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, Eamonn Ives examines the new Defence Industrial Strategy, Anastasia Bektimirova mulls over a new book contrasting China and the United States, and Philip Salter discusses navigating the politics of immigration.
🌐 Philip Salter, Founder
As I write this, we are taking part in our annual trawl through Beauhurst’s proprietary data to work out the percentage of the UK’s fastest-growing companies that have a foreign-born founder, as part of our multi-year Job Creators project.
This year we’re teaming up with Kinglsey Napley, our longtime partners on immigration policy advocacy, and building out a set of policy recommendations to ensure that we have the visa routes to capture more of this small but incredible cohort of founders.
It’s no exaggeration to state that Britain’s entrepreneurial ecosystem has been built on the backs of these individuals who have actively chosen to make the UK their home. Foreign-born founders have been instrumental in innovating in everything from artificial intelligence (Synthesia) to avocados (Oddbox).
While immigration is an increasingly controversial issue, this sort of immigration isn’t. It’s why everyone from Prime Ministers downwards loves to cite our 2019 finding that half the fastest-growing companies in the UK have a foreign-born founder. I wouldn’t even be surprised to see Reform back it.
But as important as this tiny section of immigrants is, we shouldn’t fall into the trap of believing that Britain’s economy just needs entrepreneurs. Writing about the US – but with application here too – Jerusalem Demsas digs into this on her Substack, arguing that immigrants are also needed to build houses and infrastructure, which are critical for delivering economic growth.
To make this happen politically, Demsas makes the case for transfers to communities absorbing immigrants, building greater state capacity around immigration administration and funding assimilation projects. Whatever you think of her specific policy ideas, she is asking an important question: “will liberals confine ourselves to merely defending the Katalin Karikós of the world?”
⚙️ Anastasia Bektimirova, Head of Science and Technology
You know when a book suddenly becomes the conversation? That’s Dan Wang’s Breakneck: China's Quest to Engineer the Future right now. In my circle at least, it seems like every third person is reading it. To get a taste, there is a good Works in Progress interview with the author.
Wang’s central image of China as an “engineering state” that builds faster and bigger and the US as a “lawyerly society” mired in litigation and caution is an interesting framing. The contrast between Chinese and American infrastructure delivery is unquestionable, and his broader point that the US needs to rebuild industrial capability is right. Wang also doesn’t shy away from showing the costs of authoritarian control and bureaucratic paralysis. The book is well worth a read, especially for those less familiar with China’s modern history.
But the framing also risks flattening things. In his review of the book, Jonathon Sine notes the slipperiness of defining “engineering”. Many top Chinese leaders aren’t technical hands-on engineers but part of a “Leninist developmental state” class trained in ideology and party management, with all its features of centralised control, campaign-style governance and ideology-driven mobilisation. Michael Hill also argues that this better explains many of the policies Wang uses to typify the “engineering mindset,” such as the One Child Policy and Zero COVID. In fact, the share of Politburo members with undergraduate engineering degrees has fluctuated significantly: peaking at 70% in 2002, falling to 20% in 2017, and rising again to 33% by 2022. Ironically, as Sine points out, Xi Jinping’s PhD is actually in law. Similarly, the notion of a lawyer‑driven US may headline well, but doesn’t capture the democratic and institutional contexts where rights are the point, rather than procedure.
I also don’t buy that lawyers are quite the bottlenecks Wang makes them out to be. I know lawyers who are imaginative futurists or deeply involved in building with amazing foresight and contagious ambition. I doubt it’s really about credentials. Sometimes slowing things down to pressure-test risk and ask “What could go wrong here, and how hard is it to unwind?“ is what keeps a state governable. And to be clear, it’s not just lawyers who are qualified to do that.
The “engineers versus lawyers” frame prompts a broader question of how to build a government that combines capacity and expertise with pluralism. The challenge as I see it is how to regain our ability to build without opening the door to over‑engineered social control. This is less a matter of getting a specific quota of engineers or lawyers into government and more about the kinds of institutions that allow different strands of expertise to combine into action while enabling governing with care.
🛡️ Eamonn Ives, Research Director
If there’s one thing we’ve all had to learn – or perhaps re-learn – over the last few years, it’s that the first duty of a government is to protect its citizens. Following Russia’s full-scale invasion of Ukraine in 2022, virtually all European countries have doubled down on bolstering their nations’ defences – in rhetoric, spending, and other reforms. This week, the Ministry of Defence (MoD) published its new Defence Industrial Strategy, which sets out a series of changes to improve the relationship between the Armed Forces and Britain’s defence sector, and put us on a surer military footing.
