No institutional support for startups and scaleups

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No institutional support for startups and scaleups

The CEO of the Art Fund complains that there is no support system for one of the oldest of functions – museum curators; neither is there in the newest of fields – the world of entrepreneurialism. The Clore Foundation runs a stack of programmes for leaders in social enterprise, and the Arts and Humanities Research Council has commissioned a programme for leaders in the Arts, but programmes for leaders in other fields of enterprise are rare.

Learning is essentially on-the-job; but there is no extensive form of support for on-the-job learning. There are several recent action-learning type programmes, such those run by UCL/RBS, the Judge Institute, Vistage (originally US); and Belgium’s Plato programmes provide another example. Steve Blank’s I-Corps programme helps scientists to identify and pursue opportunities for commerialisation. And there are a number of online programmes including Digital Business Academy and Dreamstake, and MIT’s new U.Lab.

There is virtually no networking/pooling of experience: Nesta initiated a twice yearly pan-European conference called Accelerator Assembly, which has since been taken over by Salamanca University. The Association for Managers of Innovation has existed in the US for a number of years, but there is no such networking function or organization in the UK.

There is no strong overall supporting institution: Praxis/Unico is focused on universities; UKSPA is focused mainly on the development of Science Parks; and UK Business Incubator died several years ago. The Scaleup Institute is in its nature focused on scaleups – on identifying routes to success together with leading examples.

Research remains uncoordinated. The Enterprise Research Centre at Aston University has developed a scoreboard and carried out research into the factors that support local enterprise, as have other organisations. The Scaleup Institute commissioned a major research project on Scaleups jointly at Judge Cambridge and Said Oxford; and Nesta has a very general and long-term research project about the effectiveness of support for startups, but does not focus on best practice. There is no large-scale university programme dedicated to research and especially to the development of enterprise and early stage business.

What is needed is an organisation that could lead or seed programmes for potential leaders of innovation across different fields (- the CBI, Nesta or ESRC?) – in industry, in science, in public services, in education, in health services, or whose first initiative was unsuccessful?

John Whatmore, January 2018

 

 

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Raising the Mentoring Game

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Raising the mentoring game

Stops and starts have marked the very slow progress of mentoring in the UK. As the ultimate beneficiaries of mentoring, funders of new businesses should be leading the way.

The big question is (and was) why hasn’t mentoring taken off in the UK. Its best known successes include Richard Branson (said to have four mentors). the Princes Trust, and in Accelerators. Two levers were touted at the recent Annual Conference of the Association of Business Mentors (‘ABM’), both winners of the ABM’s Award for Commitment to Mentoring, but both embryonic.

Two initiatives

National Mentors Day’s third incarnation, masterminded by the redoubtable Chelsey Baker, will take place in October 2017, as a seriously bigger, more widespread, much more inclusive and hopefully more impactful day. And Janette Pallas, now at the University of Warwick Science Park, received this year’s award for her pioneering work in creating ecosystems of support in incubators and their ilk – a way forward being strongly encouraged in two recent regional meetings by the Scaleup Institute.

Non-progress

It is now several years (2011 to be precise) since the government made a commitment to put 10,000 mentors in place; and mentoring was a key part of the government’s Growth Builder programme, started in   2012, but alas for some strange reason withdrawn in 2016. Mentoring is an integral element of recent scaleup programmes, such as the Judge Institute’s and the RBS/UCL programme, but the mentoring scene is necessarily local and its institutions fragmented.

                                                   Funders should take the lead

It would be good to see funders take the initiative (eg VCs and Angel Funds) and along with innovation centres and development programmes (where mentoring is usually mandated) work in partnership with sources of mentors like the ABM (eg running joint workshops). The likes of the ABM could encourage mentoring by appointing ambassadors, and running more awards schemes or prizes. What is needed is a campaign of the extent of the Public Understanding of Science.

John Whatmore, March 2017

 

A bespoke programme for private SMEs

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A bespoke growth programme for ambitious private companies.

ELITE is a platform of unique provenance designed to help the UK’s ‘most exciting and ambitious’ private companies prepare and structure for their next stage of growth.

Launched by the London Stock Exchange in 2014 and delivered in collaboration with Imperial College Business School, this programme – for the UK’s hi-growth private companies – is a veritable hothouse for growth.

Like other such programmes about which I have written recently, it is an extended programme of periodic meetings – this one an eighteen month, three part programme, consisting of education, discussion, business support, mentoring and access to entrepreneurs and business leaders as well as to the corporate advisory and investor community.

In the UK it comprises two cohorts a year, each of 15-20 companies (chosen for their growth potential) – the seventh cohort just starting; and involves seven modules of intensive meetings at the London Stock Exchange, each of one to one-and-a-half days, every eight weeks – normally for the CEO and the CFO.

