much in line with what eminently orthodox voices such as the Institute for Fiscal Studies have been advocating for decades. And more importantly, what’s the alternative?
Shooting Stars
Last year, I attended an event hosted by Lord Kamall of Edmonton and Purple Shoots in the House of Lords. Purple Shoots is a not‑for‑profit microfinance organisation, and the Founder Karen Davies is doing incredible work helping people escape poverty through entrepreneurship. On the day, we heard from people who had benefited from their support.
It provides small, affordable business loans, typically £500-£3,000, mainly to individuals excluded from mainstream lenders – many of whom are unemployed, on benefits, or facing other barriers
In their own words:
“Many of society’s problems have their roots in poverty and insufficient income. By enabling people to create an independent income we are tackling many other issues such as economic inactivity, poor mental health, indebtedness, child poverty, and re-offending, at their cause, creating sustainable change.”
Let me know if you would like me to make an introduction to Karen.
As subscribers to our Policy Updates will be well aware, yesterday the Government published the long-awaited Small Business Strategy. Backing your Business: Our Plan for Small and Medium Sized Businesses covers a lot of ground, but today I’ll pick out a few themes.
Alongside other business leaders and policy experts, I’m quoted in the Government’s press release, where I began by setting out the case for supporting small businesses:
“Small businesses are where opportunity begins – new jobs, new skills and new ideas. Practical help, such as being paid on time, easy access to advice and finance, and less administrative burden, makes a real difference.”
I went on to focus on what’s shaping up to be the headline announcement around late payments:
“In a world where online banking, accounting software and e-invoicing exist, it’s completely unacceptable that so many burgeoning startups see their growth stall due to late payments. At its worst, they can send perfectly good businesses to the wall – leaving Britain’s economy less dynamic and competitive. Founders in our network will hope the measures outlined today mean it is the beginning of the end for late payments.”
As our Research Director Eamonn Ives sets out in the Policy Update:
“New rules and powers will be introduced to clamp down on late payments – including stricter maximum payment terms, mandatory payment of interest on late invoices, fines against large companies who persistently pay their suppliers late and excluding suppliers who fail to pay promptly from large public sector contracts.”
Above all, it’s reassuring to know that Emma Jones CBE, the new Small Business Commissioner, will be leading on this. If there’s one thing Emma proved in building Enterprise Nation, it’s that she knows how to deliver.
On exports, the Plan restates the Government’s commitment to expand UK Export Finance’s capacity by £20 billion. As we argued, coincidentally with Enterprise Nation, in Access All Areas: Markets, there is room to expand on the successes of the world’s oldest export credit agency, particularly with regard to supporting more small and medium-sized businesses.
When it comes to backing the next generation, we’ve previously engaged with the government on the creation of a new ‘Youth Entrepreneur’ category of the King’s Awards for Enterprise, which was announced yesterday. This aligns with our belief that raising the status of entrepreneurs and innovators is an underappreciated policy lever of governments. As Ned Donovan and Anton Howes wrote in Honours for Innovators:
“Raising invention’s status and prestige was crucial to how Britain first got its reputation during the Industrial Revolution as the best place to innovate. Invention came to be seen as a viable and attractive career path, not just financially but in terms of the social standing that could result from it – something that was purposefully cultivated by those seeking to improve the country’s technological prospects.”
Turning to regulation, the Government is making the bold promise to reduce the administrative costs of regulation for SMEs by 25%. This is quite the claim, and one which, if it is to be achieved, deserves some serious thinking.
It goes without saying that no matter who has been in power, business regulation in the UK has only grown more burdensome. Even well-intentioned drives to cut through red tape have invariably failed. And we don’t just need to slash regulation, we need nothing short of a digital transformation of government to truly allow entrepreneurs to focus on growing their businesses, not grappling with bureaucracy.
All of this is to say that Gareth Thomas MP, the Small Business Minister, has an unenviable task on his hands. Viewed more positively, however, he has a great opportunity to leave a profound legacy: the unburdening of business bureaucracy.
Easy as ABC
The All-Party Parliamentary Group (APPG) for Entrepreneurship, of which we are the Secretariat, is ramping up with our first project. We’re putting together an A-Z of Entrepreneurship and we want your help.
So we’re asking, what would your A-Z of Entrepreneurship include? For the letter ‘A’, would you pick – Accelerators, the Advanced Research and Invention Agency (ARIA), or the Annual Investment Allowance (AIA)? Or perhaps we need all three. You don’t need to give us every letter, but feel free if you’re on a roll. And good ideas for ‘J’, ‘Q’, ‘X’ and ‘Z’ would be particularly appreciated.
The ideas and some of the writing will be crowdsourced, so there may also be an opportunity to write an entry.
Reach out to Eamonn with your thoughts, and drop me an email if you want to sponsor the project.
Value Creation
Substack is now a unicorn. While we only recently moved our newsletter over to this platform, we’ve all been big fans for a while and I would recommend others make the leap of starting or moving their existing newsletter over here. We’re now benefitting hugely from the network effects of the platform, growing our readership much more quickly, which includes our network of entrepreneurs.
So who else should you follow? Well, here’s who we recommend for those interested in entrepreneurship policy, innovation and economic growth more broadly. Let us know if you think we’re missing anyone.
Buzzwords
Meera Shah, Head of M&A Advisory at Buzzacott has joined us as an Adviser. Meera specialises in advising institutional and founder shareholders through exits, whether to private equity or large corporates.
As Meera kindly writes:
“I really admire The Entrepreneurs Network’s work, particularly its strong political and policy focus which sets it apart from other broader entrepreneur groups. Since becoming a board member of the ICAEW’s Corporate Finance Faculty, I understand how important it is for industry groups to lobby for potential changes that align with and protect the best interests of their sector [...] I believe The Entrepreneurs Network’s wider remit is crucial to nurturing a founder-friendly environment in which to build and grow a business in the UK.”
If you’re keen to join Meera in supporting our mission to make Britain the best place in the world to start and grow a business, get in touch.
Today’s Policy Update looks at the Small Business Strategy, or, to use its government-approved title, Backing your Business: Our Plan for Small and Medium Sized Businesses.
Regular readers of our work will know that Britain’s 5.5 million small and medium-sized businesses (defined as any business that employs fewer than 250 people) make up the overwhelming majority of the total business population – fully 99.8% at the last count. They’re responsible for three fifths of total employment, or 16.6 million jobs in absolute terms. And they account for just over half (52%) of all private sector turnover – a staggering £2.8 trillion.
In short, small businesses are a big deal – and getting policy right here matters. Only by properly supporting our nation’s fledgling startups can we hope that they stand a chance of scaling into mature firms of a significant size.
In this Policy Update, we’ll go over some of the new ideas and more developed policies in the Strategy, and explain what they might mean for Britain’s entrepreneurial community.
🇪🇪 Anastasia Bektimirova, Head of Science and Technology
It’s hard not to pause when you come across a public sector programme whose motto is “making illegal things legal.” That line belongs to Accelerate Estonia, an innovation lab in the country’s Ministry of Economic Affairs and Communications, set up to identify and fix regulatory barriers to innovation. I first came across it in a characteristically insightful episode of the Statecraft podcast, discussing Estonia’s digital state.
Accelerate Estonia helps businesses overcome obstacles by shaping policy and, where needed, proposing legislative changes, so innovative ideas can operate lawfully from Estonia rather than stalling in a sandbox or moving overseas. Applicants are filtered for a clear need for regulatory change, scalability potential, and a ready-to-pilot concept. The focus is explicitly B2B/B2C rather than selling to government. This model sets ambition (open a market) and backs it with the unglamorous mechanics that move the needle.
