Tricks for the Trade

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

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

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

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

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

So, how do we get more SME exporters?

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

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

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

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

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

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

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

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

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

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

On the Hunt

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

To-And-FRO

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Make the CaSE

The Windsor Framework agreement is good news for entrepreneurs and innovation. While Boris Johnson will find it hard to vote for Sunak’s deal, he’s feeling increasingly isolated. Even Steve Baker MP – the self-styled “hard man of Brexit” – is exhausted.

Britain’s innovators were in a buoyant mood for the Campaign for Science and Engineering’s (CaSE) annual lecture. Despite news that the Treasury was taking back £1.6bn promised for science, this was overshadowed by the prospect that the UK would soon be back in the €95.5bn (over six years to 2027) Horizon Europe research programme.

The CaSE lecture was to launch a thorough report on Public Attitudes to R&D. Entrepreneurs should take heed – whether directly and indirectly, the whole ecosystem relies on taxpayer funded schemes to support them. While it would be naive to think that all policy can – or even should – be subject to the will of the people (that’s why we live in a representative rather than direct democracy), if we want science funding to continue, public consent and engagement is important.

Over half, 52%, of people either haven’t heard of the acronym “R&D” or have but don’t know what it means. The Government’s “Science Superpower” tagline hasn’t cut through, people seem to respond better to the Department for Science, Innovation and Technology’s idea of R&D delivering “stronger growth, better jobs and bold new discoveries”. 

Just over 60% of people either agree that “R&D doesn’t benefit people like them” or feel neutral or unsure about R&D’s impacts. Surprisingly – to me at least – younger age groups are less likely to feel R&D benefits them, or think it can create local jobs in their area, and are more likely to say that we cannot afford to invest in R&D at the moment.

But perhaps there is hope for the next generation. In a report packed with a smorgasbord of interesting findings, young people are engaging more than their elders with R&D activities – whether that’s reading research, discussing research, or watching research documentaries. 

This TV example is particularly interesting in light of recent evidence on the effects of TV content on entrepreneurship following German unification   (I’m not joking). Western TV was available since the 1960s in some East German regions and conveyed images and attitudes conducive to entrepreneurship. It shows that TV content affects individuals’ decisions to start businesses and shapes attitudes and value orientations conducive to entrepreneurship. This ‘entrepreneurial mindset’ is passed on across generations with long-lasting cultural effects.

In other words: you can’t be what you can’t see.

(My colleague, Dr Anton Howes, will be particularly interested in the fact that just 3.29% of people have visited a science festival or science fair in the last year, given his ongoing dream of putting on a new ​​Great Exhibition.)

Funding to Flourish
I didn’t lead today on our All-Party Parliamentary Group (APPG) report, as the odds are that we’ve already emailed you about it at some point in recent weeks. But you can finally read Funding to Flourish: The Case for Tax Relief on Early Stage Investment.

It should be pointed out that the Seed Enterprise Investment Scheme (SEIS), the Enterprise Investment Scheme (EIS) and Venture Capital Trusts (VCTs) already have cross-party support. In the Autumn Statement, the Chancellor made all the right noises, and as a successful serial entrepreneur he understands the ecosystem. Equally, Labour’s Startup Review showed how seriously they take these vital tax breaks. But crucially, legislation is needed for them to continue, which is why we put out a letter that already has over 300 signatories from entrepreneurs (the first 200 of which you can find here). It’s not too late to sign the letter here, and please feel free to share far and wide.

While kindly supported by the Venture Capital Trust Association (VCTA), this project is very much an independent and entrepreneur-led report. It does three things: it makes a clear and coherent economic case for why these tax breaks exist; it gives voice to entrepreneurs who tend to be too busy to share their views with government; and it makes the case for what needs changing, specifically we want the Government to provide clarity about the future of EIS and VCTs, expand the generosity of SEIS, amend the financial health rules for startups, and give SAFE notes equal tax treatment.

As Aria Babu concludes in the must-read article on her report: “There are plenty of deep, complex reforms we could introduce to make the British economy more dynamic. From planning reform to sharper procurement, better childcare and smarter science funding. All of those however, take time and care to put into place. Rolling over a few tax breaks really is the kind of low-hanging fruit governments crave: as the Budget approaches, it would be a shame if the Chancellor passed it up.”

This House would prioritise economic growth over everything else

I spoke at the Cambridge Union in a debate with the motion “This House would prioritise economic growth over everything else”. You can watch the debate here. The post below is a blog post written from my notes.

I think the concept of growth can be very abstract. It’s easy for our eyes to glaze over amid all the chatter of percentage point changes and figures with varying amounts of zeros after them. And, don’t get me wrong, there will be numbers in the blog post. But I’d like to humanise it for a moment.

My mum was raised in absolute poverty. She never talks about it in those terms, but she has stories about what her childhood was like that make it clear. She lost an infant brother to typhoid. She says that her mother was an early feminist because, when there wasn’t enough food, she fed all her children the same amount and didn’t divert calories to her sons. This kind of life is unimaginable, not just to us in the UK, but also to most people in India today.

Hospitals cure tuberculosis and typhoid more often than they don’t, my cousins are all software developers, and – like in the UK – lots of Indians now struggle with too much food, not a lack.

Virtually all of this is down to economic growth. The story of India since the 1960s is one of increasing GDP. In 1960, it had a GDP per capita of about $83, a literacy rate of only 20%, and a childhood mortality rate of about 16%. Nowadays, those figures are $2000, 77%, and 2.7%. Why? A steady project of open trade, education, and institution building has turned India from a country of illiterate agricultural workers to a country with a young and well educated population, ready to join the global economy.

It is important not to mistake growth for GDP. GDP is to growth what positive LFTs are to Covid cases, or a map is to a physical territory. When we talk about increasing growth, we are talking about increasing the amount of stuff people have, and how easily they can get that stuff. It’s a measure of how well humans have been able to bend the natural world to our desires. We know that for most of human history almost everyone worked in harvesting and finding food, policing and war, or child rearing, and that the surplus after those necessary tasks was very small. But something happened in the Industrial Revolution that made all those tasks much more efficient and freed time up to pursue art, science and leisure. Growth is, to an extent, a measure of that surplus.

We also recognise that Spotify giving us access to all the world’s music is more valuable than a library of CDs. And the fact that our GDP statistics fail to value Spotify more than those CDs is a clear failure of the measurement of growth, as opposed to the concept of growth. Let us not mistake a conversation about prioritising economic growth for a conversation about prioritising GDP.

I reject Maslow’s hierarchy of needs – I think you can still enjoy music even if your parents don’t love you. But it describes a key human phenomenon, which is that when we are able to, we satisfy our basic needs.

Take child mortality as an example. In the year 1800, about half of all children who were born died before the age of five. Now, 96% of children survive to the age of five, and the four per cent who die live mostly in the poorest countries in the world. It’s clear that when people have the resources to do so, they’re better able to keep their children alive. Similarly, as economies grow, we see countries spend more on education. And we also see that economic growth is linked to women’s empowerment, democracy, and other things most people view as social goods.

Now you might say, if you care so much about child mortality or education, why not prioritise them instead?

Well you can only have one priority, and I think if we actually prioritised low levels of child mortality or CO2 emissions our world would look pretty dystopian. Say we prioritised low child mortality? Well we could do this by prohibiting new babies – if there aren’t any to begin with, there can’t be any to pass away. Or, we could take control of expectant mothers, banning them from anything unsafe or pleasurable in life, and then seize the children and make sure they are raised in pristinely clean and safe environments.

As Sam Bowman – my debating partner on the night – said, in his opening speech, economic growth is a Swiss Army knife, which gives us the ability to cope with our problems much better. It gives us the ability to make the tradeoffs that suit our situations, be they at the level of the family or nation.

I’m very keen to assert that this should not be a left/right debate. I lean to the right and I believe all my opposition is on the left, but almost every significant political thinker on either side of the political spectrum is pro-growth and has built their economic platform around it. Thatcher cut taxes and spending because she thought that would grow the economy. Stalin, similarly, used gulags and quotas as a means for making the soviet people better off. Even Scandinavian Social Democracies target economic growth and then redistribute it later.

So let me throw off all my scepticism about taxes and propose a thought experiment. What happens if we take all the wealth and resources in the world, stop growing, and redistribute it?

Global GDP per capita is about $12,000. In that scenario we would all be slightly poorer than the average person in Iraq, where child mortality is 2.5 per cent. That would be a very good start. Assuming that we don’t destroy any useful institutions in the process, the world would certainly be a better place. With Iraq’s infant mortality made global, we’d save about 2 million babies in total.