The dominant theme is (not unexpectedly) capital. Other main themes are: strategy, talent and other key resources, governance, marketing, and packaging one’s story.

Get ready This section – of 8-days broken down into four modules, is aimed at providing participants with the operational skills –initially to review and reflect – about visibility, productivity and efficiency, and about cultural and organisational change.

In the Get Fit phase, all the suggestions and guidelines raised in the first phase are put into practice. Using a self-assessment test, the company can identify the areas for improvement to work on, and have the support of a group of professionals tailored to the specific needs of the company to consider how to embed changes in the business.

 Get value With the help of a select community of investors, professionals and companies, the participants will be engaged in initiatives for moving forward, such as exploring new funding options and new business opportunities – designed to boost the brand and ranking with investors, suppliers, customers and other stakeholders.

The ELITE programme was first implemented in Italy (where it also runs) in April 2012 and has now expanded all over Europe. Some 500 companies have participated in ELITE programmes across Europe, with an advisory and investor community of over 250.

John Whatmore, November 2016

 

How do other programmes compare?

All ‘scaleup’ programmes tend to be for small groups of senior executives in SMEs; they focus on key aspects of growth, and are structured for mutual discussions plus input from experts – at regular, usually monthly meetings over twelve months. (The following have all appeared recently on my website, http://www.johnwhatmore.com)

The Judge Institute’s SME Growth Challenge – a series of six bi-monthly workshops for CEOs of about a dozen hi-growth SMEs, delivered over 12 months – aims to develop each firm’s managerial capability.

The RBS/UCL Growth Builder programme is a 12-month programme for 48 growth companies to meet monthly, alternating between the provision of input and small group working, with meetings rotating around the premises of the numerous and various contributors.

10,000 Small Businesses is a programme offered by 5 UK universities for cohorts of c70 SMEs to develop growth plans. They meet together – in three separate session, each at a different location, with online learning between those sessions, and over the course of 30 days.

Plato, started in Belgium and now widely franchised throughout the world is for groups of c.15 senior executives from matched small companies – to meet regularly – each group with a couple of mentors from large companies – to support and help one another with their current issues.

Vistage, originating in the US, puts together groups, each of about a dozen senior executives in SMEs in the same local area, matched as far as possible. Meeting on each other’s premises, monthly or bi-monthly for a day at a time, they focus each time on the work of two or three members of the group.

‘ella forums’ is a leadership development programme designed to inspire growth in social enterprises, in which CEOs come together for monthly sessions, where they hear the latest thinking from guest speakers, share best practice, and receive coaching from experts.

 

 

The latest support programmes for SMEs

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Support programmes for young ventures in incubators

New support programmes for scaleups are of a design that could easily be replicated in incubators and their ilk, and could help generate big steps in growth.

Incubators have been essentially providers of low cost accommodation for small businesses, but they are coming under pressure to be more active in the support of their growth and development.

The concept of the Accelerator has illustrated what can be achieved by orchestrated forms of support – at least for startups. And the recent Barclays report has suggested that some of those approaches might also be usefully applied to Scaleups, with the aim of nurturing some great businesses of the future.

New programmes for Scaleups (such as the Judge Institute’s Growth Builder programme (http://wp.me/p3beJt-fn) and the RBS/UCL Business Growth programme (http://wp.me/p3beJt-dK) have taken the form of periodic meetings for CEOs, usually monthly meetings over twelve months, and consisting of mutual discussions of their problems and opportunities, and learnings about the latest developments in the most relevant topics, such as the latest uses of social media and the latest sources of finance. The Belgian Plato programme (http://wp.me/p3beJt-dH) (widely franchised in other countries) and the Vistage programme from the US (http://wp.me/p3beJt-cb) now popular in the UK – both for cohorts of senior executives, both use a very similar format.

What is common to these programmes is:

*         the exchanging of experience

*         their regular but occasional meetings

*         their intimacy and confidentiality

*         their ability to bring together individuals with common issues or experience.

And surprisingly, their addictiveness.

Their participants are usually carefully matched – for sector, technology, markets, size or maturity.

Young businesses with high growth potential will often be found in incubators, co-working spaces and innovation centres, where it would not be difficult to set in motion programmes of this kind, which could give a major boost to their participants.

John Whatmore, October, 2016

Finance for small businesses – problems

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Better financial support for hi-growth ventures In identifying finance issues faced by hi-growth young businesses, new research has set a number of targets for the British Business Bank, for which it faces immense difficulties.

 The government’s British Business Bank, established in 2014, is focused on smaller businesses, and its main remit is by working with and through private sector delivery partners to increase the supply of finance available in areas where markets do not work effectively.

It reports that over 10,000 smaller businesses are now benefitting from finance supported by the bank compared with a year ago, and from a wide range of sources, but with no specific focus on hi-growth businesses, where there are evidently significant problems.

