Volume 6

About Barclays

Barclays is an international financial services provider engaged in personal, corporate and investment banking,

credit cards and wealth management with an extensive presence in Europe, the Americas, Africa and Asia.

Barclays’ purpose is to help people achieve their ambitions – in the right way. With 325 years of history and expertise in

banking, Barclays operates in over 50 countries and employs over 130,000 people. Barclays moves, lends, invests and

protects money for customers and clients worldwide.

For further information about Barclays, please visit our website www.barclays.com

About Business Growth Fund (BGF)

With £2.5bn of capital, BGF is Britain’s largest single investor of equity in ambitious and growing British businesses.

Its origins are with the Business Finance Taskforce, formed in 2010 to generate ideas that would help return the UK

economy to growth. The Taskforce comprised the chiefs of the UK’s largest banks, including Barclays, and BGF was one

of its key recommendations.

BGF was officially launched in May 2011, and made its first investment in October that year. Since then BGF has made

more than 80 investments, providing over £500m of new capital to UK companies.

We would like to thank The Prelude Group for providing us with our gazelle case studies for the In Focus section.

1

Foreword

Welcome to our sixth Entrepreneurs Index, our bi-annual study of the UK entrepreneurial life cycle in association with the

Business Growth Fund (BGF). Since setting out to create this report three years ago, we have seen the entrepreneurial

landscape undergo enormous change. For example, the UK has gained almost half a million companies during this time,

which very few commentators would have been able to forecast back in 2012. Clusters of tech and digital enterprises have

sprung up all over the country, from the Eastern region to the North West, and we have witnessed the continuing growth of

angel investor activity.

More widely, the UK’s economic downturn coupled with increasing digital innovation has opened up and democratised the

entrepreneurship space, enabling anyone with a good idea and the drive and dedication to take it forward to become an

entrepreneur – regardless of age, gender, background or vocation. In this, our first report of 2015, we explore the increasingly

lively start-up scene that was recorded in the UK last year, and evaluate a more pressing issue; how we convert these

promising start-ups into lasting growth for the economy.

We uncover that start-up activity is continuing to gain momentum, and the number of entrepreneurs creating wealth from

selling a part of, or all of, their businesses has also seen an uplift as investor confidence returns. As the number of

entrepreneurs grows, we believe that, in turn, stories of their success serve to motivate and inspire others to be more

ambitious in growing their businesses, creating a virtuous circle for the UK enterprise scene as a whole.

However, this report shows that the proportion of companies achieving high growth is beginning to show a slight fall, after we

saw a plateau in our last Index. This demonstrates that despite the improvement in the UK economy, there are still many

businesses struggling to make the change from start up to scale up. For this reason, we have devoted the In Focus section of

this report to entrepreneurial gazelles – companies that have achieved at least 33% growth in turnover during the last three

years – to glean their stories and advice for prospering in the current environment.

It is important that we give successful firms a platform for sharing their stories and pass on their learnings to a wider

enterprising audience. At Barclays we believe that entrepreneurs are the future of UK plc: SME enterprises provide two thirds of

all private sector jobs and contribute to around half of all GDP,1 whilst also playing a vital role in innovation. We understand that

entrepreneurs come from every industry sector and type of background and it is important that we realise the full potential of

their creativity, drive and expertise.

The purpose of the Entrepreneurs Index is to track the level of UK entrepreneurial activity over time and, in so doing, gauge the

health of this key economic sector year on year. We hope you find the information in this latest Entrepreneurs Index

interesting and insightful and will enable all of us to better understand and serve entrepreneurs in the UK.

Richard Phelps

Managing Director, Barclays1 Department for Business Innovation & Skills, Business Population Estimates 2011

2

Our Expert PanelWe are extremely grateful for the time and help given by the experts on our panel.

Duncan Cheatle, Founder of the Prelude Group, CEO and Founder of Rise To. Rise To is a digital

platform designed to improve employability in young people, and the Prelude Group delivers a range of

initiatives that support high growth and advanced learning for entrepreneurs. At the forefront of that is

The Supper Club, an exclusive membership club with around 350 of Britain’s most innovative, high-

growth entrepreneurs. Duncan also co-founded StartUp Britain, a private sector initiative to inspire

start-up entrepreneurs.

Sherry Coutu CBE, Chairman, Founders4Schools. Sherry is a former CEO and angel investor who serves

on the boards of companies, charities and universities including Raspberry Pi, Zoopla and the London

Stock Exchange Group. As a philanthropist she is a supporter of the Crick Institute and Your Life

Campaign, and is currently listed by Management Today as one of the top 50 most inspiring women in

Europe. She also serves as an ambassador for London and is the author of The Scale-up Report on UK

economic growth. Sherry was honoured with a CBE for services to entrepreneurship in 2013.

John Cridland CBE, Director-General, Confederation of British Industry. As Director-General of the CBI,

John is the key spokesman for the business community in the media, on public platforms and with the

government. He leads the CBI – the voice of business – in the UK and represents it internationally. John is

also a Board member of Business in the Community and a UK Commissioner for Employment and Skills.

Alice Enders, Director of Research, Enders Analysis. Alice heads the research and economic analysis

programme at Enders Analysis, a provider of intelligence on the TMT sector in the UK and other major

markets. She is a former senior economist at the World Trade Organisation and holds a doctorate in

economics from Queens University, Canada.

Guy Rigby, Partner and Head of Entrepreneurial Services, Smith & Williamson. Guy is a chartered

accountant and leads the entrepreneurial services group at Smith & Williamson. He sold his own

accountancy firm and has been a director and part-owner of a number of different ventures. He also

wrote the book From Vision to Exit: The Entrepreneur’s Guide to Building and Selling A Business.

Jenny Tooth OBE, CEO, UK Business Angels Association. The UKBAA is the trade body for angel and

early stage investing and the voice of the angel and early stage investment market. Jenny has over 20

years of experience supporting small and medium-sized businesses to access investment, both in the UK

and internationally. She is also co-founder of Angel Capital Group and is a regular speaker on angel

investing around the world.