As the Strategy notes, one area holding back innovation in the defence sector is our “Cold War-era procurement cycles,” which are characterised by “a ‘feast and famine’ approach to investment” that conspires against smaller and potentially more technologically innovative players. Aside from simply increasing the overall spending envelope that will be afforded to defence contractors – which will doubtlessly help plug gaps – the Strategy also notes how the recently established UK Defence Innovation (UKDI) will be empowered to accelerate cutting-edge capabilities.
If the language used to describe the new unit is anything to go by, defence tech entrepreneurs should be heartened. UKDI will be granted operational autonomy from the MoD, be encouraged to take risks and not be afraid of failing fast, and be headed up by a strong figurehead with the ability to coordinate with a range of Whitehall departments where necessary. Alongside this, the MoD itself will commit to “targeted regulatory sprints” in priority areas, to review where red tape is suffocating startups that are pioneering promising technologies. While, of course, the results remain to be seen, it’s hard to fault any of these pledges.
Entrepreneurs outside of the defence tech space would be forgiven for thinking that they are, at best, an indirect beneficiary of the new Strategy. But a theme running through the 112-page blueprint is the importance of developing dual-use technologies – and specifically, how more will be done to leverage military innovation for civilian applications. Many of us will be familiar with how the Internet, GPS, jet engines, drones – even canned food – can trace their origins back to times of warfare. Should all go to plan with the new Defence Industrial Strategy, we might just be adding to that list of useful everyday inventions.
With the Deputy Prime Minister’s demise precipitating a full Cabinet reshuffle, it would be easy to focus on the negatives. But this is also an opportunity for the Government to strike out in a new direction. As every founder learns through experience: never let a good crisis go to waste.
Tony Blair articulated this opportunity well with his famous “kaleidoscope speech” in Chicago on 22 April 1999:
"This is a moment to seize. The kaleidoscope has been shaken. The pieces are in flux. Soon they will settle again. Before they do, let us reorder this world around us."
The Prime Minister must already get this. After all, it’s all too easy to forget that he inherited a Labour Party in crisis. When Jeremy Corbyn was their leader, Labour was polling only in the 20s. Keir Starmer rebranded the party, purged the antisemitism, rebuilt its credibility with business, and decisively won the 2024 election.
While the last 14 months haven’t gone swimmingly, all is not lost. Now’s the time to ditch what isn’t working and lean into what we know will – specifically when it comes to spurring economic growth.
First things first: do no (or at least less) harm. With Angela Rayner gone, it’s time to ditch the worst parts of her Employment Rights Bill. As I wrote back in February, the Government’s own analysis projects its annual cost to businesses to be in the billions. Founders have told us repeatedly that they’re really concerned about the mooted changes. Of course, workers need protection; but they also need jobs in the first place. (Next month, Lord Leigh is chairing a virtual roundtable to discuss the implications of the Government’s Employment Rights Bill on businesses – sign up here.)
Second, we need to get more of the basics right. As we argued in Building Blocks, even marginal policy improvements in a few large areas – such as simplifying our country’s planning rules, rationalising the tax code, or modernising the visa system – would do more to ensure we are genuinely offering the best possible platform from which to unleash the full potential of entrepreneurship and innovation in Britain.
These aren’t only things that the Government could (or should) do, but if I were Starmer I would apply the advice of Steve Jobs to the rest of his term: “Deciding what not to do is as important as deciding what to do.”
In truth, you can count the real and lasting achievements of even our most radical Prime Ministers on one hand.
Clement Attlee created the NHS, built the welfare state, co-founded NATO, initiated Britain’s nuclear deterrent and granted independence to India.
Margaret Thatcher privatised major industries, curbed trade union power, deregulated the City and introduced Right to Buy.
Tony Blair secured the Good Friday Agreement, gave the Bank of England independence, introduced the National Minimum Wage and devolved power to the nations.
Starmer’s second phase of this Government should be unapologetically focused on the big things.