What stands out is the delivery discipline. Validation stage (1-3 months) tests whether there’s a genuine legislative issue, the likely economic impact, and whether the solution is mature enough to pilot. Definition stage (3-6 months) turns that diagnosis into a delivery plan: pinning down the rule change required, the pilot and impact analysis, stakeholders and budget, and the specific R&D value. Proof stage (6-18 months) is focused on execution – draft the amendment, run the pilot, carry out the public-private cooperation plan. Finally, the results/aftercare stage presents the amendment to relevant parts of government, communicates the newly opened market, concludes cooperation, and reports the R&D value.
The method has proven to work in various domains. In health, Accelerate Estonia and the Ministry of Social Affairs have taken a self-service pharmacy model to the finish line, with amendments to the Medicinal Products Act now being introduced so 24/7 automated dispensing can legally enter the market. In education, a pilot led to draft changes to the Basic School and Upper Secondary School Act to let schools procure teaching from external providers.
As the UK builds out the Regulatory Innovation Office, tasked with reducing the burden on businesses bringing new products and services to market by supporting regulators in updating rules and speeding up approvals, Accelerate Estonia could offer a lesson in how to operationalise it. In practice, that would likely mean pairing pilots with a relevant regulator from day one, running regulatory analysis alongside technical work, and defining ‘graduation’ as a safe, evidence-based rule change that opens a market.
🏗️ Philip Salter, Founder
Over on Slow Boring, Matthew Yglesias dishes out some useful policy advice to those looking to get more housing built in the US. Yglesias argues that campaigners shouldn’t ditch YIMBYism’s single‑issue focus while building out a broader, moderate urban reform coalition that links housing to public safety, transport and schools.
This strikes me as correct and more widely applicable. Whether you agree with them or not, the success of campaigns by the likes of the Living Wage Foundation, Migration Watch and the Campaign for Real Ale (CAMRA) testifies to the power of single‑issue focus (or perhaps monomania in some cases).
As a generalist, I’m grateful for single‑issue specialists – both the internal and external authors of our reports and, more broadly, those whose outside ideas we can adopt. For example, in our own work on planning reform – the topic of Yglesias’s article – we integrate ideas from specialists beyond our domain: Samuel Hughes and Ben Southwood on Street Votes; Paul Cheshire on the Green Belt; Ant Breach on change‑of‑use rules; and Tim Leunig on land auctions.Our added value is to make the case through the lens of entrepreneurship and to build a coalition of entrepreneurs who back these reforms.
I often quote the 33rd US president – “It is amazing what you can accomplish if you do not care who gets the credit” – especially when another organisation claims credit for something we’ve helped to make happen. But the truth is that we’re all part of an ecosystem that relies on coalitions to bring about the change we want to see in the world.
📈 Eamonn Ives, Research Director
For the last two weeks, there’s been a sentence from the latest chapter in Jason Crawford’s peerless Techno-Humanist Manifesto that I’ve struggled to shake from my head:
“[A]nnual growth rates in world GDP were less than a hundredth of a percent in the stone age, a fraction of a percent in the agricultural age, and single-digit percentage points in the industrial age. If this pattern continues, a fourth age would eventually produce sustained double-digit growth, meaning a world economy doubling time measured in years.”
If past performance is any guide, future economic revolutions will arrive faster than the last. We may now be at a point where people alive today could live through multiple eras in a single lifetime.
There are no prizes for guessing which technology is poised to usher in the next such one. Just as steam powered our transition from an agrarian to an industrial economy, artificial intelligence may do the same for cognitive work – potentially propelling us towards unimaginable levels of prosperity, as autonomous robots relieve us of countless tasks and AI helps unravel the mysteries of the universe.
Given the speed of recent AI breakthroughs, it’s easy to assume that its continuing advance is inevitable. But that would be a mistake. Every epoch defining technology has had to contend with political constraints and public scepticism – and these are forces that no model, no matter how advanced, can necessarily navigate alone.
We should expect plenty of ‘Red Flag Acts’ which curtail AI deployment in sensitive areas like autonomous vehicles, healthcare or criminal justice. And don’t forget – even centuries after agricultural mechanisation began, large parts of the world’s farming industry would be disappointingly familiar to our ancestors. The diffusion of innovation is seldom as smooth or swift as we might wish.
For all its transformative potential, AI’s impact will depend not just on computational power, but also conventional politics. Unless we grapple with that fact, the future may unfold more slowly – and unevenly – than many anticipate.
This week started a day early for us, with Hannah Prevett in The Sunday Times kicking off a flurry of media coverage for Full Speed Ahead, our latest report that probes how Britain can upgrade its network of startup support programmes.
As our Patron, Steve Rigby, writes in his foreword for the report:
“The problem is not a lack of public money. Each year, local and central government backs hundreds of incubators, accelerators and regional growth hubs. What is missing is coherence. Too much funding is awarded on short grant cycles with scant evaluation, leading to a long tail of well-intentioned but underperforming programmes.”
We conclude the report with four requests. First, the creation of a taxonomy and accreditation scheme for support programmes, tying public funding eligibility to minimum standards. Second, the adoption of a dual-track assessment that captures both company performance and entrepreneurs’ development.
Third, we’d like to see short-term grants replaced with 3-5 year outcome-linked support plus rolling reviews and bridging finance. And fourth, we’d like to see demand-led funding vouchers piloted, redeemable with accredited providers.
In essence, we want to put the interests of the founder front and centre. As Anastasia argues over on our Substack, the way we measure success is central to this:
“As impressive as charts showing ‘total investment raised by alumni’ may look, they only reveal which companies were visible at the end, not whether the support system helped people progress as individual entrepreneurs. Founders often move through multiple programmes, so attribution blurs and long-term capability building disappears from view. Adding the entrepreneur as an additional unit of analysis and tracking progression over time – skills gained, roles taken, ventures started or joined – and linking those trajectories back to the support they used, would shed more light on what works.”
This is how entrepreneurial ecosystems learn and improve:
“It then becomes easier to check how the funnel is behaving: are enough founders with the right competencies emerging at pre-seed? Are they progressing to seed and Series A on schedule? Where are they stalling? What kind of intervention helps them move again? Getting clarity on questions like these would be invaluable for a better understanding of progression, and enable adjustments to support accordingly.”
But here, we should tread carefully. As Goodhart's Law and Campbell’s Law remind us: “When a measure becomes a target, it ceases to be a good measure.” In other words, if we focus too narrowly on metrics like investment raised or survival rates as proxies for impact, we risk distorting behaviours and overlooking what really matters: long-term entrepreneurial development.
While the media coverage is welcome, we’ve been overwhelmed with the support and insightful reflections from the business support community in the UK and across the world. For those wanting to take part in the debate, I’ll point you in the direction of the many comments on my LinkedIn post, the post and article by Rachel Stockey of King’s College London, as well as Steve’s post.
While we obviously take responsibility for the policy, the ideas came about from deep engagement with those on the frontline. Whether that’s Jonathon Clark of Capital Enterprise, Hamish McAlpine and Fabio Bianchi of Oxentia, Neil Marshall of Change School, Chris Fellingham of Kindling Ventures, David Herbada of Zinc Ventures, Steve Aicheler of Enterprise Educators UK, Laura Bennett of the Enterprise Hub at the Royal Academy of Engineering, Tom Forth of The Data City, independent adviser Jamie Clyde, James Phipps of the Innovation Growth Lab, Gareth Jones of Townsq, as well as the many more we’ve spoken with over recent months.
The Government should take the reaction to our report as a strong signal that this is an area of policy that is ripe for reform. Ours isn’t the first or last word on this, but with your help, it looks likely to be the catalyst for change.
If you would like to be notified the same day a report launches, fill in this form or join our WhatsApp Community.