But in the rich world, we’d experience a real shock as we became less like a rich western country and more like a middle income country. Our infant mortality rate would go up by an order of magnitude and our adult life expectancy would fall by about a decade.I think, in that scenario the issue of economic growth would be of vital importance to us

Okay, so what if we say that poor countries should prioritise economic growth but that in wealthy countries we have done enough. Maybe you think there is very little to be gained if the UK gets as wealthy as the average person in Norway or Switzerland, and that it isn’t worth the effort.

I have two key responses to this. First is that a large part of the way countries get wealthier is by selling things to people from abroad. China would have struggled to get wealthier if they weren’t able to sell consumer goods to the west. By getting wealthier and being open to trade, saying nothing of the foreign aid and charitable spending that people in rich countries do, we make the rest of the world better off too. By deprioritising growth we would, effectively, be sacrificing the wellbeing of people abroad. 

My second response is that I don’t think people in the UK are as wealthy as I would like us to be. If we distributed all the money in the UK evenly, and government spending stayed about the same, we would have a post-tax income of about £18,000, which is about the same as a PhD stipend. I would struggle to live a full adult life on the income of a student. As a nation, we are already struggling to afford many of the things that we believe people in the modern world should be able to access – like heating and childcare.

So maybe you respond by saying that the opposite of prioritising growth isn’t the same as stopping it. We can choose to allow growth to happen, maybe make it our second or third issue, and but prioritise something else.

I argue that we actually make a huge difference by just choosing to prioritise growth. In rich countries economic growth is standardly between about one and three per cent.

If the UK had sustained economic growth of about one per cent, in a generation, about 30 years, a person on minimum wage would go from earning about £18,000 to earning about £25,000. Not a massive difference, but better than nothing. At three per cent growth, they would be earning £45,000, similar to an average professional today. At five per cent growth, which is what America managed during their period of major growth, they’d be on about £80,000 – a salary for a senior doctor or software engineer.

On a global scale this is even more impressive. Let’s go back to India, because it is close to my heart. Indian GDP per capita is $2,000. At a rate of one per cent growth, they would be as wealthy as someone from Lebanon, with an infant mortality rate of about one per cent. That’s fantastic. At three per cent, they’d be as wealthy as Thailand, with a child mortality rate of about 0.6%. That’s even better. At five per cent growth, they would be as rich as Greece. That’s almost unimaginable. 

The reason we want to prioritise economic growth is because there are hundreds of trade offs we have to make for economic growth – decisions about where to build houses, which taxes to raise,cut, or reform, and where to prioritise spending. By effectively prioritising growth, we can move from our sluggish one per cent growth up to two, three or maybe five per cent growth.

In truth, there are lots of things that I value more than economic growth. However, there is only one thing that I can think of that makes all other problems that bit easier to solve. Economic growth gives us the resources to tackle climate change, to feed the hungry, and heal the unwell. The surplus created by a modern economy is the reason that so many of us are now able to dedicate to anything other than survival. Survival is a given – now we can turn our minds to art and science. We’ve seen miraculous progress over the last few hundred years, but we shouldn’t be content when so many people sill go without the luxuries we have come to think of as every-day convenience. For that reason, I say that we should prioritise economic growth.

Cambridge Photo by Chris Boland

Budget It

With the Budget now just nineteen days away, regular readers will know we put out a letter to entrepreneurs making the case for why the Chancellor should extend and enhance the Enterprise Investment Schemes, SEIS and EIS, and Venture Capital Trusts (VCTs).

This isn’t a big ask. After all, at the Autumn Statement last November, Jeremy Hunt confirmed the Government would be expanding the generosity and availability of SEIS, and the government “sees the value of extending” EIS and VCTs. But legislation needs passing and the longer the Government delays the more uncertainty entrepreneurs and the investment community face.

Many of you have already signed the letter, which is why The Telegraph reported on it this week. The article notes the support of some of the UK’s most successful entrepreneurs – like Hiroki Takeuchi of GoCardless, Giles Andrews OBE of Zopa and Chris Hulatt of Octopus – but the letter is for entrepreneurs at every stage of their journey.

We have some heart-warming quotes. For example, Catherine Bedford, the CEO of Dashel Helmets: “My company which manufactures solely in the UK, in areas of economic deprivation, has only managed to raise funding due to the SEIS and EIS schemes. The schemes are crucial to the survival of viable start ups.” I know where I’ll be buying my next cycling helmet from!

There’s still time to sign the letter and tell your story for the press release, which will be released alongside a report from the APPG for Entrepreneurship next week. Join us as a Member, Supporter or Adviser if you would like me to email it to you when it launches.

Union Busting
This dovetails nicely with a debate that my colleague Aria Babu took part in at the Cambridge Union yesterday. As is the way with these things, the motion was purposely provocative: “This House Would Prioritise Economic Growth Over Everything Else”.

While I’m sure we can all think of higher priorities, economic growth is often aligned with these – whether that’s ending poverty or protecting the environment.

We’re true to our policy priorities: “Entrepreneurial endeavours have taken humanity from subsistence to relative affluence and it is entrepreneurs who will raise long-term living standards of future generations.”

You can watch the debate here or read Aria's arguments on our blog.

Upon A Time
In David Cameron’s first ever appearance at Prime Minister’s Questions, he quipped to the then Labour Prime Minister Tony Blair: “He was the future once”. It is therefore ironic that this week Blair, with Cameron’s predecessor William Hague, offered a more coherent vision of our political future than many of our present politicians seem able to.

The Tony Blair Institute’s (TBI) A New National Purpose covers some familiar ground, integrating some of our research – including Way of the Future, our joint report with them.

Chris Haley’s essay on using public procurement more effectively to drive innovation is referenced in relation to the requirement for a significant cultural change towards risk tolerance, as well as greater diversity in “alternative” procurement processes. (Read our Procurement and Innovation report and our Access All Areas: Government report with Enterprise Nation for further reading.)

But the TBI report adds another idea that the government should explore, suggesting government departments “publish and maintain a ‘Request for Startups’ list, like that used by American tech startup-accelerator Y Combinator, to signal to and incentivise innovators to work on relevant product ideas.”

In our Honour for Innovators report, we suggest that new public honours for innovators should be considered. It would be an easy (and cheap) win for the new government. John Petrie OBE, who has helped design national honours and decorations for other countries, even mocked up some potential designs, which you can see in the report.

The TBI report also recommends including the earning potential of graduates in the selection criteria for the High Potential Individual visa, as we did in True Potential. In addition, it calls for the creation of a High Potential Student visa for those studying in strategic science and technology priority areas: “This should count as time towards an individual’s indefinite leave to remain while also being more lenient in terms of working restrictions to enable these students to more easily work for innovative companies or build their own startups.”

This latter point about getting indefinite leave to remain is a critical point that many non-immigrants, including politicians, fail to prioritise. How can we expect people to take on the risk of starting and growing a business with the additional risk of being chucked out of the country? This is something we will be exploring in an event with Lord Bilimoria next month. 

There is a lot more to unpack. If you’re time poor, I would just search the document for “Technical recommendation”, read all forty-three and let me know which you think we should be helping to push.

For my part, I particularly like the idea of creating a new ministerial position to attract expert leaders to run programmes in an executive fashion, similar to how the Vaccine Taskforce was run. Anything that convinces more elite figures, like Kate Bingham DBE, from the UK’s entrepreneurial ecosystem into public service can only be a good thing – or more like an absolutely necessary thing according to Bingham in last year’s Romanes lecture.

What Reliefs?

What do you think of the Enterprise Investment Schemes or Venture Capital Trusts? If you were a Member of Parliament back in 2017, odds are, you wouldn’t have heard of them: 61% weren’t aware of the ​​Seed Enterprise Investment Scheme (SEIS), 54% were clueless about Venture Capital Trusts (VCTs), and 43% didn’t know their Enterprise Investment Scheme (EIS) from their elbow.

I’m not sure what percentage of the current crop of MPs would have heard of the schemes, but we’re acutely aware of how important they are to entrepreneurs.

That’s why we’ll soon put out a paper through the All-Party Parliamentary Group (APPG) for Entrepreneurship on growth investment. To coincide with the launch, we’ll release a public letter highlighting the importance of these tax breaks to founders in the UK, while calling on the Government to pass the necessary legislation to continue and update the SEIS, EIS, and VCT schemes.

You can read the letter and join the hundreds of signatories by clicking here.

Dividend Payments
The economist Jonathan Haskel has calculated the cost of Brexit. The Professor of Economics at Imperial College Business School and external member of the Bank of England’s Monetary Policy Committee has worked out that without Brexit, GDP in 2022 would have been 1.3% higher, which is equivalent to a £29bn shortfall. “There are roughly 28m households in the UK, so that’s equivalent to about £1,000 per household.”