To that end, I would point people towards the latest newsletter from the APPG for Entrepreneurship. Penned by my colleague Eamonn Ives, it flags what will definitely be one of the less discussed job moves this week, but that doesn’t make it any less important. John van Reenen, the Chair of the Chancellor’s Council of Economic Advisers will now report directly to Rachel Reeves as an expert adviser. As Eamonn writes:
“One piece of research that has stuck with me over the years is his 2019 paper A Toolkit of Policies to Promote Innovation. Written with the equally distinguished Nicholas Bloom and Heidi Williams, this paper quickly yet comprehensively makes the case for why governments should support endeavours to promote innovation, before evaluating some of the most common ways they try to do so. Specifically, they examine tax policies to favour research and development, government research grants, policies aimed at increasing the supply of human capital focused on innovation, intellectual property policies, and pro-competitive policies.”
Research the Role
We are looking to hire either a new Researcher or Senior Researcher, depending on experience. The successful candidate will be a core member of the team – primarily producing original policy reports and other written outputs, but also contributing on other fronts, such as supporting our events programme and expanding our presence in the policymaking ecosystem.
The ideal candidate will be highly self-motivated with a strong interest in public policy. They will not simply wait to be assigned tasks, but proactively identify new opportunities to drive the policy agenda. We expect applicants to be recent graduates, or to be working in a similar role, or to have already demonstrated the core competencies we’re looking for in another role.
Strong applicants will have shown an active interest in policies and issues that impact entrepreneurs. Most importantly, their values will be in strong alignment with those of The Entrepreneurs Network.
On 18 April 1930, BBC Radio’s 6.30pm news bulletin announced: “Good evening. Today is Good Friday. There is no news,” which was then followed by piano music to fill the remaining time.
As the News and Views section below shows, while the headlines never truly stop, they do have a tendency to slow down over the summer months. In this rare respite from the torrent of politics and policy, I hope you’ll forgive me for turning inwards – not least because we’ve picked up hundreds of new subscribers in recent weeks who might value a bit of a pointer to what we’re all about.
In short, we are the voice of Britain’s most ambitious entrepreneurs. A decade ago, I would never have been so presumptuous to describe ourselves as the voice of anyone but myself; however, over that time we’ve built a network of thousands of entrepreneurs and we’re now pretty confident that we know what keeps entrepreneurs up at night, and what they need from government to succeed.
Just to be one hundred percent sure, we’ve recently teamed up with Public First to conduct quarterly surveys of our network, the latest of which is currently open for responses. If you haven’t done so already, please complete it and consider sharing the opportunity with your networks and on social media.
Demanding supply
One of the challenges that has come with having built such a large and open network is that demand for our events is now outstripping supply. There are three ways that we’re solving this without closing the network or charging for events.
First, we’re being more selective about inviting the right people to the right events. Just this week we hosted a dinner with Ian Sollom MP, the Liberal Democrats’ Spokesperson for Universities and Skills, which had the perfect mix of entrepreneurs, investors, and Tech Transfer Office leaders. Compiling the guest list was made all the easier thanks to attendees having proactively told us which issues they’re interested in. If you haven’t let us know what topics you’re curious about, you can do so by filling out our recently updated and extended Join Us form.
Second, we’re planning more meetups. These are much more open than our more policy-focused events. Watch this space for an ambitious plan to undertake regular events outside of London, as we’re keen to travel the length and breadth of the country. We’re looking for more hosts and partners for our events, so if you’re keen to host us, get in touch.
Finally, for those who are able, becoming a Supporter, Adviser, Patron or Corporate Partner both opens up more events for you, but also supports us to do more for the wider ecosystem. It’s a win-win for everyone. Join us here.
Supplying more
Before signing up, you may want to know a bit more about the scope of what we do. If that’s the case, we have a deck which distils it into a few slides.
While this should give you an overview of what we currently do, I want to also take this opportunity to find out what you think we should be doing more of. We may be more than ten years old, but we’re just as nimble today as on day one. Everything we’ve done, and everything we’re doing now, all started with a simple conversation. As such, the time to share any ideas you have for partnering with us is now. Get in touch.
🚇 Eamonn Ives, Research Director
Fans of Monopoly will know that Old Kent Road is the cheapest square on the board. But under new proposals from the think tank Labour Together and campaign group YIMBY Alliance, its real-world value could change dramatically.
In a joint paper, the two groups argue for a new approach that would allow London to fund more of its own infrastructure rather than constantly going cap in hand to the Treasury. They use the extension of the Bakerloo line from Elephant and Castle down through the Old Kent Road and beyond as a case study, but the principles could apply equally well elsewhere across the capital – and to other big city regions such as Greater Manchester or Birmingham.