The UK’s startup support landscape is busy, but not always easy to navigate. Based on our recent paper, Full Speed Ahead, we wrote about how the UK can build on its network of initiatives by improving strategy, funding models and impact measurement.
I’m no economic forecaster, but the latest unemployment figures and inflation data suggest that there may be some storms – or at least some drizzle – on the horizon. Britain’s official unemployment rate rose to 4.7% in the three months to May, up 0.1% from April to reach the highest level since June 2021, while last month inflation rose to 3.6%.
This concern for the wider economy was reflected in the results of our inaugural Entrepreneurs Survey (though, true to form, entrepreneurs were bullish about their own businesses’ prospects).
The unemployment increase is the result of the £25 billion increase in Employer National Insurance Contributions and a 6.7% rise in the National Living Wage. As Richard Parrington writes in The Guardian, “the evidence would suggest a clear impact from the chancellor’s tax-raising measures. Figures released on Wednesday showed inflation rose by more than expected in June as firms passed on higher employment costs to the price of restaurant meals, hotel stays and supermarket groceries.”
Some entrepreneurs may feel temporarily emboldened by the shift in power between employers and employees, and by easier access to talent. But more importantly, rising unemployment reduces demand across the economy. While we may see more necessity entrepreneurship, opportunity-driven entrepreneurship – the real engine of innovation – tends to decline.
The key under these circumstances is turning necessity into opportunity.
That’s why the government should consider reinstating a form of the Enterprise Allowance Scheme (EAS), which supported unemployed people who set up their own businesses. While it was an initiative devised by the late, great Lord Young for Margaret Thatcher’s Conservative government to try to temper high unemployment at the time, it’s very much ‘left coded’ and was embraced by creators who were otherwise not fans of Thatcher (to say the least).
As I wrote last year in Empowering the Future, written in partnership with Youth Business International, the original EAS was instrumental in supporting now-renowned entrepreneurs such as Superdry’s Julian Dunkerton, Creation Records’ Alan McGee, and the artist Tracey Emin.
Nearly two-thirds of EAS participants continued to run their businesses 18 months after enrolling, and one-fifth of these businesses employed at least one additional person. According to World Bank analysis, the cost per job created under the EAS was approximately £1,729 at that time, equivalent to around £6,000 today. That’s remarkably good value compared to paying benefits and other interventions.
The EAS was eventually replaced by the much less generous New Enterprise Allowance (NEA), which has also been discontinued.
It goes without writing, I hope, that there are many more policy interventions – indeed, some more urgent – needed to fight unemployment. Not least, we must decrease the taxes on employment, not bring in regulations to disincentivise hiring, liberalise planning to increase labour mobility, and ensure job-creating immigrant founders can continue to stay and thrive in the UK.
But if unemployment returns to levels seen in the early 1980s, early 1990s, or late 2000s, the umbrella of a revamped EAS could be essential.
In the Works
Are you a student or recent graduate excited to break into public policy work? Or perhaps you’re working in another field and are just curious about entrepreneurship policy? If so, we have formalised work experience opportunities that give highly motivated people a front-row seat to how entrepreneurial ecosystems work and how evidence informs policymaking. You may even get the chance to write something for us, as Florian Gosler did in this week’s Three Big Ideas. Find out more here.
It’s a Feature
Regular attendees of our events won’t be surprised to hear that around half our network is made up of female founders. Much of this is a result of our Barclays-supported Female Founders Forum.
At the forefront of this work are the 100+ featured members who have contributed to our events and reports over the years. As I’ve shared previously, this year’s report will focus on university spinouts, so it would be great to get requests for interest and nominations for female-founded spinouts we should speak with and feature as case studies in this new report and featured as members on our website. Let us know.
🙎♀️ Eamonn Ives, Research Director
One of the longest-running research projects here at The Entrepreneurs Network is our Female Founders Forum. Through the Forum, we seek to encourage entrepreneurship among women in Britain, as well as highlighting the obstacles that hold them back – such as the gaping gender equity gap.
Data like this is critical ammunition for making the case that further change is required to give women entrepreneurs an equal shot at success compared to their male counterparts. Therefore, while their findings are far from positive, a new research paper from Camille Hebert, Emmanuel Yimfor and Heather Tookes, is a welcome contribution to the evidence base around the role of gender and startup financing.
In their dataset of venture capital-backed American companies, they not only find that women comprise just 13.3% of founders, but also that this figure actually shrinks to a mere 4% when looking at founders who have started three or more companies. This is perhaps counter to what one might expect, given that serial entrepreneurship is at least correlated with startup success.
Unfortunately, the bad news doesn’t end there. The authors’ analysis also reveals that:
“[W]omen serial founders are penalized with smaller VC deals following failures of their prior startups but they are not rewarded with larger deal sizes following past successes. By contrast, men are rewarded for their prior experiences as founders, regardless of whether their startups were failures or successes.”
And it gets worse still. They further identify a negative spillover effect that occurs when a female-founded startup fails in an investor’s portfolio – whereby the value of subsequent deals involving women-led companies falls by between 6.7-7.5 percentage points over the next five years.
What policymakers should make of all this is not straightforward. It points to the root cause being a more societal issue – whereby female founders are punished via a mixture of bias and stereotyping. Perhaps more than anything, changing that will require VCs themselves to ensure they are not – even unconsciously – discriminating against female founders.
An economy can hardly hope to fire on all cylinders if it doesn’t unleash the full potential of one half of its population. While stories of fantastic women-led businesses are becoming more common, data like these underscore just how much further we have to go.
🌱 Anastasia Bektimirova, Head of Science and Technology
Behind every spinout is a system that knows how to cultivate the entrepreneurial mindset in scientists. Massachusetts Institute of Technology (MIT) wouldn’t be the last place to look up to in that respect – its Technology Licensing Office handled 593 new invention disclosures in 2023 and supported 23 startups to spin out that year, adding to a total of nearly 600 spinouts since 2000.
Last week, Professor Dame Fiona Murray, Associate Dean of Innovation at MIT School of Management, told the House of Lords Science and Technology Committee what MIT gets right about preparing innovators. Entrepreneurship training is woven into the fabric of postgraduate programmes, sending a clear signal that launching a startup is a valued career path and rewarding academics for commercialisation in the tenure process. MIT also creates cross-disciplinary opportunities, such as bringing together STEM PhD candidates with business school students to focus on turning ideas into businesses.
This is part of undergraduate training too:
“…what our undergraduates, particularly our technical undergrads, find most interesting are the courses where we put interesting problems in front of them. They are doing engineering work or scientific work focused on a real problem, and we then wrap innovation education around it. What would it take to turn that into a real product? The education is a lot less about writing a business plan. We try to weave it into existing classes and a number of extracurricular things.”
Equally important is providing infrastructure support. Many deep tech founders spend their early funding – the first $5 million, according to Murray – replicating university equipment just to repeat the experiments. MIT has responded by opening its core facilities to alumni startups on easy terms and without IP reach-through. As she noted, “the government have paid for the equipment, so it is part of economic growth” – framing shared infrastructure as a smart use of public investment rather than university generosity.
When asked about the early signals of research with the potential for successful commercialisation, Murray pointed to two main characteristics: timing and people. The strongest ventures emerge when the scientific risk has been reduced but engineering challenges remain – essentially, the moment when science is proven but building a prototype requires additional work and funding. Equally important is having the right team: a motivated PhD or postdoc who is ready to lead the company, supported by a professor who believes in the idea but doesn’t try to run it. “Most professors are terrible CEOs,” she noted. Moderna exemplifies this model, where timing and team dynamics aligned with well-developed research. What matters is a small, aligned team with ambition, trust, and a well-timed leap.