This isn’t an attempt to reopen Brexit wounds. Whatever side you were on, you should be hoping that the Prime Minister is successful in striking a deal on the Northern Ireland Protocol. Yet, reality is biting hard. Perhaps it’s time to put the long-forgotten EEA (‘Norway’) Option back on the table.

Inclusive Innovation Forum
Morgan Stanley, who are our partners on the Inclusive Innovation Forum, have just opened up applications for their Inclusive Ventures Lab. It’s their in-house startup accelerator promoting financial inclusion that provided underrepresented entrepreneurs of tech and tech-enabled startups with much-needed access to capital. Importantly, it comes with £250,000 in cash from Morgan Stanley.

Launched in New York in 2017, and expanded to London in 2021 with participants from all over the world, it has helped raise in excess of $150m additional funding for the 69 companies that have participated.

Find out more here.

Drop the BEIS

This week the Prime Minister disrupted Whitehall, creating four new departments: the Department for Energy Security and Net Zero (DESNZ); a combined Department for Business and Trade (DBT, or DBaT if you prefer); the Department for Science, Innovation and Technology (DSIT); and a “refocused” Department for Culture, Media and Sport (DCMS).

Given where the Conservative Party stands in the polls, some have called it rearranging the deckchairs on the Titanic. But this is unfair. Everyone says they want politicians to look beyond the election cycle – we can’t have it both ways.

Particularly as these changes are long overdue. Other countries around the world have a focused department for energy for the obvious reason that it needs focus. As I previously argued, “tech policy would fit better within BEIS (or whatever they decide to call it next).” And splitting business and trade creates unnecessary silos.

The most exciting announcement is the creation of DSIT. Being at the cutting edge of innovation policy often puts our ideas at odds with the structure of government. Giving science, innovation and technology a space at the top table is – to namecheck our report – the way of the future.

That said, it should be acknowledged that there is no perfect way of splitting up the cross-cutting functions of government. And more and more, technology and innovation has and will upturn every aspect of policymaking – whether that’s the way we work, the way we learn or the way healthcare is delivered. In time, the state will become increasingly dominated by funding and procuring, regulating and banning technological innovations.

Critically, these technologies are much more complex than anything past governments have had to deal with. As things stand, government, regulators and the state at large aren’t up to the task. This isn’t a reflection of the people who work there – many of whom appreciate the challenge – but baked into an increasingly sophisticated set of problems.

To take the most in vogue example, ChatGPT has shaken everyone out of the great stagnation, alerting everyone to what’s possible – both on the upside and downside.

Governments are trying. The creation of the Advanced Research and Invention Agency (ARIA) is a case in point. As Matt Clifford tweets, it’s looking for Programme Directors: “This might be the most exciting R&D job anywhere in the world: ‘imagine your version of the future, then create it’.” Check out this video from Works In Progress for inspiration. I hope some of you apply – and spread the word.

And others outside government are trying to improve the inputs. We’re particularly encouraged by the ambitions of Civic Future. This week they opened up applications for their fellowships to attract more talented people and prepare them for public roles. Once again, I hope some of you apply – and spread the word.

Easy Does It
Governments across the world used to care a lot about the World Bank’s Ease of Doing Business Index. That was until Paul Romer, its former chief economist, revealed that before his tenure the methodology had been manipulated to attract funding and penalise certain countries.

Nevertheless, I think it’s fair to say that the UK wasn’t being unfairly penalised when year in year out we scored low on our ease of registering property – that is the procedures, time, and cost to register commercial real estate. In the background, this is something successive governments have tried to fix.

This week the Ordnance Survey got in touch to share an open call for applications onto its Geovation Accelerator Programme. Startups will get a £20,000 grant (no equity taken) and access to geodata from OS and property data from HM Land Registry. Find out more here.

Got Wise

As regular readers will know, I’m what you might call an "Estonia stan". I’ve visited the country many times to meet their politicians and entrepreneurs, to better understand how they built their self-styled "digital society" out of the horror of communist occupation.

But even I couldn’t object to Aria Babu’s swipe at the Baltic state in the Telegraph this week:

"[Estonia] boasts the highest number of billion-dollar start-ups founded per capita. But while Estonia clearly has enviable levels of entrepreneurship its population is too small and too remote from other tech centres to provide the ecosystem necessary to sustain its start-ups. As a result, many of them move to scale. Looking at the ten Estonian start-ups valued at over a billion dollars, only two of them, Bolt and Veriff, are still based in the country. Skype is now based in Luxembourg, Gelato has moved to Norway, and Playtech to the Isle of Man. Zego and Wise (formerly TransferWise) are now based in London and ID.me, Pipedrive and Glia are in the USA."

Over the years, the UK has benefited from being able to poach capital and talent hungry startups from Europe – including Estonia. After all, when we last looked, half of the fastest growing companies had at least one foreign-born founder. But we’re also on the receiving end of this process – particularly with the lure of Silicon Valley’s cash, talent and ethos (or even New York’s). And we’re not just losing out to America. Since Brexit, European funding bodies are still giving money to UK companies, but asking that they move operations to an EU country to continue their growth. As Aria’s article makes clear, we need to make greater efforts to hold onto our startups: 

"Of particular concern to some of our nation’s most innovative entrepreneurs are planned cuts to the generosity of R&D tax credits. These incentivise investment in developing new goods and services, and have been integral to fostering cutting-edge innovation. Scheduled to take effect this April, research from Coadec suggests the reform will cost the average start-up £100,000. Combine this with rising corporation tax, general Government hostility to tech companies, and the poor outlook for domestic investment, and it isn’t surprising that companies are leaving."

Along these lines, Ayming’s UK Innovation Barometer 2023 recently found that 69% of businesses moved R&D activity abroad in 2022 and 70% are planning to move activity abroad in 2023. At least 63% of businesses have moved activity to EU countries, primarily due to our exclusion from Horizon Europe, the EU’s key funding programme for research and innovation, and HMRC’s R&D tax delays. We estimated that the delays to processing claims were costing UK startups and small businesses at least £132m.

All is not lost. The UK is undoubtedly the best place in Europe to scale your business. But there could come a point when it’s not. As the Silicon Valley exodus shows, resting on our laurels is not an option.

Visa Vacillation
It’s sad to see Tech Nation close. The formidable founding CEO Gerard Grech has shared his views on Twitter and LinkedIn.

But as Elli Graves from Kingsley Napley writes, it’s not clear what Tech Nation’s closure means for the Global Talent visa: "the removal of Tech Nation’s funding has been planned for some time now, it feels extremely short sighted that the Home Office have allowed us to reach this stage without even the vaguest of plans for the continuity of the visa programme or a successor to Tech Nation being announced."

I wasn’t joking when I wrote last year that we should consider abolishing the Home Office.

Pay Up
In response to the recently announced Prompt Payment and Cash Flow Review, our friends at Enterprise Nation are running a series of roundtables. 

In the extreme case, late payments can cause businesses to fail, but they also have a negative impact on employment, exports, international expansion, investment, profitability, access to finance, borrowing costs, and much else besides.

Sign up below to feed into the response, and have your say on what needs to change to ensure smaller companies are paid faster.

Apply Yourself

Another week; another speech about innovation. Today Jeremy Hunt set out his “long-term vision to grow the economy” at Bloomberg. The Chancellor struck the right tone, but there was nothing particularly innovative about his speech. He may have dropped his four 'E' priorities: 'Enterprise, Education, Employment and Everywhere', but no new policies.

We have more than a few policies ready and waiting for him, his colleagues and his opposition, for that matter. On the education front, we had a report out this week with Young Enterprise on the value of Applied Learning – that is, the value of the education system simulating real-life contexts, with their relevance made obvious to young people.

Our Head of Innovation Research, and author of What Applied Learning Really Looks Like, Dr Anton Howes, makes the case in an article for CapX:

“We obviously want kids to be literate and numerate, and to have at least some knowledge of how the world works. And we often encourage them to demonstrate some capacity for analysing and evaluating arguments. But very often it can seem like our ambitions for schools have narrowed, with more and more effort going into teaching less and less.” 

It's worth reading his article in full, but I'll take a bit of a step back to situate it in our canon of work on entrepreneurship and enterprise education.

Back in 2018, I wrote about enterprise education at universities. The main thrust of the report argued that enterprise/entrepreneurship education shouldn't be siloed in business schools. After all, many degrees taught outside business schools – for example, psychology, architecture or veterinary medicine – are likely to lead to self employment or starting a business. Universities should prepare them for this.