As their paper notes:
“When the public sector builds infrastructure or grants planning permission, it can lead to huge windfalls for existing landowners. Allowing a landowner to build housing on agricultural land in the South East can increase the value of the land by 100 times. But it is also businesses and homeowners. Commercial rents and house prices close to Crossrail stations rose faster than the London average after the project was announced. These windfall gains have nothing to do with entrepreneurship or risk-taking. They are the result of decisions and hard work by the public sector, and the public sector should retain much more of the value uplift to pay for infrastructure.”
There are plenty of models for making that happen. Paris has used a small payroll tax and a levy on tourism to fund upgrades to its Metro, which could be replicated here. The Mayor could also be given powers to require outer boroughs to build more homes along new routes, in exchange for a faster commute into central London.
With public finances under strain – and growing pressure on the government to splash cash outside the capital – it’s increasingly difficult for London to make the case for more handouts. But as I wrote last week, strong agglomerative effects represent one of the best ways to escape our economic doomspiral. To amplify agglomeration, we need to explore every option for funding the transport upgrades to keep the city moving. Proposals like those set out in Labour Together and YIMBY Alliance’s paper deserve to be taken seriously.
💳 Anastasia Bektimirova, Head of Science and Technology
Imagine everyone set aside a small monthly budget for articles, podcasts and videos. But instead of locking it into subscriptions, we put it in a programmable wallet, tell an AI agent what and whose taste we trust, and let it give tiny payments to what we read, watch and listen to. As content arrives, the agent evaluates it against our preferences and context: what we’ve recently consumed, what our network has paid attention to, what is timely or under-reported. When something resonates, the agent sends a micro‑tip to the creator, leaving a receipt that can validate and, if we choose, publicise our attention.
Daisy Alioto, co-founder and CEO of Dirt, an independent media outlet, sketched out this vision in a piece arguing that “the future of media is a bank”: spontaneous payments replacing set-rate subscriptions, autonomous agents trained on taste and empowered to tip, attention recorded not in clicks but in stablecoin transactions.
Speculative as it sounds, it could be a return to something magazines once did well. A recent wave of Condé Nast’s reminiscence reminds us that the miracle was not in the glossy paper, but rather in the system around it: editors serving as gatekeepers and readers as members of a scene. That era industrialised curation as a social technology and made status convertible into money through almost ritualised purchase.
Today, distribution is effectively infinite. Alioto’s proposal tries to rebuild the social architecture that magazines once provided but with the tools we now have and with less gatekeeping. The mechanism would let payment travel with attention and count as proof of support. Micro-tips become a record of taste, which is private by default, but shareable when you want. Agents learn what you like, how you value it, and distribute spending accordingly. Creators get small, frequent income streams instead of fixed subscriptions or volatile advertisement revenues. Since wallets are programmable, agents can also follow agents of others, so discovery flows through people you trust rather than a platform feed. In that world, attention is both a budget and a public signal.
🌎 Jessie May Green, Events and APPG for Entrepreneurship Coordinator
The COP30 Presidency recently announced the daily themes for this year’s global climate conference, which will take place in the Amazonian city of Belém, Brazil in November. To my joy, one of the themes is ‘Small and medium entrepreneurs’.
It makes sense – small and medium-sized enterprises represent a whopping 90% of businesses worldwide, make up half of the global economy, and produce half of global emissions. If we are to get a grip on rising temperatures, we can’t afford to leave SMEs out of the conversation. Not only in the sense that their emissions will have to fall, but also because many will be invaluable in providing innovative solutions to the challenge at hand.
On this front, the UNFCCC – the body responsible for organising the COP climate summits – has issued a call to action to accelerate its ‘Climate-Proofing SMEs’ campaign. Their aims are to: increase green finance from the full spectrum of financial institutions; ensure at least 30,000 SMEs have resources available to support them tackling emissions, from carbon footprinting tools to region-specific training; and – by COP30 – to see at least 150 large businesses actively engaging SMEs in their supply chain via long-term net zero programmes.
It is great to see SMEs coming to the forefront of climate conversations, and to see this supported by institutions in the UK. For example, the Centre for Climate Engagement at Hughes Hall, University of Cambridge, which is building a network of academic experts on SMEs and climate change. Hopefully, these efforts will combine to catalyse greater business participation at COP30 – participation that is so vital to climate adaptation and resilience.