💼 Florian Golser, Intern
Now encompassing over 1.7 million individuals in the UK alone, the gig economy has become one of the defining features of the modern world of work. On paper, this benefits both individuals and firms by better matching the supply and demand of labour, granting workers more opportunities to earn, and giving businesses that contract them greater flexibility. Academic evidence has even shown how gig work platforms can increase entrepreneurship, ultimately keeping markets dynamic in the long run.
Despite this, the rise of the gig economy is not without its critics. To be sure, even its biggest proponents would readily admit that the gig economy has drawbacks that may warrant further inspection. Due to the remote nature of many gig economy jobs, freelancers may face strong international competition, and thus be forced to accept lower wages. Most receive no benefits and nearly 500,000 earn too little to qualify for Statutory Sick Pay. Only gig workers with ‘employee’ status qualify for minimum wage, while those who are deemed self-employed – which remains the norm – are left with few legal protections to fall back on. While gig work can empower individuals to launch something of their own, further reforms could help to ensure the gig economy truly can serve as a springboard for genuine entrepreneurship.
One promising change would be the introduction of portable benefits – employment protections like sick pay or pension contributions that follow workers across jobs and platforms. This would preserve the flexibility that makes gig work attractive, while extending key advantages of traditional employment. Last Monday, Republican Senators in the US proposed a bill that would allow companies to offer benefits to gig workers without reclassifying them as employees. Although the scheme would be voluntary, it marks a step in the right direction – and is something that the UK should seriously consider replicating.
Alongside this, introducing targeted tax credits for freelancers – similar to schemes in most OECD countries – could help reduce financial barriers to self-improvement and entrepreneurial risk-taking. Currently, the self-employed cannot claim relief on training that develops new skills. According to a 2023 report by IPSE, 51% of freelancers undertake no training, and those who do spend an average of £828 – a figure that does not include the opportunity cost of time spent away from work. By removing this barrier, the government could help unlock entrepreneurship among its growing population of gig workers, and begin addressing the UK’s productivity gap.
The big news this week was yesterday’s Government announcement of a £400 million package to back investment fund managers from underrepresented backgrounds, as well as an extra £50 million into female-led funds to support the aims of the Invest in Women Taskforce.
From 2026, the British Business Bank will deploy a £400 million programme aimed at women, ethnic minorities, people with disabilities and communities from deprived areas. The initiative will expand its Enterprise Capital Funds so that more diverse managers can access early-stage finance, while also boosting investment in micro-funds of around £10 to £15 million – the first rung on the venture capital ladder for emerging investors.
Alongside this, the Bank will work with venture capital partners to provide modest capital injections and training for talented individuals who lack personal wealth or industry connections, helping them build a track record and break into investing.
This aligns very nicely with the sorts of arguments we’ve made through our Female Founders Forum, which we’ve been working on with Barclays for nearly a decade. Also, back in 2022, Anisah Osman Britton made the case for the British Business Bank supporting more diverse fund managers in a project we undertook with Morgan Stanley.
As Andy Davis, Co-Founder of 10x10, argued at the time:
“It’s probably unrealistic to force private angel-owned funds to change their behaviour. The way they invest is going to be at their discretion, and they are going to do what they want. But I do think the BBB [British Business Bank] is the answer. It should be made to invest in diverse fund managers. That’s the simplest and most straightforward solution.”
If these interventions are going to be a success, the British Business Bank needs to make sure the hands of the fund managers aren’t tied too tightly though. On that front, Leo Ringer at Form Ventures has a brilliant article on the many, varied and confused definitions of what it means to “back British businesses” across government and the rules that flow out of this.
For example, the Enterprise Capital Funds programme, which is where yesterday’s announced initiative sits, has recently swapped its “demonstrable UK benefit” rule for a tight four-part test. Funds now need a UK principal place of business and two-thirds of executives tax-resident here – conditions unseen in other policies – and they must hold a UK parent company. This collides with the rising trend of British founders placing a Delaware entity to woo US capital.
I recommend reading Leo’s article in full, which unpicks lots of definitional differences across the whole startup ecosystem.
Wealth of Knowledge
I know where our comparative advantage lies, so today I’ll draw just share a paragraph from the IFS’s statement in response to speculation that the Government might bring in a wealth tax:
“In practice, implementing a wealth tax would be difficult. It would require the government to set up a new administrative apparatus to value wealth – and valuation would be extremely difficult for some assets, such as private businesses: it is much easier to observe and tax the stream of income they generate. An annual wealth tax would need to apply broadly to all assets to ensure that it was not easy to avoid. Such a tax could raise significant revenue if it applied to the bulk of the UK’s wealth – that would include the homes and pensions of the middle class. Trying to raise large amounts of revenue from only the very wealthy would make the UK a less attractive place for those people to live.”
Get Connected
At the end of the month, we’ll host our second TEN x Connected.Ventures: Ecosystem Builders Meetup at the London School of Economics. This project is all about connecting the connectors, and we’re now committed to quarterly meetings of the group. Those who are accepted onto an event are also invited to join the WhatsApp group, which will hopefully grow into a way to reach the UK’s ecosystem builders in one place.
Clearly, we would be missing a trick to just do these in London, which is why we’re looking for partners to take this on the road. Get in touch if you’re as passionate about this as we are.
To hunker down, or not to hunker down, that is the question I explored in our fortnightly Big Ideas feature. While I sympathise with the advice that entrepreneurs should focus on what they can control, I don’t think this means they should just mind their own businesses. Instead, I suggest they venture into the world of policy and find a way to “channel their rage” (or whatever emotions they‘re feeling).
As if to prove my point, yesterday we saw the Government shelve reforms to Companies House that would have required businesses to file their accounts in a more onerous manner. Under legislation brought in by the previous government, small and micro companies would have had to disclose their profit-and-loss statements for the first time as part of their annual accounts.
This volte-face didn’t happen by chance, but because lots of business owners and business groups alerted the Government about the impending problem. While governments don’t listen to every gripe, if we can make a strong case that entrepreneurs are actually aggrieved, and that it will negatively affect the economy and, potentially, as a consequence, politicians’ election prospects, they’re all ears.
Also, many of the UK’s most exciting startups are in sectors where ignoring politics and policy isn’t a choice – whether because they’re in a highly regulated market, or because it’s a completely new one where policy is still evolving.
Here are just three examples. If you want to run a consumer-facing website, game or social app that children might use, you must comply with the Online Safety Act. If you want the NHS to buy your software, devices or supplies, your tender must include a Carbon Reduction Plan. If you want to offer budgeting tools, payment initiation or any service that connects to UK bank accounts, you have to implement Strong Customer Authentication under the FCA’s PSD2 regime.
All that being said, there are exceptions that prove the rule. Just this week, I received a bulleted list from an entrepreneur setting out how to reform the entire tax code. It happened that I agreed with quite a lot of it, but I don’t fancy his chances of convincing the Chancellor when the peerless Mirrlees Review hasn’t succeeded yet. There is no point in fighting a lost cause.
Also, not every idea is one worth pursuing. Entrepreneurs or business groups can come up with bad policies. Sometimes they don't adequately understand the problem or justify government intervention. Sometimes the policies are poorly constructed, too costly or impractical to implement. Sometimes they are impossible due to the political landscape or public sentiment. Sometimes they would undermine good governance. I could go on.
But all in all, we are definitely underweight in getting the insights of the UK’s innovators into government. Those creating wealth, jobs, and on the front line of regulation should have a louder voice. And when we band together, we believe we can make a difference. I ended my article on the other Substack with this quote from Margaret Mead, and I hope regular readers will forgive me for doing so again:
“Never doubt that a small group of thoughtful, committed citizens can change the world. Indeed, it is the only thing that ever has.”