Our next report was Educating Future Founders, which made the case for teaching children as young as eleven the basics of running a business. It looked at the international evidence, citing a number of organisations already making a difference, including the Junior Achievement's Company Program, VIVITA and KidsMBA, that are doing just this.

Following this we published ​​Future Founders: Understanding the Next Generation of Entrepreneurs, which was built around polling over 1,500 representatively selected British young people (aged 14-25). The headline finding was that over half of them have thought about starting (or already have started) a business. A further third (35%) say they have not thought about it but are open to the idea.

Crucially, respondents who have thought about starting or had started a company are more likely to have a family member or friend who is a business owner, while a surprising 57% of young people could not name a single entrepreneur who inspires them. The education system should be better supporting this growing demand.

More recently, we put together a report for the APPG for Entrepreneurship, which makes the case for properly integrating entrepreneurship in the curriculum. And in October we released Tomorrow's Entrepreneurs, which surveyed young entrepreneurs, and found, among other things, that the more money a business turns over, the more likely they are to agree that their primary aim was to tackle a social or environmental problem.

So what does this all add up to?

First and foremost, we aren't claiming that education should just be about teaching children to start businesses, or even just to be more entrepreneurial.

And yet, you don't need to read all our reports to know that our schools are missing a trick. As Anton argues, we aren't nurturing attributes like confidence, initiative, character, and more general attitudes to learning. Clearly doing this at scale through the education system is hugely complex, and as was mentioned at the launch, you need a strategy for different schools based on their capacities.

All this doesn't mean entrepreneurs shouldn't look to change things themselves – whether that's through Young Enterprise, or the many other organisations supporting enterprise education. As one of the young entrepreneurs who attended our launch event said, as well as all the skills that he has learned from the Company Programme, he also said something too many lose sight of in the education system – he said it was incredibly fun. I didn't do Young Enterprise and can count on my hand the number of times I had fun while learning at school. Maybe there's a lesson in that.

EX 23
We're teaming up with the Small Business Roundtable, Intuit, Enterprise Nation and the Federation of Small Businesses for a half-day symposium that aims to advance entrepreneurship on a transatlantic level.

EX23 will bring together small businesses, entrepreneurs and government leaders from the United States and the United Kingdom, and subject matter experts from across the globe for a discussion exploring entrepreneurship policy, industry trends, national and international economic development, the future of small business, international trade, and much else besides.

It will take place on Thursday, 16 March. I'll share more details of the coming weeks, but if you're particularly keen you can register now.

Summit Special

In Davos this week, the Business Secretary Grant Shapps announced that the UK will launch a Scale-Up Summit “to bring together key frontier tech, development and finance figures who have accelerated tech businesses from start-ups to scale-ups.”

Shapps wants to hear from those in the UK and beyond – from California to Tallinn – who have achieved high growth, unicorn status and experienced multiple exits, to “build networks and share expertise.”

It’s still in the planning stages. We’ll be sharing our advice on how to make this successful, but I have some initial thoughts based on my experience of attending conferences (even though I tend to avoid them).

First, the agenda should be acutely focused on particular challenges and opportunities. For example, I hope his mention of Tallinn is a reference to Estonia’s impressive digital state. After all, it’s estimated that their reforms collectively save Estonian business owners around 12 million hours every year. What we need now isn’t a vague session about the benefits of such innovations, but a concrete blueprint of how we implement them. Many of these innovations were created and are being developed by Estonian entrepreneurs, who could simply be hired to do the same here. We shouldn’t be wasting lots of taxpayer money reinventing the wheel.

Second, each session needs to be attended by the relevant ministers across government departments and top-level civil servants. For example, if there’s a session on the space industry, it’s no good just having the business department and the UK Space Agency in attendance. Depending on the focus, the likes of the MoD, DCMS, Transport, DIT, Defra, Ofcom, and the Civil Aviation Authority may need to attend. Where there are sessions which involve civil servants from multiple departments, these same civil servants then need to share ideas and potential actions with each other. 

Third, to get the best people from around the world it will need to be a hybrid event, but the networking component (for want of a better word) – whether online or in-person – is where a lot of the added value can be created. One technological innovation that makes conferences more useful is the ability to see profiles and request one-on-one meetings. Ministers, MPs and civil servants should be included in this.

Beyond Davos and conferences, it’s worth taking a step back to acknowledge the Business Secretary’s speech in the round. When I started The Entrepreneurs Network nearly a decade ago, the language of entrepreneurship was alien to politicians. The Coalition had launched the Startup Britain campaign a few years earlier, but their thinking didn’t scale beyond encouraging more small businesses.

That’s all changed, with MPs across all parties keener than ever to understand and talk about entrepreneurship. This is an opportunity and challenge to politicians to live up to their rhetoric.

I’m sure many of you have more experience of what makes for a successful summit. So why don’t you let me know and we’ll do our best to amplify your views.

Choice Questions
Our friends at Coadec have launched a survey for founders to share their views on the UK's immigration system. They want to know about any barriers you might have faced when hiring from abroad, and whether you find the UK’s immigration system easy to understand and navigate. There are just seven multiple-choice questions, so if this is a policy area where you want to see change, it’s worth spending a few minutes to respond.

Only a Number
Adviser to the network Jarmila Yu alerted me to a media opportunity that I think one of you will be able to help with. The BBC’s Felicity Hannah is making a documentary about very young entrepreneurs: “Would love to hear about children or very young people who have launched their own businesses (but, like, actually – not businesses that their parents really run).” You can get in touch with her via Twitter. Do share far and wide.

Blockchain firms with a female founder are more successful

City AM recently published an article about the gender gap in venture capital. They cover a new study from the Vienna University of Business which claims that female entrepreneurs are held back by a false “prototype” of what a real start-up founder looks like. The article then mentions the research that we did with Barclays, where 72% of high growth female founders agreed that it would have been easier to raise cash if they were men and 59% said they had been discriminated against because of their gender.

The Vienna study identified 107 blockchain-related start ups from Crunchbase and found that 15 of the teams were all-male, 92 were mixed gender, and none were all-female. They controlled for team size, education level, industry experience, managerial experience and start-up experience and found that all-male teams were less successful than the teams with some women on them. And majority female-founded teams were again less successful than the mixed teams.

This is similar to what we have found in our own research. Female founders are just as likely to receive follow-on funding and female-founded companies have the same return on investment as male-founded companies, but female founders struggle more when raising their first rounds of equity investment.

However, the press release of this study claims much more than this . According to the study’s author “while female founders need to be as different as possible in order to stand out from the competition, the study suggests that being female already deviates too much from the normative standard. As a result, female founders are not able to prove themselves in the first place because they are simply denied the chance, or the investors’ funding, to do so, regardless of their education or experience.”

Their evidence does not support this broad claim. For one, blockchain businesses are not going to be representative of startups in general. A lot of the interest in blockchain has come out of online sub-cultures interested in libertarianism and crypto-currency. These cultures skew very heavily male, and are often accused of being quite misogynistic. Data gathered based on blockchain cannot be generalised to represent the culture in, say,  healthtech or green technology.

The hypothesis being tested by the study is that the more deviation from the “prototype” of a typical entrepreneur (who is assumed to be male), the less investors will support the company. They then tested this hypothesis with the method described above, and were surprised to find that companies with some female founders outperformed the all-male companies. Despite finding evidence that contradicted the initial hypothesis, the rest of the study and the press output continues with the same argument as before. With little, if any, alteration based on their results.

From my own research, their hypothesis that women find it harder to be entrepreneurs because people are not used to female entrepreneurs seems plausible but their method of investigating this question does not give much evidence either way.

This represents a broader trend in academia (and, to be fair, in think tanks) where the pressure to publish eye-catching research means twisting the results of a study into something more sensational. Very few people will read the paper, so where’s the harm, they think, especially if what you’re saying may be broadly true? But it comes at a very real cost. We need good quality research about the tough problems that we face collectively, and this means being clear with your audience about what you found.

I would have been perfectly happy to see a news article saying “Researchers find that blockchain firms with a female founder are more successful than all-male blockchain companies.”

Clouds on Horizon

This week the Science Minister George Freeman set out the UK’s Global Science Strategy beyond Horizon Europe. His speech was sensible and necessary, but highlighted the challenge the UK has in crafting science policy in an uncertain environment.

Freeman was optimistic, but pragmatic. Pinching Boris Johnson’s phrase, he said; “I think we can have our cake and eat it: I think we can be a domestic powerhouse, a European player and more of a global player.”

He isn’t closing the door to our involvement with Horizon Europe just yet though – quite the opposite. He is “​​continuing to push actively for association.” But the speech also says we need a good ‘Plan B’, which would make it “more likely that the EU will pick up the phone and ask us back in.” Last June he gave the EU an ultimatum for last Autumn, which has come and gone.  So we’re getting to a point where there really is no alternative.

