From Start-Up to Scale-Up

Tech City UK recently reported that the number of startups in the UK increased by 4.6% last year - from 581,173 in 2014 to 608,100 in 2015 - surpassing both the European and the US average. But what does this statistic really mean? When we look at how many of these startups reach maturity and secure a concrete place in the market, the number quickly appears less impressive. According to the entrepreneurship and investment expert Sherry Coutu CBE, fewer than 3% of startups manage to both survive for a decade and enjoy a single year of high growth. Begging the question, what good is a high startup rate if those startups aren't properly transitioning into high powered 'scale-ups' with the capability and capacity for successful long-term growth?

Barclays' 2016 report entitled Scale-up UK: Growing Businesses, Growing our Economy attempts to solve the scale-up problem in greater depth than any other report previously published. The report collates the work of experts at Oxford Saïd Business School and the Cambridge Judge Business School to analyse two specific issues characteristic of scaling up companies - the 'finance challenge' and the 'management challenge'. The finance challenge focuses on how to increase funding options for scale-ups, while the management challenge centres on cultivating the proper management skills in order to support this type of high growth.

The report issues 12 recommendations for policy makers, industry leaders and the investment community to help businesses overcome the three main problematic elements of the scale-up challenge (generic drivers of growth; take-off; and acceleration) to aid the transition from start-up to 'gazelle'. The finance recommendations range from stating that scale-ups need more funding for later on in their journey after their initial start-up, to arguing that we need more experienced UK investors with in-depth sector expertise and strong international networks. The management recommendations range from identifying that scale-ups must have a real drive and commitment to ambitious growth, to recognising the need for them to develop effective management systems.

Why does all of this matter? The UK economy is heavily dependent on the lasting success of new businesses. As Sherry Coutu argues, it is in all of our best interests to see these startups grow into fully functioning, stable, prosperous and innovative businesses.

For over twenty years, Sussex Innovation has helped businesses to grow quickly and sustainably during the vital early years of operation and beyond. While many incubators help to turn startups into sustainable businesses, we look to help the best of those businesses to scale and achieve high growth. Our network of trusted investors and financial advisors across the South East can be counted upon to help address the finance challenges that scale-ups typically face, while our affiliation with the University of Sussex means that we can offer access to a world-class research community and help businesses to develop strong, credible networks both nationally and internationally.

In line with the report's recommendations around management challenges, Sussex Innovation encourages individuals and organisations to be more ambitious for their ideas. The three key criteria that all of our members must meet are innovation, growth potential and ambition. In other words, we look for a new or novel idea that has the potential to scale, and comes from an entrepreneur with the ambition to achieve that kind of substantial growth. Experience and resources aren't necessarily a prerequisite - if a founder is credible, has a great idea and the passion that goes with it, we can help them to develop their management skills and build the kind team around them that can help them achieve their ambitions.