Lords A-Leaping
This week, we introduced some of the members of the Young Entrepreneurs Forum to investors (including the youngest partner ever at A16z), but now comes the think-tanking. And for that, we need to hear from the next generation. There are three easy steps:
First, join the Young Entrepreneurs Forum by filling out this short form. Second, answer these questions – your insights will shape the report, and you may be quoted or featured as a case study (if you want), which could gain you media attention. Third, once you’ve done that, request a place at the report launch in October.
Lab to Launch
We’re embarking on research for our next report in the Female Founders Forum series. This time we’re focusing on spin-out founders. We want to understand three key things:
What speeds up or slows down the path from research to company?
How do negotiations over equity, support and funding play out?
Are the 2023 spin-out policy reforms making any real difference on the ground?
If you’ve recently founded (or are in the process of founding) a university spin-out in the UK, we would love to learn from your experience. We’re equally keen to hear from those who support spin-outs – whether you work in a TTO or advise academic founders independently. If that sounds like you, drop Anastasia a line.
Three Big Ideas is our fortnightly roundup of ideas (and our takes on them) in entrepreneurship, innovation, science and technology, handpicked by the team.
This week, Philip Salter discusses that entrepreneurs shouldn't just "hunker down" – because governments listen when founders make strong cases, Anastasia Bektimirova writes about different science advice systems, while Jessie May Green reflects on London Climate Action Week.
🗣 Philip Salter, Founder
As one of the world's best journalists covering innovation and entrepreneurship, I have a lot of time for John Thornhill, Innovation Editor of the Financial Times and founder of Sifted.
Reporting on our inaugural survey of entrepreneurs, he shares our key finding that just 4% of founders thought the government understood their needs as entrepreneurs, and only 19% were optimistic about the prospects for the economy over the next 12 months.
Thornhill writes approvingly about our efforts to change this, though he offers a piece of advice I would quibble with. He thinks, “raging against the government may be rather like complaining about the weather: fun but futile. Britain’s startups may have to hunker down and wait for the storm to pass.”
While there is a lot of wasted breath, I think a better piece of advice for founders is learning how to channel their rage. I would say this (I guess), but we and other organisations offer a platform for their voices to be heard and amplified. Governments don’t listen to every gripe, but if we can make a strong case that entrepreneurs are actually aggrieved, that it will negatively impact the economy and, potentially, as a consequence, their election prospects, they’re all ears.
We are seeing this play out around the proposed Employment Rights Bill, but I could cite countless examples. Indeed, entrepreneurs have changed the course of history, most notably in the 19th century, when northern manufacturers and businessmen like Richard Cobden and John Bright formed the Anti–Corn Law League, leading to the repeal of the Corn Laws, which set Britain firmly on the path towards free trade.
Margaret Mead was right: “Never doubt that a small group of thoughtful, committed citizens can change the world. Indeed, it is the only thing that ever has.”
🎛️ Anastasia Bektimirova, Head of Science and Technology
In Science and Politics by Ian Boyd (a former Chief Scientific Adviser at Defra), a comparison of science advice models caught my attention. Ian writes:
“...the British/American Model for a science advisory system…focusses on placing key scientists close to the seat of political power. It contrasts with what could be called the Continental Model of advice (because it is common in Europe). Advice, in that case, is most often delivered using a committee-based structure where scientists are asked questions from within the politics factory and they provide an answer often by consensus in the form of a committee report.”
Ian also suggests that legal systems may nudge countries towards one model or the other. In many civil-law jurisdictions, advisers can face personal liability if their guidance is judged negligent. For example, after the 2009 L’Aquila earthquake, Italian prosecutors initially charged government risk commission members for allegedly providing inadequate warnings to the public, though most were later acquitted on appeal. The case was still widely read as a warning to scientists everywhere. Such cases reinforce Europe’s tendency towards caution and collective, precautionary advice. Hence the EU’s long, committee-led deliberations on issues such as gene-edited crops, which are thorough and transparent, but often mired in regulatory limbo as member states disagree.
But while the binary is useful, reality proves messier and more interesting. Even the UK, often cited as the “scientist-in-the-room” model, has in practice stitched individual and collective channels together through a web of committees, the Council for Science and Technology (CST), SAGE for emergency response, and a network of Chief Scientific Advisers (CSAs) – all of whom pull in outside experts. The CST surfaces long-range, cross-departmental issues, departmental CSAs bring discipline-specific depth, and crisis response panels like SAGE mobilise outside expertise quickly. The system might appear personal but is underpinned by networks and committees that distribute expertise and responsibility.
Systems of science advice rarely rely on one model, and that’s a good thing. History shows that flexibility matters. On one hand, Thatcher’s personal science aide in No. 10 managed to steer a policy shift by convincing her to prioritise funding for curiosity-driven basic research over near-market projects – a move pushed through despite the scepticism of the government’s science committees at the time. On the other hand, when faced with a sensitive issue of embryonic research, Thatcher opted for an external committee to handle the evidence gathering and moral deliberation, rather than relying on a single adviser’s judgement.
Effective science advising requires not picking sides but mixing tools. Individual advisers deliver swift, agile, context-aware input, while wider expert groups provide legitimacy, depth and political resilience. The most successful approach is to treat each model as complementary, using each when it plays to its strengths, so that sound science advice finds its way into policy.
🏙️ Jessie May Green, Events and APPG for Entrepreneurship Coordinator
Inauspiciously, London Climate Action Week 2025 was sweltering. Heatwaves in June were once expected to occur every fifty years, and yet we’ve just had two in a single month. It quickly became clear that Britain’s infrastructure is simply not built to cope with the increase in out-of-the-ordinary weather, almost certainly brought on by anthropogenic climate change.
Warnings were issued to hospitals and care homes regarding the risk of heat stress in vulnerable patients, and Tube and rail users were prepped to expect disruptions due to high track temperatures. Bedfordshire Council even sent out road gritters to prevent melting tarmac, and London’s fire chief cited the risk of wildfires as ‘severe’.
The consequences of out-of-date infrastructure were clear when the London School of Hygiene and Tropical Medicine gave its prediction that the UK will experience the fifth-highest number of heat-related deaths out of all European countries between 30 June and 4 July 2025. Short-sightedness and underinvestment have fed this lack of preparedness in the UK for decades – but it’s not too late.
The good thing about London Climate Action Week co-occurring with this heatwave is that there were plenty of hopeful tales to cut through the disruption. Innovation is happening all over the country (and, indeed, the world) for the purpose of making UK towns and cities cleaner, greener, fairer, and cooler. For example, Fornax – finally making heat pumps affordable; NatureMetrics – enhancing nature monitoring using eDNA; and Glitch – a cyberbug bot that helps Londoners design their own biodiverse garden.
To support these innovators, we at The Entrepreneurs Network will continue to champion entrepreneurs to make the policy landscape as supportive as possible. If you are a climate tech founder and would like to discuss your experiences starting or scaling your business in the UK – please get in touch.
It’s been a big week of media coverage for us, as we launched our inaugural Entrepreneurs Survey. As Eamonn Ives, our Research Director, wrote for City AM:
“Last week, the government announced that serial entrepreneur Alex Depledge would be joining the Treasury as Britain’s first-ever entrepreneurship adviser. New polling from The Entrepreneurs Network suggests that this appointment couldn’t come soon enough. Fully 84 per cent of founders we surveyed do not believe the government understands their needs as entrepreneurs, compared to just four per cent who do. If it’s any consolation to Rachel Reeves and Sir Keir Starmer, founders aren’t exactly wowed by any of Britain’s other political parties – 43 per cent replied ‘none of the above’ when given a choice of which party they trust most to know what they and the startups they lead require.”
So what’s driving the current malaise? In a word: tax.
As I said to Henry Bonsu on Times Radio yesterday in response to the British Chamber of Commerce’s Annual Conference (go to 18:30 to listen), Shevaun Haviland is right to call for “no further tax increases on business in the autumn budget.”