There are risks in going it alone. Only this week the UK’s attempt to become the first European nation to launch satellites into orbit ended in failure. The final frontier is prone to setbacks no matter the nation or group – with recent delays to the European Space Agency’s (ESA) Ariane-6 project and the grounding of Italy’s Vega rockets. But there are risks that eclipse one failed launch, with space funding being illustrative of more general post-Brexit institutional challenges.

The UK remains a leading contributor to the ESA, which as I wrote in a paper for the All-Party Parliamentary Group for Entrepreneurship is to be welcomed. However, with space becoming an ever-increasing geopolitical concern, power and funding is moving away from ESA and into core EU institutions which, of course, we are no longer part of. So even being part of ESA and other pan-European agencies is no bulwark against the UK and its entrepreneurs being sidelined.

In space, we are diversifying our relationships, with agreements like the UK-Australia ‘Space Bridge’ – in which the UK’s and Australia’s Space Agencies are cooperating to improve space related trade, investment, research and business collaborations. However, as Freeman acknowledged, we can’t match the US, China or EU science budgets. Instead, we “will need to carve out a realistic role which draws on our historic strengths”, focusing on specific research challenges where we can lead multinational consortia. He mentioned things like polar research, space, biosecurity, synthetic biology, agritech and gene editing of crops, and research into the growing sector of functional food. He calls on the UK to become “a global testbed”, echoing ours for the UK to become a “Testbed Nation”.

On the Northern Ireland Protocol, relations are thawing, with the UK this week agreeing to allow the EU access to its trade IT systems. The dispute over post-Brexit trade rules clearly needs resolving before the Commission will let the UK rejoin Horizon Europe. 

Rather than having our cake and eating it, you might think we’re stuck between a rock and a hard place. Or you may be optimistic about Freeman’s vision of becoming a testbed nation. Either way, what's the alternative?

Heart of the Matter

“The change we need is to put innovation at the heart of everything we do.” So said Prime Minister Rishi Sunak on Wednesday as he set out his priorities for 2023. 

He said all the right things: “Let me tell you why innovation is so important. Over the last 50 years, it was responsible for around half of the UK’s productivity increase. New jobs are created by innovation. People’s wages increased by innovation. The cost of goods and services reduced by innovation. And major challenges like energy security and net zero will be solved by innovation. The more we innovate, the more we grow. And the world is seeing an incredible wave of scientific and technological change, so right now, the most powerful way to achieve higher growth is to make sure the UK is the most innovative economy in the world.”

The Prime Minister claimed to already be doing this by: increasing public funding in R&D; seizing the opportunities of Brexit; making sure entrepreneurial and fast-growing companies get the finance they need to expand; and spreading a culture of creative thinking and doing things differently across every part of the UK.

I’ll take each in turn.

First, while successive governments should be commended for their commitment to R&D spending, in the Autumn Statement the government cut R&D tax credits for smaller companies. This coming April, the credit for companies claiming through the SME scheme will be reduced from 33.35% to 18.6%. As Wayve’s CEO Alex Kendall says: “We’ve seen really strong rhetoric from the government being pro-innovation, pushing the UK to be one of the best environments if you want to come and start a company. [The credit reduction] feels like a U-turn on that rhetoric and that strategy, which is disappointing to see.”

I’m not sure what, if anything, has been seized so far post-Brexit. As the TIGRR report and a succession of Regulatory Horizons Council reports show, there are opportunities, but they haven’t been a priority. Philip Aldrick is to the point: “Sunak, a Silicon Valley acolyte, believes in tech, ideas, innovation and capital. Thrilling stuff, but he might get bigger rewards simply by delivering on his promise to get the Northern Ireland protocol fixed.” However, George Freeman MP (co-author of the TIGRR report) remains optimistic for some regulatory reforms.

On access to finance, we will wait to see whether he can unlock the institutional investment that we’ve long called for. I’m particularly interested to see more detail on the Long-term Investment for Technology & Science (LIFTS) initiative, which is designed to catalyse investment from pension schemes and other institutional investors into UK science and technology businesses.

When it comes to impacting culture, much of this is frankly outside the power of government. However, as we have argued, the Great Exhibition of 1851 managed to inspire a generation of innovators and we could do so again. This would be the opposite of last year’s failed Unboxed festival, which was described by the DCMS committee as “vague and shape-shifting”.

Stupid Economy
We don’t know what the biggest story of the year will be because there’s no accounting for a deranged world leader like Putin, or a pandemic like Covid. But even if they don’t turn out to be the biggest stories, we know that the Government will have to deal with the strikes, a recession and the impasse of post-Brexit trading arrangements in Northern Ireland. 

Local elections will be held in May. Most don’t expect a general election until 2024, but last year nobody predicted three Prime Ministers. Even without an election, the campaigning will start gearing up in earnest.

The economy will be front and centre. Of 101 leading UK-based economists polled by the Financial Times, more than four-fifths expect the UK to lag its peers, with GDP already shrinking and set to do so for much or all of 2023. Professor Ricardo Reis concludes: “The UK suffers from an energy shock as bad as Europe’s, an inflation problem . . .  as bad as the US and a unique problem of lack of labour supply from the combination of Brexit and the NHS crisis.” You can read the full responses here.

Bloomberg’s economic predictions are equally bleak – including a significant drop in house prices (even at a time of gross undersupply when it’s most needed). The Office for Budget Responsibility expects a 9% decline and many others are predicting even more. This would hit business creation as house price growth is strongly correlated with entrepreneurship, and there is a strong positive effect of home equity on the probability that a non-business owning household will switch to entrepreneurship in the future. 

Kitty Donaldson is “on the lookout for Keir Starmer to try and recreate some of the cultural groundswell of enthusiasm for a Labour government that Tony Blair managed to create in the mid-1990s.” Perhaps a drill remix of Things Can Only Get Better? While Cool Britannia 2.0 is an overstretch, Starmer (as Blair was when he was favourite to enter Downing Street) will be asked to set out a more detailed policy platform.

Elizabethan Order
Back in 2021 our Head of Innovation Policy Anton Howes and Ned Donovan called for the creation of a new order of chivalry – an Elizabethan Order – to raise the status of innovators, entrepreneurs, engineers, and scientists. Part of the reason is that the current Order of the British Empire fails to do this, with on average only 6.7% of the awards being given for those activities. Instead, it largely goes to philanthropists, civil servants, or people who are already famous for sports, acting, and music. With the 2023 New Years Honours, we had hoped for some improvement, but this year it’s actually fallen a little, to 6.2%. Still, it’s incredible to see Anisah Osman Britton, chair of our Inclusive Innovation Forum, and Alison Cork, member of our Female Founders Forum, both awarded an MBE. Both richly deserved.

So, Last Year

This will be the last newsletter of the year. I won’t pick over the political malarkey and machinations of a year with four Chancellors and three Prime Ministers – many others will do a better job of that. Instead, I want to just share what we’ve been up to. The tl;dr is: we’re bigger and better than ever, producing more reports, hosting more events, and, most importantly, having a greater impact on policy.

Thanks to all our sponsors, Patrons, Advisers and Supporters. We wouldn’t – and couldn’t – exist without your support.

If you would like to get more involved, you can join us here. Or, if you’d rather have a chat, book 15 minutes in my diary for early next year, or just drop me an email.

Q1
The start of the year was packed with events – mostly online for obvious reasons – with our various forums on green entrepreneurship, female founders, and small businesses. We also hosted online events with leading VCs through our Something Ventured project with FieldHouse Associates, on the future of immigration with Kingslety Napley, and when things opened up we got back to private dinners with our Advisers with FTI.

In February we released Strong Foundations, written by our Head of Policy, Aria Babu. It makes a forceful case that entrepreneurship is being dampened in our most productive cities due the high cost of housing and office space. The Telegraph published our open letter signed by 64 entrepreneurs and campaigners, Aria wrote on how high housing costs are sapping growth, and if you’re still not convinced I wrote about it for Forbes.

In March we released Access All Areas: Finance. The report made the case against an Online Sales Tax (which is thankfully now dead in the water) and extending the EIS, SEIS, and VCTs schemes (which thankfully isn’t).

March also saw the launch of the Inclusive Innovation Forum project with Morgan Stanley. It focuses on funding for underserved founders – a topic that we’ll focus on in more detail next year. 

Q2
May saw the release of our Procurement and Innovation report which identified key issues with the current public sector procurement process and put forward 14 ideas for improving it. 