3

Stephen Welton, CEO, Business Growth Fund. Stephen launched BGF in May 2011. He has worked in the

development capital and private equity industries for over 25 years, including roles at Henderson, Barclays

and JP Morgan Partners (CCMP Capital), where he was a founder partner and member of the Investment

Committee. In 2013, Stephen was a member of the advisory group formed specifically to guide the UK

Government on the direction and priorities for the new British Business Bank, a government-funded

institution that provides lending and broader support to small and mid-sized businesses.

Richard Heggie, Head of Proposition and Delivery for Entrepreneurs, Barclays. Richard has over 15

years’ experience in investment banking and private client wealth management. Richard has headed the

Proposition and Delivery for Entrepreneurs at the Wealth and Investment Management division of

Barclays since October 2013. Prior to this role, Richard co-headed the Proposition and Delivery team for

Barclays Global Ultra High Net Worth and Family offices. He was a key member of the working group

leading the integration of Lehman Brothers’ Private Investment Management business in New York.

Mark Hart, Professor of Small Business and Entrepreneurship, Aston Business School. A 2014 recipient

of the Queen’s Award for Enterprise Promotion, Mark has played a national role in promoting enterprise

skills and supporting entrepreneurs. Mark leads the Goldman Sachs 10,000 Small Businesses programme in

the Midlands. He is also Deputy Director of the national Enterprise Research Centre which is jointly hosted

by Aston University and the University of Warwick, and has as its mission to understand the drivers of small

business growth.

Regional Chambers of Commerce representatives

David Bharier, Policy and Research Adviser, Birmingham Chamber of Commerce

Mark Goldstone, Head of Policy and Representation, West and North Yorkshire Chamber of Commerce

Ross Smith, Director of Policy, North East Chamber of Commerce

Liz Cameron, Chief Executive, Scottish Chambers of Commerce

Ann McGregor MBE, Chief Executive, Northern Ireland Chamber of Commerce and Industry

4

The UK is at an important juncture for entrepreneurship.

While the start-up environment is becoming a success

story, with new business activity continuing to strengthen

year-on-year, there is now a pressing need to focus on

translating that activity into growth.

The financial crisis and subsequent recession acted as a

significant driver for people to start their own businesses,

and the government injected further impetus through

measures such as the Seed Enterprise Investment Scheme

(SEIS) and the Start Up Loans programme. Advances in

technology and greater support from the private sector

have also contributed to today’s healthy start-up landscape.

According to Companies House data, the number of active

companies in the UK continued to grow between June and

December 2014, rising from 3,027,622 to 3,139,630. This is

part of a continuing trend we have observed since we

began the Entrepreneurs Index series in 2012.

Translating start-ups into high-growth companies

When the UK’s new government is formed following May’s

general election the key challenge in the entrepreneurial

space will be to help translate an increasing start-up

population into a greater number of high-growth

businesses. Currently, we see signs that entrepreneurs

and business owners are not achieving their maximum

growth potential. For instance, only 4% of UK start-ups

achieve £1m turnover after three years.2 In the previous

volume of the Entrepreneurs Index, we observed that the

proportion of high-growth companies in the £2.5m to

£100m revenue bracket was plateauing and, in the latest

Experian figures, covering up to March 2014, there has

been a slight decline in this percentage, from 23.2% to

21%. The message is clear: while the desire to start a

business is becoming more prevalent in the UK, there is

work to be done in getting those businesses to the next

stage, delivering growth and wealth creation.

It is for this reason that we are using the In Focus section of

this report to profile four gazelle companies – entrepreneurial

businesses that are achieving high growth – to identify some

of the key characteristics that have brought them success.

By sharing the stories of these companies firsthand, we hope

to extract some lessons for other entrepreneurs that will help

them to emulate the gazelles’ impressive growth.

About the report

The aim of the Entrepreneurs Index series is to provide a

barometer of entrepreneurial activity in the UK across

sectors and regions; to understand the barriers to growth

facing today’s entrepreneurial companies; and to assess the

extent to which the country’s entrepreneurs are now

realising wealth through their businesses.

Introduction

2 Should the focus be on ‘scale-ups’ rather than start-ups? The Start Up Donut, December 2014

5

To achieve this, we study a number of complementary

datasets, some publicly available, and others created

specifically for this report. We use Companies House data

relating to the number of active companies in the UK to

provide a broad gauge of the change in start-up activity

nationally. We also look at Experian data on the number of

high-growth companies in the UK, to assess whether these

have increased or decreased as a proportion of total

companies of a similar size, both nationally and by sector

and region. We analyse data provided by Wealthmonitor

that captures the number of deals occurring over the

previous year. And for the first time, we are also using data

on the number of VAT-registered companies sourced from

the Office of National Statistics, that indicates the number

of UK companies reaching a turnover of over £81,000 in the

previous 12-month period.

Meanwhile, the addition of qualitative analysis from

interviews with our panel of experts – including

entrepreneurs, investors, academics, business network

leaders and accountants – enables us to deliver a more

insightful view of the UK environment for businesses at

each stage of the entrepreneurial cycle.

According to Companies House data, the number of active companies in the UK continued to grow between June and December 2014, rising from 3,027,622 to 3,139,630.

6

Active companies – Companies that are ‘live’ in the

sense that they are not in the process of liquidation or

being dissolved.

Deals – Any stake sale of a target company that is publicly

announced and results in individual wealth creation of at

least £0.2m.

Enterprise – A term used by the Office for National

Statistics (ONS) to refer to the smallest combination of

legal units (generally based on VAT and/or PAYE records),

which has a certain degree of autonomy within a group

of legal units under common ownership.

High-growth companies (also gazelle companies for

purposes of Section 2) – Companies with revenues of

between £2.5m - £100m that have increased turnover by at

least 33% over the preceding three years and produced at

least 10% year-on-year growth for a minimum of two years.