Our survey shows that 84% of entrepreneurs have a negative view of taxation (only 8% positive), and the 1,000 founders who signed our letter against equalising Income Tax and Capital Gains Tax shows this has become a – if not ‘the’ – major gripe for founders.
The other big issue is the Employment Rights Bill, which, combined with the immediate pain of increasing National Insurance Contributions, is driving many to outsource and offshore. We find that in the next 12 months, 12% of founders are looking to sell their business, and when asked why it’s not for reasons you would hope. For the brave, click through to slide 13 of our deck.
But I don’t want to fall into a position of pessimism. While only 19% are optimistic about the next 12 months for the UK economy, 69% of founders surveyed are optimistic about their business. The truth is that the UK is still an incredible place to be an entrepreneur. It’s just that when the pips start squeaking, don’t be surprised if Britain see less entrepreneurship.
A massive thanks to readers who completed the survey. If you want to make sure you don’t miss out next time, sign up here.
Where It's At
On Wednesday, we host our third event of the Young Entrepreneurs Forum. If you are or know a young person who would benefit from this event, please send them here. We will be joined by Sean Kohli, Chair of the Young Entrepreneurs Forum, alongside other invited guests from Silicon Valley.
We aren’t just looking for those who have started a business. We are looking for people who like to build, which could be a technology, charity, fund, campaign or anything entrepreneurial.
If you want a testimonial, take a look at Malindi Mwangi’s LinkedIn post. Off the back of hearing from Chris Hullat, she found out about the Octopus Energy Entrepreneur Awards, and following the nomination of her local MP, Callum Anderson, managed to win.
Match Pointing
Rt Hon Chloe Smith has an interesting piece on how the UK might overcome economic inactivity. She posits that AI-driven job-matching could help, as in Estonia where an AI-powered tool has seen 10-15% more people remain employed than those advised by a human without AI assistance. If you’re working in this space, drop Anastasia an email as she has been talking with Chloe on this topic and it has really piqued our interest.
Breakfast Club
One reason for starting The Entrepreneurs Network is simply because I love spending time around entrepreneurs. It’s telling that our survey found most founders are optimistic about their business, even if they aren’t quite as bullish on the British economy.
That’s why we’re working on a plan to start hosting regular small, private breakfasts with the 10,000 or so entrepreneurs in our network (not all at the same time). For this, we’ll need partners, so drop me an email if you would like to chat about this.
We think these breakfasts would allow us to take an even more regular pulse of what’s holding back founders – feeding into the work we do while strengthening the network of entrepreneurs.
This week the Government gave two encouraging nods to entrepreneurship. On Tuesday, it was announced that Emma Jones CBE, founder of Enterprise Nation, will become the new Small Business Commissioner to help tackle late payments. And yesterday, news broke that Alex Depledge MBE, founder of Resi, will become the Treasury’s first entrepreneurship adviser. Following in the successful footsteps of Matt Clifford CBE, who we just found out is standing down as the Prime Minister’s Adviser on AI Opportunities, it begs the question: what can entrepreneurs bring to government?
One project I think about a lot – and wrote about in our latest Three Big Ideas Substack fortnightly series – is the creation of GOV.UK. Martha Lane Fox laid the groundwork with her influential 2010 report Directgov 2010 and Beyond, which called for a single, user-focused government website and a dedicated digital team to build it. Her recommendations led to the creation of the Government Digital Service (GDS) under the political backing of Lord Maude, with design and delivery led by technologists like Mike Bracken.
In its first few years, the GDS quickly gained a reputation as a global trailblazer in government digital transformation. By 2016, we topped the United Nations E‑Government Development Index. It also saved money. Between 2011–2016, GDS reported £1.3 billion in cost savings through tighter IT spend controls and the use of common digital platforms, such as the G-Cloud procurement and the Digital Services Framework for SMEs. The UK also co-founded the Digital Nations coalition in 2014, hosting the first summit of leading digital governments to reinforce our position as a digital world leader.
You don’t need me to tell you that we no longer lead in this area – otherwise I wouldn’t have to keep writing about why we should emulate Estonia – but this isn’t the fault of any of the entrepreneurs and technologists who built the system. If we had kept innovators at the heart of the system, we could be the envy of the world, competing with the likes of Denmark, Estonia, Singapore and South Korea.
So what do entrepreneurs, investors and innovators need to be successful in government?
First and foremost, they need the skills to deliver. There is a material difference between the likes of Dame Kate Bingham, who was instrumental in the success of the Vaccine Taskforce, and Sir Alan Sugar, who achieved very little as Enterprise Champion under Gordon Brown and David Cameron.
But that’s not enough. Entrepreneurs coming into government also need high-level political backing with real powers – even brilliant innovators will struggle if political leaders are not willing to enact bold recommendations that outsiders might suggest, or if they face constantly changing priorities.
Those coming into government also need clearly defined missions and measurable goals. It’s important to garner some short-term wins to build momentum, and to find a way to both impose a culture of delivery, while not ruffling so many feathers that they can’t achieve their objectives. Diego Piacentini, the orchestrator of Italy’s digital transformation, cautions about complaining too much.
What You Really Want
As many of you know, we tested out your willingness to respond to surveys with Public First. I’m delighted that one email (and a bit of coaxing here) was enough to hit a healthy sample of founder-led businesses. If you want to find out the policies that matter most to entrepreneurs, join us on Wednesday for our launch event. You’ll hear from the Financial Times’ Jonathan Moules and Public First’s Rachel Wolf. And get in touch with me if you want to partner with us on our next survey.
Down for Business
As part of its efforts to understand the startup business and entrepreneur support activity in the UK, the Centre for Entrepreneurs is leading on a survey of their own, which we, alongside a few other organisations, are supporting. It is intended for any startup business organisation in the UK to complete quickly and simply. Find out more here.
Young Guns
Sticking on the theme of surveys, we have also opened one up specifically to gauge the views of younger founders as part of our Young Entrepreneurs Forum. If you’re a young founder and want to make your voice heard on what it’s like to build a business in Britain today, please consider filling it out. You may be featured in the final report which will be launched in the House of Lords later in the year.
Three Big Ideas is our fortnightly roundup of ideas (and our takes on them) in entrepreneurship, innovation, science and technology, handpicked by the team.
This week, Philip Salter celebrates news that Emma Jones has been appointed as Small Business Commissioner, Eamonn Ives wonders whether our ageing society can explain Britain’s dwindling economic dynamism, whileAnastasia Bektimirova writes about challenge prizes and how best to employ them to further innovation.
🎉 Philip Salter, Founder
With news that Emma Jones CBE has been appointed as the new Small Business Commissioner, it’s time to return to one of my favourite questions: how can we get more expertise into the government? And, more importantly, how can we ensure they are able to deliver?
Over the years, Emma, who is a Patron of The Entrepreneurs Network, has always made the case for getting more entrepreneurs and innovators into government and public service more broadly, so it’s great to see her follow her own advice. Critically, Emma has already been involved in government, so knows how it works (and, more critically, how it doesn’t).
As Anastasia has written here before:
“Having innovative thinkers embedded in government as a norm also increases the chance of something exceptional emerging from within. When Pat McFadden outlined the idea of experts from tech companies doing “Tours of Duty”, it might have been interpreted as if no innovator had set foot in Whitehall before. This is not the case. For example, such individuals were critical to the creation of the Vaccine Taskforce, ARIA and AI [Security] Institute – all remarkable examples of startups inside the government.”
But we can go back even further – to the much-emulated Government Digital Service (GDS), which delivered the ground-breaking (at the time) single government website GOV.UK. In the case of GDS, success was driven by a mix of technologists and entrepreneurs: Mike Bracken – a seasoned digital transformation expert; Martha Lane Fox, co-founder of Lastminute.com; and Ian Watmore, an experienced civil servant with a technology and management background.