In June the APPG for Entrepreneurship released a report on Entrepreneurship Education in the House of Lords with support from FinnCap. The report highlighted the lack of a specific entrepreneurship education strategy and made the case for why it should be embedded across the curriculum. Many of the UK’s leading entrepreneurs signed a letter backing the report, and this week BGF’s Stephen Welton is the latest to back our proposed our reforms. 

We also released True Potential, which argued for the expansion of the High Potential Individual Visa to include universities with more successful graduates (as decided by real-world labour market data from Glassdoor) than those already on the government’s list.

Q3
Building upon our Procurement and Innovation report, in July we released another report with Enterprise Nation on how government can fix procurement for small businesses which included new data from Tussell about how which departments spend more with SMEs and are meeting the government’s overall targets.

In August we published A New Model for Science with the Tony Blair Institute and Convergent Research. It made the case for investing in Focused Research Organisations, which undertake projects at the intersection of cutting-edge-science and entrepreneurship that are too big for a single academic lab to do; too complex for a loose, multi-lab collaboration; and not directly profitable enough for a venture-backed startup or industrial R&D project. Aria has written a useful explainer for those new to the idea.

In the same month we released ​​Tech Startup Manifesto 2022 with our friends at Coadec (incidentally, do take their survey on the upcoming reduction in value of R&D tax credits for SMEs). We called on the new Prime Minister to do everything in their power to support our ideas. Liz Truss did, but we all know what happened next, though it's great to see the current PM retaining many of the bits of the Truss agenda we campaigned (while scrapping those we didn't), and Labour also backing them in its Startup Review.

In September the APPG for Entrepreneurship released a report with the support of the Space Applications Catapult on supporting Space Startups and Scaleups. In Q3 we also hosted four Female Founders Forum roundtables focused on the UK’s fastest growing businesses, a virtual roundtable on accessing talent, an event on the future of sustainable businesses, and an Inclusive Innovation Forum virtual roundtable on public policy.

Q4
In October we launched Tomorrow's Entrepreneurs in the House of Lords with Youth Business International (YBI). The report shows that attitudes towards entrepreneurship have shifted, with young people seeing entrepreneurship as a way of changing the world instead of simply a way of making money (although pleasingly we also found that founders who want to change the world for the better are also more profitable). Read my thoughts about the report in Forbes.

In November we released another report with Enterprise Nation on the importance of  access to the right people so entrepreneurs can meet their growth ambitions. It makes a series of recommendations to boost the supply and quality of the labour force, including reducing the cost of visas, reforming the Apprenticeship Levy, and widening the scope of tax breaks for training.

November also saw the release of One in a Million with Barlcays – the culmination of a year of roundtables, interviews and surveys with female founders who have raised over £1m. It’s a sizeable report, covering everything from attitudes in the media to division of chores at home, but read Aria on the impact of the ‘chore gap’ and childminding regulations.

In December we released Supporting SMEs Successfully with Virgin Money in the House of Lords. It found that while existing interventions are well intentioned, and in many cases working well for the businesses using them, more could still be done to ensure they are as effective as possible. Eamonn Ives, our new(ish) Head of Research, wrote about the report in CapX.

In Q4 we started hosting more private dinners, something we’re hoping to do more of in 2023 (get in touch if you’re keen to host). We hosted Lord Clement-Jones CBE in Drummonds to discuss how to make the UK the best place in the world for artificial intelligence. With Evelyn Partners we hosted two, one on tax reform and another on increasing the quality of people in public life.

We’ve worked closely with Labour on their Startup Review, hosting two of their eight roundtables, to talk about economic growth and female founders respectively. We definitely managed to make some impression, as they quoted our second report on procurement in the final document. We also hosted a fireside chat with The Office Group on business funding for 2023.

Again, thank you to everyone who has supported us this year. We look forward to continuing to do what we do in 2023, championing entrepreneurship and making the UK the best place to start and grow a business. 

Remix To Ignition

Nuclear fusion was ‘always thirty years away’ – until it wasn’t. This week we learned that researchers at the US National Ignition Facility have achieved ‘ignition’. Nature has a useful primer on the science, but to cut a long story short, the facility reaction released roughly 54% more than the energy that went into the reaction. You don’t need to be Ernest Rutherford to understand this is significant – world-changing, in fact. 

When, not if, the technology is commercialised, it will make reversing climate change and humans’ wider negative impact on the planet a cinch, as our Head of Research explained a few years ago.

But that’s just the start. As Eamonn also explains, grand projects like terraforming Mars and interstellar exploration will become economical – possibilities will open up that are so incredible they could even tempt Elon Musk away from Twitter. Perhaps the most incredible thing will be the way nearly free energy would ripple throughout the economy, reducing the cost of just about everything. Entrepreneurship and innovation would reach new heights, as the cost of energy, a major blocker between imagination and action, is destroyed.

I’m getting ahead of myself though, and it's worth pointing out that others, including The Economist, are less bullish than I am. After all, first, it needs to be commercialised. 

Given its potential to make us all wealthier, healthier and happier (if ending absolute poverty doesn’t make you happy I don’t know what will), I jumped at the chance to visit First Light Fusion, the Oxford-based fusion pioneer, to see a 'shot' in action earlier this year.

I was there to meet Nick Hawker, its founder and an Adviser to The Entrepreneurs Network. The good news for Nick is that First Light uses the same physics that has now been proven by the National Ignition Facility. They take a different approach though – using a projectile instead of a laser.

As Nick says, while this “proves that the core process works, First Light has a different wrapper around that process that we believe has a much more rapid path to electricity generation.” Nick believes his method can be commercialised more quickly.

Whether laser or propulsion is the first to crack the commercialisation of inertial fusion, this is a case study in the importance of funding fundamental science over a long time scale (there were complaints the US National Ignition Facility was a waste of money), thinking seriously about how we can better at spinning out more technologies from universities, and why we should be unapologetically optimistic about the potential for progress.

Cut it Out
In not entirely unrelated news, as reported in the Financial Times (paywall), more than a dozen leading UK start-ups have appealed to the Prime Minister to rethink proposed cuts to research and development (R&D) tax credits.

“We’ve seen really strong rhetoric from the government being pro-innovation, pushing the UK to be one of the best environments if you want to come and start a company,” said Alex Kendall, co-founder of Wayve, who coordinated the letter with tech investors Form Ventures. Kendall’s rebate will drop from 33% to 19%, while Ochre Bio is projected to lose half its projected £3m rebate in 2023 and 2024.

Both these companies are producing exactly the sort of innovative research that R&D Tax Credits were made for: Wayve is a London-based startup creating autonomous driving technology based on computer vision and machine learning, while Ochre Bio is developing therapies that regenerate poor quality donor livers, so more people have access to better quality organs.

Entrepreneurs should get in touch with me to share your experiences of the scheme. This won’t be the last you read about this here.

Help Yourself
Less than one thousand Help to Grow: Digital vouchers have been redeemed by SMEs. That’s why the Government is scrapping it in two months. “The scheme has supported businesses to grow, but with take-up lower than expected, the government cannot justify the continued cost of the scheme to the taxpayer.” 

The Help to Grow: Digital programme was designed to give 100,000 SMEs free and impartial advice on how technology can help their business and vouchers worth up to £5,000 to cover up to 50% of the costs of buying pre-approved software.

This comes on the back of a campaign we backed pointing out the failing of the scheme, and our recent report for the All-Party Parliamentary Group for Entrepreneurship (APPG) that was critical of the scheme and the failure of the officials to release data on the number of business owners who have taken up the scheme. We now know why they were so reticent to let us know.

While it would be easy to say we were right, as with any experimentation, we need to accept that government schemes will also fail, and we should actually commend the government, both for starting and scrapping it and looking to deploy the money in a more effective way. However, for policy experimentation to work, we need to learn from mistakes, so BEIS should investigate why it failed so that future governments can do better next time (or not do it at all).

Start-Up, Scale-Up

This week, Labour’s much-anticipated Start-Up, Scale-Up Review was released. It’s a solid piece of policy work – although we might be biased, having hosted two of the eight roundtables for dozens of entrepreneurs and experts who all fed into it.

First, I’ll shamelessly share our reference in it:

“It is clear from responses to the review that procurement can play an important part in supporting innovation. One of the main ways in which the Government can support start-ups and small businesses to gain access to a market is by being an anchor customer of their goods and services at an early stage.

“However, evidence suggests that the proportion of public sector procurement spending going to small businesses has decreased since 2016, from 25% to 21% in 2021. Evidence from Tussell for The Entrepreneurs Network also captured the variation across government. The Department for Culture, Media and Sport devotes 37% of its budget to small businesses, whilst the Department for Transport devotes just 2%.”

The report being referenced is Access All Areas: Government, which we worked on with Enterprise Nation. 