Start-up – A general definition meaning a company that has

recently been set up and is in the first stage of its operations;

a fledgling business or enterprise.

Total early-stage entrepreneurial activity (TEA) –

Percentage of population aged 18-64 who are either a

nascent entrepreneur or owner-manager of a new business

(a running business that has paid salaries, wages, or any

other payments to the owners for more than three months,

but not more than 42 months).

VAT-registered companies – The number of UK companies

registered with HMRC to collect VAT (which is compulsory for

companies with a turnover of over £81,000 in the previous

12-month period). Latest data available is up to March 2014.

Glossary

7

Methodology

Data sources

The key datasets used in this report are:

• Active companies. The number of active companies in

the UK as published in the Incorporated Companies in

the United Kingdom statistics from Companies House.

The data covers up to December 2014.

• Deals. A publicly announced stake sale of a target

company that results in individual wealth of £0.2m and

above. Data is supplied by Wealthmonitor, part of the

Mergermarket Group, and runs up to December 2014.

• Enterprises. The number of VAT and/or PAYE based

enterprises in the UK as contained in the Office for

National Statistics’ (ONS) UK Business: Activity, Size and

Location report. Latest data available is up to March 2014.

• High-growth companies. Data on companies in the UK

with revenues of between £2.5m and £100m, and at least

a 33% increase in turnover over three years, as well as at

least 10% year-on-year growth for a minimum of two of

these years, supplied by Experian. The data runs up to

March 2014.

• VAT-registered companies. The number of UK

companies registered with HMRC to collect VAT (which

is compulsory for companies with a turnover of over

£81,000 in the previous 12-month period). Latest data

available is up to March 2014.

8

Executive summary

The UK’s start-up activity remains very strong

Companies House data on active companies suggests

there has been strong growth in the number of new

businesses in the six months to December 2014. Global

Entrepreneurship Monitor’s UK 2014 Monitoring Report

also shows that total early-stage entrepreneurial activity

(TEA) in the UK has risen to 8.6% of the working-age

population (18-64), up from 7.3% in 2013.

The population of businesses (revenue

£2.5m-£100m) is expanding most quickly in the

business services and finance sectors

Between March 2013 and March 2014, of the sectors

measured by Experian in its analysis of UK businesses

with revenues between £2.5m and £100m, the number

of companies in the business services and finance

sectors grew, yet the number of firms of that size fell in

all other sectors.

The exit environment continues its return to health

The number of deals that result in individual wealth

creation of £0.2m and above has grown again, up to

1,562 during 2014, compared with 1,476 in 2013.

2014

2013

March 2013 – March 2014

March 2012 – March 2013

21.0% 23.2%

1,476 deals

1,562 deals

Business services Finance sector All other sectors

Between March 2013 and March 2014

2014

8.6%

2013

7.3%

The proportion of people in the UK involved in early-stage entrepreneurial activity on the rise

The proportion of entrepreneurs who are achieving

high growth is falling

Of companies in the £2.5m to £100m revenue bracket,

just 21% were high-growth companies in the year to

March 2014, down from 23.2% for the previous year.

9

The construction, retail and property sectors

show encouraging signs of growth

Of all the sectors covered by Experian data, the

proportion of high-growth companies in the

£2.5m-£100m revenue bracket has grown in only

three sectors: construction (up to 22.7% from 19%

in 2013); retail (up to 19.1% from 18.3%); and

property (up to 11.5% from 11%).

Gazelles provide important growth lessons for

UK entrepreneurs

There are a number of significant barriers to firms

scaling up in the UK, such as access to skills and

finance, and building leadership capability, among

others. Our In Focus section seeks to draw out lessons

from gazelle companies that have succeeded where

others are experiencing difficulty.

22.7%19% in 2013

11% in 2013

Construction

Property

19.1%11.5%

18.3% in 2013

Retail

The north-south divide is still evident

The number of deals in Southern England grew

during 2014, up to 839 from 773 in 2013. In the

north of the UK, however, deal numbers flatlined.

There was also a steeper decline in the proportion

of high-growth companies in northern regions

than was seen in southern ones. At 5.7%, Scotland

saw the biggest rise in the proportion of high

growth companies of any region in the UK -

one of only two regions to register a rise.

839 dealsrecorded in the South in 2014,

773 deals in 2013

Rise in high growth

companies Number of deals

flatlinedin Northern England

Scotland

10

Growing: The total proportion of high-growth companies has declined.

Starting: The number of active companies has continued to increase.

Chart 1: Key themes

Note: TEA is percentage of 18–64 year olds who are in the process of starting or are already running new businesses

Source: Global Entrepreneurship Monitor

Tota

l ear

ly-s

tage

ent

repr

eneu

rial a

ctiv

ity (

TEA

)

Chart 2: Starting/Funding – Entrepreneurial Activity

2%

0%

4%

6%

8%

10%

12%

2008

5.9%

2010

6.4%

2009

5.7%

2011

7.3% 7.3%

2012

9.0%

2013 2014

8.6%

Source: Barclays/Ledbury Research

Exiting: The number of deals taking place continues to climb, though at a slower rate.

11

Headline findingsCompanies House data indicates that start-up activity in the UK continues to grow, with around 280,000 newly incorporated companies recorded between June and December 2014, an increase of 9.3% over the comparable period last year. Supporting this, Global Entrepreneurship Monitor’s (GEM) UK 2014 Monitoring Report found that total early-stage entrepreneurial activity (TEA) in the UK rose from 7.3% of the working-age population for 2013, to 8.6% for 2014.

Many of the factors underlying this trend are by now well explored. When the financial crisis hit in 2008, almost 2.7 million people in the UK were made redundant3 and many were driven towards entrepreneurship out of necessity. At the same time, there has been a concerted effort by government to encourage people to start their own businesses, which has involved a variety of initiatives, including access to funding, training and helping to put support networks in place for entrepreneurs.