Alongside the positives, there are also lessons to be learned in the stalling of progress at GDS. The reasons for this are up for debate, but listening to those who built it is probably the best place to start.
🎲 Eamonn Ives, Research Director
Yesterday I attended a research symposium hosted by King’s College, London’s Centre for the Study of Governance and Society and the University of Texas at Austin’s Civitas Institute. Our watchword of the day was dynamism, and specifically how we can get more of it. As well as the usual (yet always critical) discussions about specific regulations that restrict businesses from innovating or high marginal tax rates that disincentivise risk-taking, attendees were also keen to probe some of the more ‘societal’ explanations for why dynamism may have stalled in the United Kingdom.
Executive Director of the Institute of Economic Affairs Tom Clougherty raised the point that our society is slowly but steadily getting older on average, and asked whether this translates into a politics that places more emphasis on stability than dynamism. I am minded to believe it does – one only has to think about recent debates over whether institutional investors like pension funds should be able to skew their allocations towards riskier but potentially higher reward asset classes such as venture capital to see this in action. Moreover, as Britain gets older, the state mechanically has to call upon a relatively smaller labour force to pay for more retirees, for a longer period of time – which necessitates higher taxes. And last but not least, I’d happily wager that age strongly correlates with plenty of forms of NIMBYism, perhaps the most pernicious enemy to a dynamic economy.
From increasing immigration to making it easier for families to form and have more children, there is no shortage of levers the government could pull on to try to make the country more youthful. While results won’t be instant, an interesting consequence may be that we become more comfortable with dynamism. Though that may trade-off some stability in the short term, if it means our economy is better equipped to adapt to a rapidly changing world, we may just find that dynamism and security are not as mutually exclusive as many might assume.
🥇 Anastasia Bektimirova, Head of Science and Technology
While most R&D flows through traditional grants, there are other funding mechanisms that work very differently. One of them is challenge prizes. For example, the Vesuvius Challenge offered $700,000 to anyone who could use AI to read ancient scrolls carbonised by Mount Vesuvius, and within months, a team of students had cracked 2,000-year-old texts that had been unreadable for centuries.
The efficacy of challenge prizes was a subject of discussion with two former DARPA directors during last week’s as ever insightful House of Lords Science and Technology Committee session. When asked about DARPA’s famous challenges, Dr Stefanie Tompkins highlighted the multiplication effect: “you have put down a $50,000 prize and you have a whole mass of other people each putting in $500,000 to win it. The multiplication is quite powerful.” DARPA’s 2004 autonomous vehicle challenge appeared to be a failure when no team finished more than 5% of the desert course, yet Stanford alone spent over $3 million chasing a $2 million prize, and the ripple effects include companies from Waymo to the countless startups.
A takeaway from the session is that challenges work as accelerators, not substitutes. As Dr Arati Prabhakar said: “challenges are, in my view, a terrible way to fund the underlying research.” She used the autonomous vehicle example to illustrate: “The self-driving car challenge was not how the AI for image recognition was developed, but that was key to that success. That research had to be funded.” Challenges excel as accelerators when the underlying science exists but application remains elusive, and when there are clear success criteria but multiple solution pathways. For example, DARPA’s AI Cyber Challenge asks whether humans partnered with AI can better defend against cyber threats, with Google, Microsoft, OpenAI, and Anthropic donating access to their latest models because they share the problem and want the solutions.
The multiplication effect runs deeper than just private investment. Challenges compress innovation timelines from decades to years through focused urgency. This urgency creates breakthrough thinking and lasting networks of innovators. Challenge alumni can go on to found companies, launch university programmes, and recruit from their competition networks. The result is an ecosystem effect where a relatively small initial investment can create compounding value for years.
But timing matters enormously. Both Dr Tomkins and Dr Parbhakar stressed that challenges fail when problems need sustained basic research or patient infrastructure investment, or tolerance for highly uncertain outcomes. They succeed when speed takes priority and when demonstration creates a validated proof-of-concept that reduces risk for follow-on funding. As Dr Prabhakar said, a key question is: “if you did it, would it lead to something that had outsized impact?”
This week, Chancellor Rachel Reeves delivered her much-anticipated Spending Review, setting out the Government’s strategic priorities with a 2.3% real-terms increase in total departmental budgets. From healthcare to national security, the Review touches virtually every corner of public policy, but does it deliver the coherent vision Britain’s businesses need to deliver growth?
No policy announcement – or newsletter for that matter – is complete nowadays without mentioning AI. As Anastasia Bektimirova, our Head of Science and Technology, responded:
“It’s excellent to see £2 billion allocated to deliver the AI Opportunities Action Plan, including up to £500 million for the new UK Sovereign AI Unit – which we’ve already seen in action with [the] announced investment in OpenBind, which will help position the UK as the go-to destination for AI-powered drug design by addressing one of the field’s biggest bottlenecks.
“Coupled with the additional £1 billion for the AI Research Resource announced earlier this week, more of such ambitious endeavours will help the UK gain strategic advantage in critical areas of science and technology.”
Another impediment to growth that we’ve long drawn attention to is the cost of energy. The decision to invest in both advanced modular reactors and fusion technology thus signals serious intent towards making Britain more competitive, particularly in energy-intensive sectors. As Eamonn Ives, our Research Director, notes:
“Economic growth and energy abundance go hand in hand. It’s therefore extremely welcome to see the Government resolutely commit to a nuclear power renaissance in Britain – pledging investment in innovative advanced modular reactors and fusion reactors alike.”
However, investment alone won’t deliver results. As Eamonn emphasises, “funding can only go as far as we allow it. Alongside this investment, the Government must also rationalise the regulatory landscape that nuclear developers face, so that the private sector can be the driving force behind the rollout of new nuclear assets.” As luck would have it, these are all issues that he unpacked in his recent Small Wonders report.
Somewhat less high-tech but just as important was the Review’s focus on transport infrastructure – recognising a fundamental economic truth about connectivity and growth. As Eamonn states, “deep and interconnected labour markets are the lifeblood of dynamic economies.” It’s why agglomeration is a major pillar of our policy priorities. As he goes on to say:
“When workers can better match their skills with employers, or when innovators can exchange ideas more easily, productivity booms. By investing in new transport infrastructure across the North and between Oxford, Milton Keynes and Cambridge, agglomerative forces will be strengthened.”
The success of these investments, however, depends on execution. Eamonn warns that “to ensure public money is spent effectively, the Government should double down on its planning reforms that will prevent blockers from driving up costs and delaying construction.”
Perhaps the most concerning aspect of the Review is the contradiction between stated ambitions and actual policy. While the Government commits to supporting opportunities for top international talent, this sits uncomfortably alongside restrictive immigration policies outlined in the Immigration White Paper.
Eamonn responds, “the Government says it will support new opportunities for top talent to enter the country. Yet this is diametrically opposed to other plans set out in the Immigration White Paper, which will render Britain’s economy less attractive and more difficult for the world’s brightest minds to contribute towards.”
This contradiction undermines Britain’s competitive position. “The Government knows that overseas talent is critical for our entrepreneurial ecosystem to succeed, but its stance is increasingly contradictory – with Britain’s status as an enabling place to build losing its lustre as a result.”
Sober Reading
I don’t want to dampen the optimism following the successes of SXSW London and London Tech Week, but the latest Global Startup Ecosystem Report 2025 report makes for sober reading.
For the first time since 2019, London has slipped to third below New York in its highly respected Global Startup Ecosystem ranking (no prizes for guessing number one). This isn’t just a London thing, nor a UK thing, but a European thing. The report argues that the global startup landscape is undergoing its most dramatic shake-up in years.