The recent Scale-up Report, sponsored by Barclays and the work of the Judge Institute in Cambridge and the Said Business School in Oxford has identified six major needs for smaller businesses with hi-growth potential:

*         increasing the number of large VC funds

*         growing the number of experienced investors with sector experience and         international networks

*         developing a venture debt market

*         establishing the LSE as the leading stock market for scale-ups

*        developing new approaches for creating liquidity in private company shares, and

*         collecting systematic data about financing scale-ups.

Many of these fall into the lap of the Bank.

Its CEO feels that London is now well supplied and the bank has recently started to focus on the less well supplied areas of the country such as the ‘Northern Powerhouse’. It is currently aiming to set up funds there for which it is seeking tenders for fund managers, who will bring with them their own local ecosystems of supporters (on the lines typically found in Cambridge.)

Secondly it has sought to bring together under a single head the dozen or so sources of financial information that growing businesses need (in a publication entitled the Business Finance Guide).

And it is now giving growing attention to the complementary need for mentors/advisers to give specific help and advice on finance to early-stage ventures. At present experienced finance mentors for hi-growth businesses are not easily found. The source booklet, just published, is very different to good advice being on tap just when it is needed; small businesses have neither time nor inclination for research.

The bank already seeks to ensure that its startup loans are also accompanied by the appointment of mentors (as it does loans made by the Angel Co-investment Fund – which it funded.) It is seeking to do this on a national basis and in an enduring way – with organisations like the UK Business Angels Association and the Institute of Chartered Accountants.

It has a challenging task in that while its aim is to enhance the more entrepreneurial part of the economy, it seeks to do so through other organisations, and through a number of them.

In working with small businesses the bank also faces a disconnect: it exhibits all the trappings of a major financial institution, while its direct links with small business are tenuous.

The Barclays Scale-up Report has identified some very specific targets for the British Business Bank. They depend very much on the influence it can bring to bear. As a brand new organisation, it has a mountainous challenge.

John Whatmore, July 2016

Scaling up: a challenge for Innovate UK

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Scaling up: a challenge for Innovate UK

A new report identifies the challenges that the UK must meet if our SMEs are to underpin economic growth to the substantial extent that they can.

Seldom has a piece of business research been designed to be so authoritative. Inspired by arch Angel Sherry Coutu, sponsored by Barclays and executed by the Business Schools of Oxford and Cambridge, its findings hit hard.

The research addresses a problem that has been relatively hidden – by the vibrancy of Tech City and the startup scene. While hi-growth SMEs generate 20% of all jobs growth in the UK, recent evidence from OECD shows that the UK has the highest number of start-ups compared to the OECD average, but we also have the lowest proportion of hi-growth SMEs. The biggest problem for the UK is not in starting companies, but in growing them.

 The report focuses on two closely linked obstacles to their successful growth. It seeks to identify the things that characterise successful hi-growth SMEs – with a view to stimulating them. And it seeks to make recommendations that would improve their financability.

It portrays their problems in terms of a series of challenges that they need to recognise and handle at the right moment, in particular:

  • aiming high – ambition
  • building a strong team
  • establishing partnerships
  • putting effective management systems into place
  • identifying core competences, and
  • articulating competitive strengths and new market opportunities.

While there may seem little new in these challenges, several of the recommendations emphasise the role of stakeholders in supporting scale-ups; and the research illustrates the importance of two factors: the timeliness and firmness with which the relevant issues are tackled; and the value of support in doing so.

In the financial capital of Europe, it is surprising to read of as many recommendations to tackle the financial support of these SMEs as there are about the management of the business – which seem to have caught the City unawares. These recommendations are about:

  • increasing the number and quality of VC funds
  • growing the number of experienced investors with sector and market experience
  • developing a UK venture debt market
  • establishing the UK Stock Exchange as the European leader in this field
  • enhancing the liquidity of private company equity
  • collecting better data on VC financing.

The report says little about how these objectives might be achieved, but the researchers participated in a new programme for such hi-growth companies at the Cambridge Judge Institute, which brought together the CEOs of all the participating companies at a series of six bi-monthly workshops, each of which addresses one of the classic challenges that early-stages ventures progressively face (eg shaping the value strategy/marketing and competition/developing the team/future finance).

These were structured so as to help each participant work with all the others: to assess progress, gain insights into and articulate their problems and opportunities, problem-solve collaboratively, set objectives and develop plans and ways to implement them. And a dedicated member of staff makes regular visits and contacts with each participant.

I have come across several programmes in the UK structured in this way (which I will discuss shortly in my blog). Innovate UK is ideally suited to enabling well-established and located incubators to set up targeted programmes of this kind, and this report should help ensure that it does so. For the full report, see home.barclays/scaleup

John Whatmore, May 2016