The Review also suggests that Labour “assess the case for making pre-market engagement mandatory for all government buyers.” As we argued in Procurement and Innovation, “procurement regulations in the US require agencies to employ pre-market engagement to identify and acquire potentially useful commercial off-the-shelf solutions. While in Canada, procurement managers are encouraged to use off-the-shelf products unless a bespoke solution is operationally necessary.

“The government should adopt the same approach here by creating a requirement for public bodies to explain why they have sought a bespoke solution over off-the-shelf solutions. This must not become a box-ticking exercise, but rather be part of a long-term shift to greater pre-market engagement. Data on the share of bespoke solutions, relative to off-the shelf solutions, should be published on an agency-by-agency basis and the worst offenders should be required to invest in greater pre-market engagement.”

It should be noted, however, that this isn’t a significant break from Conservative Party policy. In fact, the Procurement Bill is slowly making its way through the sausage factory that is Parliament.

Another area where Labour are aligned with the Government is on tax breaks for investing in startups. As stated: “Through the call for evidence for this review, and the various roundtables that we have held, it is clear that there is strong evidence as to the benefits of both the SEIS and the EIS schemes in stimulating investment and entrepreneurship. Labour should commit to maintaining the incentives provided by those schemes and should commit to continuing the EIS and VCT incentives beyond their 2025 sunset.”

But it goes further, recommending that Labour reviews the “scope, scale, and design of both EIS and SEIS to ensure they are providing adequate incentives.” That means that limits, caps and the qualifying period could all be on the table.

This review also recommends that Labour ensures that the “R&D tax credit system continues to adequately incentivise investment and innovation by high growth firms, including SMEs.” The review is also live to our (and others’) complaints about delays: “One response noted that they had received numerous reports that R&D Tax Credits had become increasingly hard to access with payments often taking months to come through, resulting in some eligible businesses not applying.”

On the issue of female founders, it was good to see the report acknowledge that “a prominent factor cited for many women was the affordability and availability of childcare.” It’s something that my colleague Aria Babu has been leading on – both in our latest Female Founders Forum report with Barclays, and in many other places, including to the Work and Pensions Select Committee. 

Finally, the All-Party Parliamentary Group (APPG) for Entrepreneurship gets a shout out, through Erika Brodnock, who is one the group’s Advisers: “Her journey in trying to fundraise for her previous start-up between 2012 and 2019 was so challenging that she reached the conclusion she would need to install a white male CEO to ever raise funding. Furthermore, from many conversations she has had, and the research generated through Extend Ventures, it has become clear to her that Black founders seeking investment face an uphill battle.”

We will continue to undertake work on this policy agenda through the Inclusive Innovation Forum we launched this year with Morgan Stanley, who run a really impressive Multicultural Innovation Lab. You can read the write-up of our latest newsletter here, and we will be holding an event to discuss some of the themes of the review in a virtual roundtable on 24th January at 3pm. Drop us an email if you’re keen to get involved.

There is a lot more in the report. Check out the proposed ‘founder-track’ option for spinouts where universities would only take a share of equity at or below 10%; the call to give the British Business Bank more independence; the call for a British ‘Tibi’ scheme to bring together institutional investors and VCs; and to explore ways to foster the provision of Long Term Asset Fund (LTAF) products for ISA investors.

Well done to Julie Devonshire, Tom Adeyoola, Alex Depledge and Lord Jim O’Neill for keeping all this to a pithy 28 pages. We would really value your thoughts on anything in the document, as we’ll continue to be engaging with Labour – as we do with all major parties.

Supporting SMEs Successfully
This week we launched a new APPG for Entrepreneurship report in the House of Lords in partnership with Virgin Money: Supporting SMEs Successfully. The foreword was penned by Bill Esterson MP, Shadow Minister for Business and Industry, with Selaine Saxby MP, Officer of the APPG for Entrepreneurship and Chi Onwurah MP, Shadow Minister for Science, Research & Digital speaking at the launch.

It focused on the flagship Help to Grow schemes, which, following a call for evidence, Eamonn Ives – our Head of Research, and the report’s author – found could do with some changes. On ‘Help to Grow: Digital’ Eamonn makes the case for cutting bureaucracy to get more innovative software on the platform. On ‘Help to Grow: Management’ the call is for more flexibility and experimentation.

Check out the APPG’s Twitter thread for a succinct summary of the findings, read Eamonn’s article in CapX, or read my article in Forbes.

Million-Pound Questions

In the House of Lords on Tuesday, we launched One In A Million: our sixth major report of the Female Founders Forum, which we run with Barclays. The title comes from the fact that there aren’t as many female founders of high-growth firms as there could, and should, be: just 32%. We don’t need to look far to find countries where there is a higher percentage of female founders. Switzerland, the US, Canada, and the Netherlands are all doing better. 

One In A Million shares the success stories of many of the most successful of that 32%. Over the last year, Aria Babu, our Head of Policy, has interviewed 59 female founders who have raised over ​​£1 million. As the report reveals, just 16% of equity finance goes to companies with a female founder or co-founder. 

Entrepreneurs buck the trend – even their own stereotypes. As the report shows, there is no such thing as a typical female entrepreneur. But there are important questions to ask in the dividing lines, lessons to be learned even from outliers, and, ultimately, concerning trends across the experience of many female founders that require action from government, the finance industry, our education system and society at large.

First, 59% of our sample feel that they have been discriminated against because they are a female founder, and 72% believe that it would have been easier to raise finance if they were a man. If you have any doubts that this is still a problem read the case study of Kim Nilsson, founder and CEO of PeripherAI: “Very few founders ever get concrete proof that they have been discriminated against, although many have stories of when they suspect they had been. Kim is the exception. She said that once, after an Angel investing pitch, one of the investors reached out to her and said that he had made a mistake. ‘He emailed me afterwards and said that he had given money to the other team because they were men and they seemed so much more confident. He told me he regretted that decision.’”

Nevertheless, 76% of the female founders we polled said that they thought there were advantages to being a female founder. As Raissa de Haas, co-founder of Double Dutch says in her case study: “It helps you to stand out. If you’re in a group of ten colleagues, the rest of whom are men, people are more likely to remember who you were.” And Hannah Philp, co-founder and CEO of ARC Club said: “There is an advantage. I feel like there’s less of a prototype for what I have to do. I don’t have a dress code, for example. I don’t have to fit a mould.”

Just over half, 54%, of the founders Aria spoke with think that the media positively portrays them. As Saascha Celestial-One, co-founder of OLIO says: “You get more PR. That’s usually helpful.” But as Elsie Rutterford, co-founder of Bybi says: “The fact that we are both women often poses itself as a PR opportunity. But the story that gets penned could do with work. The stereotype of a female founder is quite cliched. There are only so many stories that get told about women in positions of power. There are only so many things you get to be.” Yet the majority, 79%, still think that the framing of “female founders” is helpful. 

Every time I write about our Female Founders Forum reports, I get a couple of emails from men asking why we focus on female founders. Here’s one compelling reason: of those living with a partner, only 18% say that their partner does more housework, while 38% do more housework; the gap is wider for those with children: 12% versus 48%. This points to why childcare is such a big issue for the female founders in our community – as well as for women and households more broadly.

I suggest you read the report (or at least skim it), read a write-up in The Times (paywall), read Aria on how the ‘chore gap’ is still holding female founders back, or read the speech Aria delivered at the launch.

Happy Mondays
Getting the right funding for your business is such an ever-present challenge that there is always the risk we overlook it. That’s why we picked it as the topic for Monday’s event with The Office Group, who we work with (and out of). 

You’ll hear from Julia Elliott Brown, founder and CEO of Enter the Arena, member of the Female Founders Forum and author of RAISE: The Female Founder's Guide To Securing Investment; Henry Whorwood, head of research and consultancy at Beauhurst, who we’ve worked with on a number of reports; and Patrick Newton, ​founding partner at Form Ventures, who back companies in UK startups with public policy exposure, and who we regularly chat to about what the regulations their portfolio companies are struggling with.

We’re a lean operation, so wouldn’t stretch to anything as profligate as a public Christmas party. However, most of the team will be there if you want to pop along and say hello before and after the event, and raise (if not some funds) at least a festive glass.

Inclusive Innovation Forum: Access to Funding

Welcome to the third newsletter of the Inclusive Innovation Forum. The first and second roundtables and newsletters considered how founders of colour can access funding, the different paths they can follow, the barriers they face, and what can be done to unlock their potential.

In the third roundtable we focused on understanding the role of public policy and how it can support founders of colour. At The Entrepreneurs Network we will use these insights of this project to inform its policy work and lobbying efforts, including:
- Ongoing discussions with government departments;
- Engagement with policy makers outside government, e.g. the Labour Start Up Review
- Upcoming conversations with the British Business Bank;
- Scoping out a briefing paper to impact policy.