Contract Helper
The Office of the Small Business Commissioner (OSBC) has asked us to share a Guide to Creating a Contract which aims to help small businesses write and negotiate clear, simple contracts between them and their suppliers.
The guide is designed to be as comprehensible as possible. The OSBC can’t provide a template contract to accompany it for legal reasons, but the World Commerce and Contracting Association and its charitable Foundation, who collaborated on this resource, have examples on their website.
Bull Market
I’m delighted to announce that Partners Wealth Management is the latest company to join us as a Corporate Partner. David Bull, who is a Partner in the firm, will become an Adviser.
Our Corporate Partners, like David, speak with entrepreneurs on a daily basis, so are vital for keeping us updated on their challenges. But that learning goes both ways. As David says:
“I need to understand the challenges my clients are facing in order to better support them in building their long-term personal financial and lifestyle goals. The Entrepreneurs Network creates a forum for the wealth creators of the UK to address their challenges to success.”
If you’re keen to join our growing band of brothers and sisters, driven to make the UK the best place to start and grow a business, let me know.
Today, the Chancellor of the Exchequer, Rachel Reeves, delivered the Spending Review – setting out the Government’s long-term spending plans. From the NHS to national security, energy to education and infrastructure to innovation, little was left ignored – and, overall, the Spending Review increases total departmental budgets by 2.3% in real terms.
Below, we’ve picked out a handful of areas where the Spending Review will matter most for Britain’s entrepreneurs. We’ll delve into what the Chancellor announced in more detail on Friday in Perennial Gale – so be sure to subscribe if you’re not already.
🚀 What does today’s Spending Review mean for Britain’s startups?
— The Entrepreneurs Network (@TenThinkTank) June 11, 2025
Our team weighs in on some of the key announcements for entrepreneurs.
Thread below! 🧶 pic.twitter.com/uV29YAWTXB
Commenting on the decision to invest in new nuclear energy, Eamonn Ives, Research Director at The Entrepreneurs Network, said:
“Economic growth and energy abundance go hand in hand. It’s therefore extremely welcome to see the Government resolutely commit to a nuclear power renaissance in Britain – pledging investment in innovative advanced modular reactors and fusion reactors alike.
“As we have repeatedly outlined, however, funding can only go as far as we allow it. Alongside this investment, the Government must also rationalise the regulatory landscape that nuclear developers face, so that the private sector can be the driving force behind the rollout of new nuclear assets.”
Commenting on AI-related announcements, Anastasia Bektimirova, Head of Science and Technology at The Entrepreneurs Network, said:
“It’s excellent to see £2 billion allocated to deliver the AI Opportunities Action Plan, including up to £500 million for the new UK Sovereign AI Unit – which we’ve already seen in action with yesterday’s announced investment in OpenBind, which will help position the UK as the go-to destination for AI-powered drug design by addressing one of the field’s biggest bottlenecks.
“Coupled with the additional £1 billion for the AI Research Resource announced earlier this week, more of such ambitious endeavours will help the UK gain strategic advantage in critical areas of science and technology.”
Commenting on plans to invest in transport infrastructure, Eamonn Ives said:
“Deep and interconnected labour markets are the lifeblood of dynamic economies. When workers can better match their skills with employers, or when innovators can exchange ideas more easily, productivity booms. By investing in new transport infrastructure across the North and between Oxford, Milton Keynes and Cambridge, agglomerative forces will be strengthened.
“To ensure public money is spent effectively, the Government should double down on its planning reforms that will prevent blockers from driving up costs and delaying construction.”
Commenting on the mention of the National Data Library, Anastasia Bektimirova said:
“While the Chancellor did not specify a funding figure for the National Data Library (NDL), it is encouraging to see it receive dedicated attention as a Government priority.
“With the present level of political will behind reimagining public data infrastructure, we have a rare opportunity to be very ambitious, which we must seize.”
Commenting on the objective to attract more of the world’s top international talent, Eamonn Ives said:
“As part of the uplift to funding for R&D, the Government says it will support new opportunities for top talent to enter the country. Yet this is diametrically opposed to other plans set out in the Immigration White Paper, which will render Britain’s economy less attractive and more difficult for the world’s brightest minds to contribute towards.
“The Government knows that overseas talent is critical for our entrepreneurial ecosystem to succeed, but its stance is increasingly contradictory – with Britain’s status as an enabling place to build losing its lustre as a result.”
All entrepreneurs know the danger of living beyond their means. Do it for too long and the businesses they’ve struggled tirelessly to build can easily come crashing down. In today’s volatile economy, knowing how to balance prudence with ambition is a growing challenge – so spare a thought for Rachel Reeves as she prepares to deliver next week’s Spending Review.
For those with better things to do than follow the ins and outs of Westminster proceduralism, spending reviews are when the government of the day sets out its spending plans – largely for any items that can reasonably be decided in advance (as opposed to expenditure like benefits, which fluctuate with the economy).
We’ve known for some months now that this particular Spending Review will be ‘zero-based’ – meaning that allocations for departments will be reset to zero and all spending decisions will be taken from there, as opposed to making increases or decreases to existing budgets. That probably sounds more radical than it actually is, but nonetheless, in theory, everything is therefore up for grabs.
Where, then, might Britain’s startups hope to see the cash being splashed? Some ankle has been shown, with £15 billion of investment earmarked for transport projects across the Midlands, the North and the West Country. Knowing what we know about how underdeveloped labour markets are outside of London – primarily owing to weak transport connectivity, as opposed to so-called skills shortages – this investment should be applauded, and all the more so if proposed changes to the planning system really do make infrastructure delivery quicker and cheaper.
Meanwhile, Darren Jones, the Chief Secretary to the Treasury – or the Minister responsible for public expenditure in plain English – has repeatedly emphasised the importance of modernising the state and using new technologies to boost public sector productivity. While that could well pay dividends, it won’t come without upfront investment – and many tech founders will spy an opportunity to supply innovative solutions that cost-effectively improve public services.
Of course, given that all government outlays are ultimately financed by the hard work and toil of the private sector, plenty of entrepreneurs may sooner prefer that Reeves tightens the purse strings instead. With the tax burden at its highest rate in decades, if now is not the time to question whether more largesse is affordable, when is? Anecdotally at least, following hikes to Corporation Tax, Capital Gains Tax and Employer National Insurance Contributions, it seems that more of Britain’s wealth creators than ever are questioning the UK as a viable place to start and grow a business.
For reasons I set out in my latest contribution to our Three Big Ideas series (do subscribe if you haven’t already), I don’t think a mass exodus of entrepreneurs is just around the corner. But, if we become complacent, and keep funding spending increases through tax rises rather than broad-based economic growth, our finely balanced fiscal situation will become downright precarious.
Last Call
Entrepreneurs have enough on their plates to deal with without also thinking about influencing policymakers. That’s where we come in. If you’re a founder, please consider filling out our Entrepreneurs Survey so we can tell politicians what Britain’s entrepreneurs really think – with the cold, hard data to prove it. The survey only takes ten minutes to complete and will be open for another few days for final responses. If you’ve already completed it, don’t forget to RSVP to attend the launch reception of the first set of results.
We’re All Ears
On the science and technology side, we have some exciting opportunities coming up for these three groups in particular:
🤖 Those working with AI to solve economic inactivity (e.g. AI-powered solutions for recruitment, job matching or other ways to improve employability, training, and support for people not yet in work);
📚 Those with strong views on what data the government could help unlock to benefit your work and how to make the National Data Library useful for you (see our latest work on this, by the way);
💡 Those who have a positive or negative, successful or unsuccessful experience with Innovate UK.
If one of the above sounds like you, please drop Anastasia a line.