Richard Heggie, Head of Proposition and Delivery for Entrepreneurs at Barclays Wealth and Investment Management, says a growing number of people are attracted by the idea of entrepreneurship as a career choice too.

“I think we’ve seen the emergence of more high profile entrepreneurial role models and that has helped to create an aspirational mindset around starting your own company,” says Mr Heggie. Meanwhile, the introduction of tax incentives for start-ups and early-stage investors has further added to the appeal of entrepreneurship.

Section 1

3 Redundancies since start of jobs recession cost UK employers £28.6 billion, CIPD, March 2012 cipd.co.uk/pressoffice/press-releases/redundancies-since-jobs-recession-140312.aspx

12

Is stronger start-up activity here to stay?

Duncan Cheatle, Founder of The Prelude Group, a

membership group for founders and CEOs of high-growth

businesses that aims to support their development, says

the past few years have seen a convergence of the

conditions required to create a healthy start-up

environment. “Demographic changes have certainly played

a part, as people have longer to live after retirement,” says

Mr Cheatle. “They need a new income source or just want

to apply themselves in a new area. Meanwhile, technology

developments have cut the upfront costs of starting a

business, and have made it easier to find a route to

market.” Technology is helping to embed a more

aspirational mindset among business owners too.

“Entrepreneurs are better connected than ever before

as a result of social media channels and online networks

emerging,” says Mr Heggie. “By accessing these

networks, entrepreneurs are gaining more support and

a better understanding of their company’s longer-term

potential,” he adds.

One of the challenges for the UK will be ensuring that this

momentum is not lost, particularly given the impending

general election. Mark Hart, Professor of Small Business

and Entrepreneurship at Aston Business School, feels that

regardless of who forms the new government, there will

remain a firm commitment to supporting the burgeoning

start-up environment. A range of government-backed

initiatives have been directed at boosting entrepreneurial

activity in the past few years, including the Growth

Vouchers programme, GrowthAccelerator for small

businesses, and the Business is GREAT campaign that offers

help, funding and guidance to small business owners. It is

unlikely that these measures will be overturned.

These initiatives have had success in boosting the numbers

of new businesses. If we look back to Companies

House data from June 2012 when we began the

Entrepreneurs Index series, we can see there has been a net

gain of nearly half a million companies (491,828), from

2,647,802 to 3,139,630. Sherry Coutu, a serial entrepreneur

and angel investor, says that while the success of these

policies has been good for the UK, there now needs to be a

shift in emphasis, with more measures aimed at helping and

encouraging leaders of businesses to grow, rather than just

start. “The policies to date have encouraged a huge number

of micro businesses, but evidence shows that micro

businesses are actually a net drain on the economy, rather

than a boom,” says Ms Coutu. “More than half the

companies that were created in the past ten years employ

no people and there are only 8,932 businesses growing at

20% or more per year. This is much lower than you’d expect

to see. So it is important and urgent to rebalance the

portfolio of policies aimed at economic growth to include

initiatives specifically designed to facilitate a greater number

of companies to grow in scale.”

13

“More than half the companies that were created in the past ten years employ no people and there are only 8,932 businesses growing at 20% or more per year.”

Sherry Coutu, entrepreneur and angel investor

Chart 3: Number of active companies in the UK

Source: Companies House

June 2012

2,500

2,400

2,600

2,700

2,800

2,900

3,000

3,100

3,200

4 million

Dec 2012

June 2013

Dec 2013

June 2014

Dec 2014

Activ

e co

mpa

nies

(‘0

00)

Percentage change (previous period)

2,647,802

2,727,758

2,821,190

2,915,353

3,027,622

3,139,630

3.0%3.4%

3.3%3.9%

3.7%

14

The high-growth question

In the previous Entrepreneurs Index, we observed a

levelling effect in the percentage of high-growth companies

within the revenue bracket of £2.5m to £100m during

2013. The latest Experian data on these companies actually

shows a slight reduction in the percentage of these firms

achieving high growth, down from 23.2% in March 2013

to 21% in March 2014.

In its 2014 study of high-growth firms, Moving on from the

‘Vital 6%’, (which uses a definition from the OECD different

to that used within this report), the Enterprise Research

Centre in the UK concluded that: “There are a very small

number of firms in the UK that can be classified as high-

growth firms (HGF) using the OECD definition (firms with

at least ten employees in the start-year and annual

employment or sales growth exceeding 20% during a

three-year period). Further, the HGF prevalence rates have

remained largely unchanged, although there has been a

fall in their contribution to job creation.”

It seems that, despite the UK’s improving economic outlook

– the economy grew by 2.6% in 2014, the fastest pace since

2007 – there are many businesses struggling to take

advantage and achieve high growth. While it is true that

nearly 280,000 companies were incorporated between June

and December 2014 according to the Companies House

register, almost 200,000 companies dissolved during

the same period. In addition, the percentage of VAT-

registered companies in the overall population of active

companies has decreased from 41.3% in March 2010, to

39.5% in March 2014, indicating that a lower proportion of

firms are surpassing the £81,000 turnover threshold for

VAT registration.

So while the focus on driving start-up activity has borne

fruit, it seems the UK is yet to see a large enough proportion

of those firms translate into high-growth companies. The

solution of how to drive a greater number of start-ups

towards high growth is not a simple one, however: “In order

to turn these start-ups into gazelles you need a number of

different factors,” says Stephen Welton, Chief Executive of

the Business Growth Fund (BGF). “It starts with raising

awareness that it will take more than just targeted policy

efforts to turn start-ups into high-growth companies – you

need to support the management of these businesses, as

well as improve access to growth financing.”

Ms Coutu’s research showed that the most significant

reason companies were unable to grow to a significant scale

in the UK was down to their being unable to find employees

with the right skills. “These scale-up companies are turning

away customer orders because they can’t hire people,” says

Ms Coutu. “If they could find people with the right skill-set,

they could accept those orders and their turnover and profit

would grow faster, which would then make it easier for

them to get finance.”