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, Eamonn Ives writes about novel ideas for funding new infrastructure, Anastasia Bektimirova wonders whether ‘micro-tipping’ will replace subscriptions, and Jessie May Green welcomes the inclusion of small businesses as a focus for COP30.
Today’s newsletter comes from our Research Director, Eamonn Ives. Normal service with Philip will resume next week!
Veteran Westminster watchers will know that the long summer months when Parliament is in recess are a breeding ground for less credulous stories to find their way into national newspapers. During ‘Silly Season’, as it’s affectionately known, journalists feed on scraps – with even speculative rumours standing a chance of being written up as if they’re iron-clad facts. So it was with more than a little apprehension when I read in The Guardian that the Chancellor Rachel Reeves is mulling over a new tax grab on high-value properties to raise revenue at the forthcoming Autumn Budget.
According to leaked proposals, the Treasury is considering charging Capital Gains Tax on the sale of homes worth over £1.5 million. Currently, an exemption which shields most main residences from being liable for CGT sees a whopping £31 billion a year slip through the Chancellor’s fingers as taxes forgone – earning it the title of being Britain’s single biggest tax relief. No wonder our cash-strapped Treasury is looking enviously at shaking things up, and that should be reason enough for us to take seriously the fact these ideas are surfacing – Silly Season or not.
What’s all this got to do with entrepreneurship though, I hear you ask? Well, regular readers should be acutely aware that strong agglomeration effects form the basis of just about all fertile startup ecosystems (for the uninitiated, go straight to Building Blocks after reading this newsletter). When people can live in close proximity to one another, the ease with which founders can exchange ideas, attract talented employees, find willing investors, share physical and social infrastructure and so on only increases. Density doesn’t just correlate with economic success, it actively enables it. There’s a reason why London alone routinely receives over two thirds of all venture capital invested in Britain, is a magnet for both domestic and international talent, and is the nation’s foundry bar none for producing cutting-edge startups.
Anything, therefore, that impedes agglomerative forces from taking hold thus also prevents entrepreneurial sparks from flying. And there are few better (or worse?) ways to do that than by putting homeowners on the hook for potentially tens of thousands of extra tax should they wish to move house. As a consequence, people liable for paying the new tax will hang onto property for longer than they otherwise would in an efficient market. Evidence suggests that the construction of new homes may well slow down too, as demand for housing dampens. Altogether, prospective entrepreneurs will find it harder and more expensive to move into economic hotspots, and any well-heeled international talent would be forgiven for thinking twice about relocating to Britain.
We don’t need to rely purely on economic theory here either. Anyone who has had to grapple with the pain of Stamp Duty will be well acquainted with the damaging effects of transaction taxes on property. Empirical evidence from the Office for Budget Responsibility shows that a one percent increase in Stamp Duty causes transactions to fall by between 4.5-7%, depending on the value of the property. Some economists have even argued that property transaction taxes are so harmful that they may even destroy more value than they raise. Static markets serve nobody.
As Philip mentioned a fortnight ago, the reason we’re debating tax rises in the first place is because of the daunting fiscal black hole we’re facing. The Government has shown itself incapable of meaningfully trimming back public spending, has limited room for extra borrowing, and can’t rely on economic growth to save the day. That leaves tax hikes as the only way to try to balance the books – and with a prior promise to not touch VAT, Income Tax or National Insurance Contributions, officials are understandably searching for other routes to bring in extra cash.
By definition, anyone fortunate enough to have profited from the meteoric rise in house prices in Britain over recent decades – even if only on paper – has the proverbial broad shoulders needed to bear further tax hikes. But while such lucky homeowners may be viewed as a politically easy target, we must consider whether the juice is worth the squeeze. Whatever happens at the Autumn Budget, here’s to hoping the Chancellor properly evaluates the second-order effects that taxes like this might have. If the Government is as serious as it says it is about growing the economy, it will ensure idle ideas like this remain exactly that.
(P.S. Speaking of the Autumn Budget, we’ve just opened the next round of our Entrepreneurs Survey for responses. If you’re a founder and want to make your voice heard on the issues that matter to you most, please consider taking ten minutes or less to fill it out.)
What’s your spin?
We’re gathering evidence for our next Female Founders Forum report, which will investigate how university spinouts are created in the UK today, and what policy fixes are needed to support their growth.
