Significant challenges in financing scale-ups are holding back growth performance for early-stage start-ups according to Thomas Hellmann, Professor of Entrepreneurship and Innovation in a report released by Barclays titled Scale-up UK: Growing Businesses, Growing our Economy.
The research was a collaboration between Oxford Saïd and Cambridge Judge Business School, led by Professor Hellmann and by Professor Stelios Kavadias respectively. The Oxford research team assessed the current state of the UK financing ecosystem for scale-up companies, with Cambridge examining the role of management and skills, and their findings are set to contribute to the debate on the future of business growth in this country.
‘The UK has seen a ‘start-up revolution’ in recent years where strong ecosystems have developed to facilitate the initial stages of start-up formation,’ said Professor Hellmann. ‘However, a funding gap for later-stage investments to scale-up means many of these ventures fail to develop into high growth companies. The UK lags behind the US in the levels of funding available, but a strong environment with the right support, will make the UK well positioned to lead the development of funding solutions for scale-ups.’
Split into two sections the report makes twelve recommendations for action that will help develop a strong entrepreneurial ecosystem that to cultivate early stage start-ups in to high-growth scale ups. To finance growth the Oxford team recommended:
- increasing the number of UK venture capital funds that are sufficiently large to finance scale-ups
- growing the number of experienced UK investors with in-depth sector expertise and strong international networks
- developing a UK venture debt market to complement equity funding
- establishing the London Stock Exchange as the leading pan-European stock market for scale-ups
- developing new approaches for creating liquidity in private company shares
- collecting systematic data about the financing of scale-ups
The initiative was spearheaded by Barclays following a meeting of minds at the World Economic Forum at Davos, and a recognition of the need to break down the barriers to small businesses scaling-up and look to develop solutions to some of these problems for the benefit of future generations.
‘The challenges affecting business growth in the UK must be addressed for the sake of long term economic growth and job creation and we want to lead the way, working with policy makers and business, in driving forward the recommendations outlined,’ said Jes Staley, Barclays Group CEO. ‘The report is one step towards helping more businesses achieve their growth ambitions, but it is an important step and one that we look forward to building on.’
Source: Oxford Saïd Business School