It seems that, despite the UK’s improving economic outlook – the economy grew by 2.6% in 2014, the fastest pace since 2007 – there are many businesses struggling to take advantage and achieve high growth.

15

Chart 4: Percentage of high-growth companies

Source: Experian

2009

5%

0%

10%

15%

20%

25%

30%

2010 2011 2012 2013 2014

27.4%

19.4%

16.2%17.9%

23.2%21.0%

Chart 5: Percentage of VAT-registered companies in the overall population of active companies

Source: Companies House / ONS

Mar 2003

Mar 2005

Mar 2009

Mar 2007

Mar 2011

Mar 2013

Mar 2004

Mar 2006

Mar 2010

Mar 2008

Mar 2012

Mar 2014

34%

36%

38%

40%

42%

44% 43.1%

39.9%38.7%

37.1%

42.7%

41.3% 41.2% 40.7%40.1%

39.5%40.7%

38.8%

16

To actually solve the problem, rather than treat the

symptom, the most important thing the UK can do is to

ensure that the skills are available in the population to fill

the open jobs, says Ms Coutu: “Companies growing fast

don’t have time to create apprenticeship schemes to make

potential employees capable of helping them fulfill their

customer orders. Finance is a symptom, not a cause.”

Part of the solution would also involve making it easier for

high-growth companies to bring in staff they need from

overseas, and ensuring that students in educational

institutions gain greater exposure to the entrepreneurs

running the best performing businesses in their region.

Meanwhile, Professor Hart suggests that a lack of

experience in how to grow a business is hurting many

entrepreneur-led companies. “There’s help available to get

them access to grants and loans, but it’s the vision and

culture of the senior management team that really makes

the difference,” he says. Mr Heggie agrees, adding that

getting the right person in the chairman’s seat can be

enormously important: “It’s a hugely challenging transition

to move from starting a business with an idea you’re

passionate about, to becoming a professional and scalable

business. Having someone available who can act as both

a critical mentor for the founder as well as an adviser can

be invaluable.”

In a recent research report from the Department for Business

Innovation and Skills – Understanding Motivations for

Entrepreneurship4 – the majority of entrepreneurs surveyed

said they would have valued a free, experienced business

mentor to provide tailored, practical advice during the early

stages of growth.

John Cridland, Director-General of the CBI, agrees that a

lack of mentorship and advisers is a problem: “You can’t

expect the entrepreneur to think about getting on a plane

to Jakarta and opening up markets in Indonesia, or to realise

that Ethiopia is one of the fastest growing markets in Africa,

if they don’t have people with their ear to the ground telling

them that,” says Mr Cridland. “We need a coalition of the

willing that includes university vice chancellors,

organisations like the CBI, and leaders in the City focusing

on this constituency of companies.”

There are a number of schemes now emerging – particularly

out of university business schools – that seek to effect

positive change in the leadership of entrepreneurial

businesses. These programmes offer a pure learning

environment whereby growth-orientated businesses go

through a shared experience of intensive mentoring and

support. “The results are quite interesting in terms of the

additional growth these businesses get over and above

what they would have achieved,” says Professor Hart.

Meanwhile the Small Business Charter, an accreditation

scheme initiated by Lord Young and launched in 2014, is

designed to build on such experience and enhance the

ability of business schools to engage with small businesses

on aspects of strategic growth.

Guy Rigby, Head of Entrepreneurial Services at Smith &

Williamson, believes that non-executive directorships have

an important role to play in this respect: “Whereas the

concept of the non-executive director is pretty common in

the public company market, it’s not as well adopted in the

private company market. Whether they’re a non-executive

director or a mentor, or a mixture of the two – business

owners don’t need to try and reinvent the wheel here,” he

says. “It’s normal for the founder to be inexperienced

beyond a certain stage of growth, so why not bring in

experienced mentors to help you figure out which strategies

have failed in the past and what may have a better chance

of succeeding?”

4 Understanding Motivations for Entrepreneurship, Department for Business Innovation and Skills, March 2015 gov.uk/government/uploads/system/uploads/attachment_data/file/408432/bis-15-132-understanding-motivations-for-entrepreneurship.pdf

17

Rebalancing policy

The business community has largely praised government

policies that have helped to drive start-up activity, but

there are now calls for a rebalancing of policy to focus on

helping to scale entrepreneurial businesses, rather than

focusing primarily on starting them.

“There is a forgotten army of companies in the £20m-£60m

turnover region that I call the British mittelstand, that

could triple turnover in a couple of years with the right

growth strategy and support network,” says Mr Cridland.

According to Mr Cridland, the biggest single thing that

government can do to help these businesses is to address

the current lack of patient capital available to them from

investors that are willing to make longer-term bets. One

positive development in this area is the Government’s

announcement of its Help to Grow initiative that will deliver

financial support to 500 mid-market firms each year

through the new British Business Bank, an institution set

up to manage government programmes that help smaller

businesses to access finance. “I would like to see something

on the equity side to complement that,” says Mr Cridland.

“I would like to see ordinary retail investors getting more

capital gains tax relief so that they can take a longer-term

stake in non-listed companies.”

The Scale-up Report on UK Economic Growth makes 12

specific recommendations to government.5 Central to this

is the idea that releasing existing data collected by

government would help to identify and monitor fast-

growing companies in real-time, making it easier to

accelerate growth for these firms (see Driving growth

through data on p25). In addition, the report recommends

that any organisation seeking funding from central

government – such as Local Enterprise Partnerships (LEP)

– should be funded only if they demonstrate that they

direct a range of effective measures specifically towards

increasing the proportion of high-growth businesses in

their area. Ms Coutu also argues that organisations such

as UK Trade & Investment (UKTI) should ensure a certain

proportion of these companies are on trade missions, to

help raise the profile of these highly innovative companies.

“There is only glory to celebrating and assisting these hard

working heroes of our economy, and for too long, they have

been unsung,” says Ms Coutu.