If you have spun out a company from a UK university within the last three years (or are in the process of doing so), or are someone who supports spinouts (e.g. through a TTO, university, funder, or advisory organisation), please consider filling in our survey and sharing it with others. And if you’d like to be interviewed for this research or know someone who should, just drop Anastasia a line.
Calling all entrepreneurs! Today, we’re asking for 10 minutes (or less) of your time to fill in our quarterly Entrepreneurs Survey. (For those who haven’t started a business, the ask is that you share it with your networks.)
Our inaugural survey was picked up by many media outlets and led to all the political parties chasing us for more insights. No wonder. Entrepreneurs play a disproportionately important role in our economy, but too often their voices go unheard by the politicians who are designing policies that impact their businesses.
This will be an important one, as it will inform our campaigning ahead of the Budget. This is your best chance to tell those in power what you really think.
Another Year Wiser
We’re beginning the research process for our annual Female Founders Forum report with Barclays. This time, we’re investigating how university spinouts happen today and how to make translating academic ideas into real world companies work better for everyone in the UK.
The 2023 Independent Review of University Spin-out Companies promised faster, fairer, more founder-friendly journeys. We want to see where that promise has landed: where progress is being felt on the ground, where challenges remain, and where further steps are needed. We also want to understand how much founder experiences differ by gender, region and sector.
We’re building on important work already done in this space, adding a UK-wide, gender-aware lens and combining survey data with in-depth interviews to produce practical policy recommendations.
If you’ve spun a company out of a British university (or are in the process of doing so), or if you work with those who do, please consider filling out our survey or drop Anastasia a line for a chat. LinkedIn aficionados may also want to tag close contacts into this post, which is proving a useful way of getting the word out.
And Spend
Another week, another mention of tax. I’ll keep it short though. I just want to direct you to our Adviser Derin Kocer’s Big Idea this week. Derin thinks I didn’t make a big enough decision in last week’s Perennial Gale about the need to cut spending.
Unlike him, I’ve never been an official political strategist, so I’ll leave it to others to decide on feasibility and extent of cuts, but, either way, it’s always worth reminding the Government about which taxes are the least damaging.
Up to Date
Our Policy Updates are well and truly back. This week, we informed subscribers about the Cyber Security and Resilience Bill with more than a little help from Spark Legal and Policy Consulting. These updates are intended to be timely, bitesize overviews on policies that will impact the thousands of ambitious entrepreneurs in our network. If you’re an expert on an area of policy get in touch to see how you can partner on future updates.
Ta-da, Tata
Our friends at the Centre for Entrepreneurs have just announced that they’re teaming up once again with Tata for their Varsity Pitch Competition. It is the longest-running inter-university business pitching competition in the UK, with a £25,000 prize pot, as well as mentoring opportunities and connections to Tata Group for category winners and alumni.
One reason I like to promote this competition is that you don’t need a fully-formed idea to enter – or, indeed, win. Find out more here.
🕳️ Derin Kocer, Adviser
Since Labour returned to office, every fiscal event has focused on “filling the fiscal black hole.” As Philip wrote last week, the next one will be no different – except, if anything, the black hole only seems to be getting bigger. One obvious way to fill the gap is to raise the rate of VAT, or, more creatively, to broaden the base to which it applies. However, neither approach offers a sustainable long-term strategy to shore up Britain’s public finances.
The Treasury’s real problem isn’t a newly formed deficit — it is an enduring one. Spending has failed to normalise post‑pandemic. According to official estimates, public spending as a share of GDP for 2024-2025 will be at around 44.4%. Although this represents a significant fall from 2020, when the pandemic caused it to spike to 50%, it’s still well above the pre-pandemic levels. The IMF estimates that between 2015 and 2019, government spending averaged 39% of GDP annually. Meanwhile, our debt has also increased dramatically to over 100% of GDP and there is no plan to pay it down quickly. Under Tony Blair, Britain’s debt burden was under 40%.
Our fiscal situation stands in stark contrast to many of our European peers, whose finances returned to pre-pandemic norms more quickly. In Britain, meanwhile, numerous practices designed for the pandemic era were kept in place, which continue to contribute to the unusual and consistent rise in welfare spending. The stealth tax rises Reeves introduced since taking office have paid for these but have also made inflation and high interest rates stickier than elsewhere. We need to get back to normal if economic growth is the core mission.