Roundtable Insights

The roundtable opened by summarising the findings from the Report of the Commission on Race and Ethnic Disparities, which analysed different areas, including employment and enterprise. As Tony Sewell, Chair of the Commission on Race and Ethnic Disparities, said in his opening remarks: “There are disparities in terms of who gets money from venture capitalists for their startups, and these disparities are also rooted in peer groups and families."

There was agreement that a barrier for underrepresented communities to start an entrepreneurial journey is the lack of access to capital. Marquis Caines, partner at Diversity-X, explained this problem: “Typically, in the black community, we can not do family and friends rounds. When we try to leave the ideation stage, most of us do not even have the capital to develop the idea of a product, which is a necessary first step before approaching venture capitalists.”

It was suggested that this situation should be addressed by the government:

"Public policy, especially within the pre-seed investment space, should include more vehicles to promote more equitable access to capital." – Dama Sathianathan, Partner at Bethnal Green Ventures.

“I don’t think that mentoring and outreach is good enough, because the question is not how do we discuss ideas, but how do we turn the idea into a business.” – Ahana Banerjee, Founder & CEO of Clear.

Mark Neild of the University of Bristol said: “People from underrepresented communities often can’t access Start Up Loans because credit decisions are based on whether the applicants have money and if they can pay it back.” He believes that credit decisions should shift to be more about the prospects of the business rather than the founder's already existing wealth.

The discussion, additionally, revolved around whether entrepreneurship can be promoted by shifting mindsets and encouraging people to convert their day jobs into a business. Mark Neild thinks this may be particularly important for excluded groups that may not be able to access employment and may be better suited to selling directly to the public rather than selling their skills to an employer.

Another major topic of conversation was around if entrepreneurs should focus on selling to their own communities or look to expanding their market beyond them. Many of the attendees said that an advantage of selling to their own communities is that they understand what their specific needs are that have not been solved by others.

Moving on, the discussion covered the importance of promoting minority-lead accelerators and other organisations that provide startup support. More diverse organisations that support startups could be game-changing.

Eni Timi-Biu, Founder & Director, Create Your Table, said: “The opportunity to design and deliver programmes can be monopolised by quite a few organisations who often mirror some of the biases that exist in the entrepreneurship ecosystem.”

Ahana Banerjee, Founder & CEO of Clear stated some of the key institutional blocks for underrepresented founders:
- There are too few ethnic minority investors in senior positions (with decision-making power) at VC funds;
- Companies tackling problems faced by underrepresented founders are often built by those minorities. These areas may be less familiar or less well understood by most investors, resulting in even more unknowns and an increased perceived risk;
- Many investors will not respond to cold communication, thus, the ability to fundraise is often tied to one’s network. Most people in VC come from a finance, tech, or a startup background; these are also white male-dominated fields.

It was agreed that something has to be done to overcome those institutional barriers and this is something that the private sector can help with. “Corporate-led programmes such as the Morgan Stanley Multicultural Innovation Lab, which focuses on actively investing in improving access and opportunities for diverse founders, are critical. We find that there is a strong business imperative to invest in diverse founders, given the resilience and innovation they bring to the table” said Sanghamitra Karra, EMEA head of multicultural client strategy at Morgan Stanley.

Finally, it was agreed that it would be valuable to have a better evidence base to, as Tony Sewell put it “gain a better understanding of what works and use this as a model to move forward.”

One in a Million

This week we released our sixth annual Female Founders Forum report One In A Million with Barclays. Unlike in previous years, where we have repackaged and drawn out themes in other people's data, this year we have created our own new data set. We talked to members female entrepreneurs, who have raised at least £1m in equity finance, and asked them about what it is like to be a female founder in Britain in 2022. Here is what we found:

• 72% of our founders believe that it would have been easier for them to raise equity finance if they were a man;

• 59% of our founders report having been discriminated against because of their gender;

• Female founders are much better educated than the general population. They are twice as likely to have have a degree and ten times more likely to have a postgraduate qualification;

• The chore gap for female founders is the same as it is for other working women. Half the founders who are mothers say they take on the majority of housework.

I hope that has whet your appetite because there is much more in the report. If you'd like a condensed version you can read our Twitter thread or the coverage in the Times. And if you're interested in the chore gap for female founders, and ways we can make childcare cheaper, I have written about that here, here, and here.

We launched the report in the House of Lords. Thanks to everyone who made it there. There was so much energy and passion in the room and it made such an excellent event.  We had the support of Baroness Jenkin, who is a great champion of women in politics and who, before entering politics, founded a business and Maria Caulfield, the Minister for Women and a great advocate for women's empowerment. Below is a version of the speech I gave.

First of all, I need to say thank you to all the founders who helped put the report together. There are only about 2000 women who have raised at least £1m in equity finance, and about 5% of them have been a part of this project in some way. We have been running the Female Founders Forum for several years, but until now we’ve been reliant on general data from the business literature. The vast majority of people who start businesses are not high-growth founders and I think people face very different interests when they run very different businesses. The policy issues for women who run kitchen-table businesses because they are trying to work less and spend more time with their children are very different to those who are trying to revolutionise banking or green energy. As a result I feel honoured that such a small and thinly stretched group has been so generous with their time and attention.

But let's go back to basics. Why should we care about female entrepreneurs? I think to some it may feel like this is a luxury issue – when we’re talking about founders we are talking about a. tiny portion of the population and often (but not always) quite a privileged portion of the population.

But I think they're of critical importance. First, barriers that thwart female entrepreneurs are barriers to our own economic growth. In the UK we have significantly fewer female founders than similar countries like Switzerland, the Netherlands, Australia, the US and Canada. Young companies are engines of growth and we’re losing out on about £200bn of economic output because we are behind our peer countries.

Second, founders have influence. By starting a company and creating new products you have a disproportionate influence over the world. You can determine what gets sold and how it works, and you set the cultures in your companies and industries. The systematic underrepresentation of women in decision making roles has created a world that is not built for women.

Here’s a small example. I had a meeting the other day in a VC firm’s offices and I had to sign in on a screen and then it took a picture of me for my pass. I’m 5ft3 – which is the average height of a British woman, and I think my arms are a pretty normal length. But I couldn’t reach the screen and stand in range for the picture at the same time.

This is obviously just a minor inconvenience but it is illustrative of a broader issue. How many of us take aspirin or paracetamol? How many of us are a woman of 'childbearing age?'. Well, until 1993 the US FDA banned clinical trials on women of childbearing age, meaning that many of us regularly take medicines that were approved before they were properly tested on people with our biology.

It’s damaging to women to exclude us from the decision making processes. This is why it is so important to increase the number of women in politics, and in business, and in STEM fields. And, as we have seen an increase in the number of women in senior roles, we have seen more and more products made for women by women.

Just look at the very first case study in the report. Irene McAleese makes bike lights that gather data on people’s cycling habits. She’s passionate about the health and lifestyle benefits of cycling and wants to help close the gender cycling gap. With the bike lights she’s found some really interesting differences between how men and women cycle and she’s using this data to help policy makers make more women-friendly urban design choices.

And third, female founders face the same issues that all women face. How do we navigate careers with the ingrained expectations about household labour? I was shocked to learn that despite being incredibly successful, 46% of the female founders who are mothers say that they do the majority of the housework. Only 12% say that their partners do more. These are similar numbers to the rest of British mothers who work full time.

And discrimination is something we all deal with. Founders talked to me about how they were ignored in meetings, about how male investors don’t take them seriously, and about how they are generally believed to be less competent and worthy than their male counterparts. Still only 16% of equity finance goes to companies with a female founder. 72% of our founders believe they would have found it easier to raise equity if they were men.

The interests of high-growth female founders should be all of our interests too. Discrimination and poorly built systems are making all of our lives worse and it’s time we addressed these issues head-on.

We have a series of recommendations in the report. I have a whole list of ways that we can make childcare more affordable. We need to address the fact that girls, despite being as talented in maths and science, do not feel as though they can continue onto careers in these fields. We need to change the culture in the media and how the press discusses female founders. And we need investors to stop investing in people who are like them and already in their networks.

Even if they don’t care about inequality, it’s bad for business. 

Best wishes,
Aria

P.S If you would like to keep up to date with what we're doing with the Female Founders Forum, make sure you subscribe to our newsletters and follow The Entrepreneurs Network on Twitter. We're trying to raise the salience of these issues and raise the profile of female founders (on their own terms) so that they are viable role models for all the women who have a business in them but haven't made the leap yet. To that end, please to share the report and the Twitter thread on any platform that you have.