Another area where the government can provide greater

assistance to high-growth companies, which is arguably less

widely reported than issues such as skills shortages and

access to finance, is in providing the infrastructure they

need: “Government needs to put pressure on real estate

companies, so that growing companies can be released

from contracts more easily,” says Ms Coutu. “As a fast-

growing company in the UK, you find that you’re in ten

different locations and you have to sign ten different leases

that you can’t escape when you find that you’re growing

faster than you were expecting. That is actually a real drag

on the ability of these companies to grow.”

“There is a forgotten army of companies in the £20m-£60m turnover region that I call the British mittelstand, that could triple turnover in a couple of years with the right growth strategy and support network.”

John Cridland, Director-General of the CBI

5 The Scale-up Report on UK Economic Growth, Information Economy Council, November 2014 scaleupreport.org/scaleup-report.pdf

18

Growing investor confidence

Wealthmonitor’s data showed a rise in the number of

deals resulting in wealth creation of £0.2m and above

during 2014, with 1,562 such deals recorded, up from

1,476 in 2013.

This steady growth in deal numbers may be indicative

of returning confidence among investors. Jenny Tooth,

Chief Executive of the UK Business Angels Association

(UKBAA), says that angel investors have continued to show

high activity in the past 12 months. A study of UK angels

carried out by the UKBAA suggested that their confidence

is strong: respondents expected over four out of 10 of

their investments to generate a return in the range of 1-5x

the initial investment6 – a higher rate of expected returns

than found in earlier studies. “There is a sense they will

have fewer failures and higher numbers of good growth

prospects,” says Ms Tooth.

There have also been higher proportions of younger and

female entrepreneurs entering the angel investment

marketplace, driven by a combination of confidence

about rewarding opportunities, and tax reliefs for early-

stage investors. Almost nine out of 10 angel investors

have invested either through the Enterprise Investment

Scheme (EIS) or the SEIS7.

Mr Welton agrees that there is more capital available to

entrepreneurs than was the case a few years ago, as

improving economic conditions are making it easier for

businesses to raise funds. He feels, however, that a lot

more capital needs to flow into the market to support the

universe of growing businesses. “I think we need to see a

deeper pool of money in the venture capital market, and

greater possibilities for angel investors to form syndicates,”

says Mr Welton. “We also need to have a vibrant junior

market, so some of the recent tax changes encouraging

investors on the London Stock Exchange’s Alternative

Investment Market (AIM) are also really important,” he adds.

Part of the solution will be to further strengthen the

co-investment occurring in the angel market, which is an

area where banks can play an important role, argues Richard

Heggie. In the UKBAA’s report, 23.1% of angels were shown

to invest alongside providers of loan/debt finance. “We’re

beginning to see a more sophisticated approach to

optimising the finance model from ambitious early-stage

businesses – they’re looking for the right balance of debt

and equity from a wider range of sources to help facilitate

the scaling process,” says Mr Heggie.

Chart 6: Number of Deals

Source: Wealthmonitor

Dec 2012 Dec 2013 Dec 2014

Number of Deals 1,293 1,476 1,562

% change 14.2% 5.8%

6 A nation of angels, UKBAA, January 2015 ukbusinessangelsassociation.org.uk/sites/default/files/media/files/erc_nation_of_angels_full_report_0.pdf

7 Ibid.

19

Bridging the north-south divide

The growing influence of London as the powerhouse of the

UK economy has been well documented. Office for National

Statistics figures released at the end of 2014 showed that,

while London’s economy grew by 24% between 2007 and

2013, the rest of the UK experienced only 15% growth

during the same period.

The data used for this report suggests that, to some

extent, this divide is actually felt more widely as a

difference in performance between north and south.

For instance, when Wealthmonitor’s deals data is grouped

into northern regions (including North East, North West,

Yorkshire and the Humber, and Midlands), and southern

regions (including the East, London, South East and South

West), the south of England saw an 8.5% increase in the

number of deals recorded during 2014, while there was a

slight (0.2%) decline in the north of the country.

The same regional groupings also reveal a similar pattern

in Experian’s high-growth company data. While the decline

in the percentage of high-growth companies in the south

has been slight, falling from 22.2% in 2013 to 20.7% in

2014, the fall has been more pronounced in the north,

dropping from 25.3% to 21%.

An imbalance in the location of angel investors is a key

challenge – two-thirds of those in the UKBAA’s survey

were based in the south for investment reasons. “I don’t

think there are enough focal points for angels to find good

deal flows elsewhere at the moment,” says Ms Tooth.

“It means great businesses from other regions may be

coming to London to find the investors instead of finding

them locally.”

* North = North East, North West, Yorkshire and the Humber, Midlands* South = East, London, South East, South West

Source: Experian, Wealthmonitor

Chart 7: UK North vs South

Number of deals

North South

2013 529 773

2014 528 839

% change -0.2% 8.5%

% of high growth companies

North South

2013 25.3% 22.2%

2014 21.0% 20.7%

20

Mr Heggie feels that the increasing use of digital platforms

to connect investors with entrepreneurs should begin to

bridge this gap. “I think we’re moving towards a more

digitalised venture capitalist and angel market. In this day

and age there should be no reason why you can’t find the

most suitable investors for your company wherever you

are located, provided you have a digital interface to

enable you to do that,” he says.

Meanwhile Professor Hart says that, while London’s

Tech City grabs a lot of the national headlines, there is

actually a higher level of net job creation happening in the

East Midlands. For example, a December 2014 research

report from recruitment firm Manpower UK suggested

that job prospects across the region would increase by

13% in the first three months of 2015, almost double the

national average of 7%. The survey revealed that the jobs

market was boosted by growth in demand for staff in the

transport, logistics and construction sectors.8

Mr Welton says that BGF made several investments in

Yorkshire and the North East during the last three months

of 2014. “We see the north as pretty buoyant, and we

expect quite a lot of investment activity there in 2015,”

says Mr Welton.