Rachel Reeves cannot continue to rely on tax grabs to balance the books. She must also stand up to members of her own party and cut spending back to normal levels. It’s worth adding that the Conservatives should give them the ‘political headroom’ to do so, if they too are serious about sustainably fixing the ‘fiscal headroom’ problem every Chancellor has faced in the past decade.
🔭 Anastasia Bektimirova, Head of Science and Technology
I recently took part in two different foresight exercises. One was a simulation game that tasked participants, who role-played as governments, tech companies and scientists, to make constrained choices under uncertainty. Another one was a rapid scenario sprint that asked participants to judge how various shocks would shift the UK’s position across several AI-related strategic fronts. Both were valuable for surfacing trade-offs quickly, exposing coordination gaps and clarifying sequencing. They also shared a familiar limitation of strategic foresight work: generating narratives about the future, but not decision-grade evidence about how people are likely to behave inside it.
In many ways, policymaking, especially in emerging science and technology domains, is the disciplined management of uncertainty – turning incomplete information into choices that aim to protect and create public value. Governments often have to set rules before the behavioural and second-order effects of a technology are observable at scale. On their own, horizon scans and lists of risks and hopes don’t show how people will act within those futures. That requires a different kind of foresight.
A piece published in Nature last week calls this shift “science-fiction science.” The idea is to simulate plausible near-term futures and run controlled experiments inside them to measure attitudes and behaviours before norms and markets harden. Done well, this could offer evidence on how big the effect is, who it helps or harms and which mitigations work. Where this was attempted – most notably around autonomous vehicle ethics – research such as the Moral Machine project helped structure policy debates and, in places, legislation. Where this wasn’t the case – for example, genetically modified foods – public attitudes hardened before behavioural research caught up.
New tools make this approach ripe for experimentation. Take Google DeepMind’s Genie 3, released last week. It’s an example of world-model tooling that can generate interactive 3D environments from simple prompts that can be navigated in real time, with conditions adjustable on the go via a prompt. In theory, this could generate interactive, policy-relevant micro-worlds, lowering the cost of turning priority questions into experiments. That could make it feasible to prototype, for example, a busy high street to examine how delivery robots affect pedestrian behaviour, or a drone delivery corridor to assess noise tolerance and complaint behaviour. The standard of proof would still come from the protocol with clear hypotheses, representative samples, randomisation, incentives and transparent reporting.
Here’s a thought experiment on what an institutionalised version of this could look like. Create a small, cross-government experimental foresight lab that runs or commissions simulations for priority questions and curates the best results as shared benchmarks. Its mandate would be to pre-register hypotheses with policy teams, recruit representative cohorts, and publish effect sizes with uncertainty and distributional impact. It could then endorse high-quality studies as benchmarks, signalling national priorities so departments, regulators and procurement could optimise for them. This would keep foresight close to strategy and delivery, and let evidence travel across portfolios and survive political cycles.
🚀 George Patin, Intern
Over on The Generalist, their team have put together the 2025 edition of The Future 50: the most promising startups valued at or below $200M, as selected by over 200 investors, from all across the world.
One of the most striking things about this grouping is just how lean the teams are. The median team is only 26 people, with many at 15, 10 or even 4 core members. While most are very young companies, many nevertheless boast very impressive multiples of revenue per employee. This broadly tracks with Carta’s earlier report on startup hiring – founding teams are getting very lean indeed.
It is no coincidence that this is happening alongside the rise of vibe coding and better AI in general. Prototyping, early brand design, pitch decks, research — all speed up initial validation and let companies scale faster right away. We’ve already seen Lovable break every speed record to cross $100 million ARR in 8 months. The trend, it seems, is towards companies being spun up practically out of thin air, possibly as fast as a single day.
Policy, too, is gradually adapting to the new speed of startup scaling. The EU’s proposed 28th regime, a harmonised business framework across the entire Union, has now moved into consultation. A project of this magnitude is bound to be challenging, but the goal itself is simple: make company formation faster, compliance easier, and the overall flow smoother.
There is a lot to be said for reducing barriers to innovation. One need only look at Estonia, which Anastasia wrote about here last week, with its recent digital reforms and 10 unicorns to show for it. It isn’t merely removing legislation, either, but making it responsive and closely attuned to the needs of entrepreneurs. If policy is able to match the new pace enabled by emerging tech, we may very well see more Lovable-style stories in the near future.
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.