Despite some positive signs, Mr Welton says that London

and the South East remained the single biggest investment

regions for BGF in 2014, though he feels there is enormous

potential to be unlocked across the rest of the UK. And, as

Alice Enders, Research Director at Enders Analysis, points

out, the UK continues to be viewed by many – particularly

foreign investors – as a London-centric economy: “You look

at companies like Google setting up its campus in London

and it sucks in a lot of the talent. There is a view that unless

you’re where potential investors are located then you’re

missing the boat – and the concentration of investors seems

to be in London,” she says.

Concentration of skills is another issue. Figures released by

the Office for National Statistics at the end of 2013 found

that inner London has a working-age population in which

60% have degrees, much higher than anywhere else in the

UK9. The shortage of skills is a challenge being keenly felt in

the North East, according to Ross Smith, Director of Policy at

the North East Chamber of Commerce. “Growing the skilled

workforce in the region is the most critical challenge we

face. We need to improve careers advice for young people

and ensure they have courses that can help them find jobs

in our growing industries. “We also need apprenticeship

funding that backs businesses looking to invest in their staff,

and an immigration system that helps us retain some of the

top international talent coming to North East universities.”

8 Manpower Employment Outlook Survey UK, Manpower Group, 2014 manpowergroup.com/wps/wcm/connect/4c64f21c-b8cd-4a62-a255-297c4b4c33e2/UK_Q115_MEOSbro.pdf?MOD=AJPERES&CACHEID=4c64f21c-b8cd-4a62-a255-297c4b4c33e2

9 Graduates in the UK Labour Market 2013, ONS, November 2013 ons.gov.uk/ons/dcp171776_337841.pdf

21

Liz Cameron, Chief Executive of the Scottish Chambers of

Commerce, says the chambers are focusing on working

with schools, colleges and universities to identify specific

opportunities in the market. “We are developing across

Scotland, led by business, our ‘Invest in Youth Panels’ to

break down this barrier and ensure that we have skilled

people in the areas we need,” says Ms Cameron. “Another

barrier for Scottish entrepreneurs is the lack of knowledge,

finance and confidence relating to exporting. In this regard,

we have developed specific support aimed at connecting

small business entrepreneurs through our International

Chamber Network and supported by financial networks,”

she adds.

Another factor that may begin to persuade entrepreneurial

talent to lay their company foundations in regions outside

of London is the increasing cost of doing business in the

capital. Mr Cheatle says it is becoming more common for

entrepreneurs to operate a satellite office in London to

ensure access to key investors and clients, but to move

other operations to other regions where they can be

performed at significantly lower cost.

Meanwhile, part of the solution from an investment

perspective will involve raising awareness of good

opportunities in other regions. Some local authorities

are taking a proactive approach to garner investment.

As one example, Manchester City Council has set up a

co-investment initiative aimed at building new syndicates

of angels around local businesses.

“The EU will be delivering further funding to the LEPs

during 2015, and government investment via the Growing

Places Fund could act as key mobilisers for networks that

help good quality deals find early-stage investors,” says

Ms Tooth.

It is becoming more common for entrepreneurs to operate a satellite office in London to ensure access to key investors and clients, but to move other operations to other regions where they can be performed at significantly lower cost.

22

The sector picture

According to Experian’s data, high-growth companies

within the construction, property and retail sectors have

shown the most positive growth in the 12 months up to

March 2014.

Given that the UK’s economic recovery began in 2013,

it is perhaps unsurprising to see these traditionally cyclical

industries showing stronger signs of growth during this

period. Mr Welton says there is strong evidence within

BGF’s portfolio to suggest a healthy entrepreneurial

environment in property and construction: “We backed

our first housebuilder towards the end of 2014 in the

North East. We see the opportunity there to significantly

increase our investment because the demand is high,”

says Mr Welton.

Retail is another sector in which the percentage of high-

growth companies in the £2.5m-£100m revenue bracket

has risen. This is clearly linked to the rise in consumer

spending seen during 2013 as economic confidence began

to return10, a trend that continued in 201411. And, with oil

prices falling dramatically during the second half of 2014,

consumer spending power should be increased yet further.12

Greater consumer spending does not tell the whole story in

the retail sector, however. Ecommerce is the fastest growing

retail market in Europe13 and successful entrepreneurs in the

retail sector need to capitalise on this trend. “Bricks and

mortar are getting a bit better at doing online,” says Mr

Cheatle. “Those that have fallen by the wayside, like

Woolworths and HMV, have freed up a bit of space for those

that are nailing the online business.”

Ms Tooth says this is an area that continues to attract

attention from angel investors, pointing to the flotation of

angel-backed firm Attraqt in August last year, which helps

retailers to improve the effectiveness of their online

businesses. According to the UKBAA’s A Nation of Angels

report, the top five sectors for angel investments are:

professional services, healthcare, ICT-software, food and

drink, and digital media.

Wealthmonitor’s data also found that the media sector had

seen a jump in investment during 2014, with 77 deals resulting

in wealth creation of £0.2m and above recorded, compared

with 64 during 2013. Ms Enders says significant opportunities

arise for UK entrepreneurs in the creative industries because

10 Consumer Trends, Q3 2013, ONS, December 2013 ons.gov.uk/ons/dcp171778_346211.pdf

11 Consumer Trends, Q3 2014, ONS, December 2014 ons.gov.uk/ons/dcp171778_388683.pdf

12 Europe Brent Spot Price FOB (Dollars per Barrel), US Energy Information Administration, March 2015 eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=RBRTE&f=M

13 Online Retailing: Britain, Europe, US and Canada 2015, Centre for Retail Research retailresearch.org/onlineretailing.php

The top five sectors for angel investments are: professional services, healthcare, ICT-software, food and drink, and digital media.

23

Key

2013 2014

Source: Experian

Business Services

Finance WholesaleConstruction Agriculture Transport Manufact- uring

Retail Consumer Services

Public Property

Chart 8: Percentage of High Growth UK Companies, by sector

5%

0%

10%

15%

20%

25%

30%24

.3%

22.7

%

22.1

%

21.5

%

21.0

%

20.8

%

20.6

%

19.1

%

18.4

%

16.7

%

11.5

%

Key

2013 2014

* Top 11 sectors in the UK by 2014 deal value Source: Wealthmonitor

Services (Other)

Industrial MediaFinancial services

Computer software

Leisure Medical Consumer Retail

Computer services

Internet Consumer: Other

Chart 9: Number of deals, by sector*

100

50

0

150

200

250

300

350

278

117

84 80 77

62 61 55 51 47 44

24

14 Financial Services: contribution to the UK economy, House of Commons Library, February 2015 parliament.uk/business/publications/research/briefing-papers/SN06193/the-financial-sectors-contribution-to-the-uk-economy

15 The Royal Society Science 50 Index, Royal Society, 2014 svc2uk.com/the-royal-society-science-50-index/

16 Ibid.

there is strong global demand for UK content. “The UK

really punches above its weight in terms of the creative

sector, whether it’s music, books, film, TV programmes

or newspapers – we’re good at producing content,” says

Ms Enders.

It is unsurprising to see a high level of angel investment in

the professional services sector too, given the increasing

dominance of services in the make-up of the UK economy.

For example, government statistics show that financial and

insurance activities have grown as a proportion of total

gross value added (GVA) to the UK economy since the late

1990s, and in 2014 the sector accounted for 8.0% of GVA.14

Experian’s data also shows that the population of firms in

the £2.5m-£100m revenue bracket grew within the

business services and finance sectors, yet declined across

all of the other sectors measured.

And while the science sector is not specifically measured

within Experian’s data, Ms Coutu says its performance

should not be overlooked: “Sometimes, people don’t think

science is that sexy, but in terms of being a powerhouse for

the UK economy, it’s deeply sexy,” says Ms Coutu. The Royal

Society’s Science 50 Index shows that the average annual

growth rate in turnover of the 50 fastest-growing science-

based companies in the UK is 92%,15 and these are spread

right across the UK, as opposed to existing predominantly in

clusters, as is sometimes perceived to be important for the

success of such businesses. Encouragingly, 36 (72%) of the

top 50 fastest growing science-based companies are located

outside of London:16 “It’s very interesting that these firms

can grow and scale on an international basis far faster than

a construction company or consulting company for example,

because once you get the science right, it’s a case of just

scaling on a global basis. The growth these firms are

experiencing is phenomenal,” says Ms Coutu.

Experian’s data shows that the population of firms in the £2.5m-£100m revenue bracket grew within the business services and finance sectors, yet declined across all of the other sectors measured.

25

Driving growth through data

Sherry Coutu is an entrepreneur, non-executive

director, investor and adviser to companies,

universities and charities. She explains how freeing

up government data on companies that are growing

at more than 20% per annum could deliver a major

boost to growing businesses.

Ms Coutu would like to see the UK government make

VAT payment data and National Insurance data of

fast-growing companies available in real time, enabling

identification of the quickest growing firms in the UK by

virtue of the number of people they are employing and

the revenues they are receiving from customers.

“The reason that I want to identify the fast-growing

businesses is so that we can help them with their

number one problem – attracting talent so they can

fulfil customer demand,” says Ms Coutu. “Historically,

people are slightly reticent to join start-ups when given

a choice between a multinational and a fast-growing

young company. If, by releasing the information on

which companies are the fastest growing and best

performing, we help them to hire more people, that will

be solving their number one problem.”

The second area where public access to such data could

help growing businesses is in bringing them to the

attention of more customers: “If you hear that there’s

a company that is selling 30% or 40% more products

than everyone else, and they’re in your space, it lets you

know that maybe you should be talking to them,” says

Ms Coutu. “If you have no idea that they’re growing that

well, and all your competitors for instance are buying

their products, you’re missing an opportunity.”

Ms Coutu says the current lack of awareness about

such high-growth companies is detrimental for overseas

trade missions too. “At the moment, I think if you

analyse who is invited to go on government trade

missions, you would find very, very few companies that

were between 50 and 200 employees, and growing

really fast,” says Ms Coutu.

26

27

In focus: The markings of a gazelle

Start-up activity in the UK has continued to strengthen over the past few years as policies have focused on encouraging people to start businesses. At the same time, awareness has been raised around options to finance new businesses, and investors have been directed towards early-stage firms through initiatives such as EIS and SEIS.

The Experian data used in this report shows a slight decline in the percentage of high-growth companies in the £2.5m-£100m revenue bracket, however. In addition, the Department for Business, Innovation and Skills (BIS) estimates that at the beginning of 2013 there were over 1.5 million small and medium-sized enterprises (SMEs) in the UK that were not growing and had no wish to grow.17 Recent BIS analysis also showed that almost 2.7 million SMEs in the UK wished to grow but were not growing (growth defined as a more than five per cent annual increase in employment or turnover terms), and just 640,000 SME firms were growing in accordance with this measure.18

“If you think about this as an escalator, we are getting more companies at the beginning of that escalator, and that is a good thing,” says Stephen Welton, Chief Executive of the Business Growth Fund. “What we are not yet seeing, which will inevitably take longer, are enough of those companies moving up the escalator, getting bigger and growing more quickly.”

Section 2

Defining the gazelle companiesFor the purposes of this report we use Experian’s high-growth company criteria to define a gazelle. That is, a business that has increased turnover by at least 33% over the preceding three years and produced 10% year-on-year growth for a minimum of two years.

17 Business Population Estimates, Department for Business, Innovation and Skills, 2013

18 Small Business Survey, Department for Business Innovation and Skills, 2013

28

There is no guarantee that starting more businesses will necessarily translate into a larger population of high-growth companies. There are a whole range of factors that act as barriers to growth, and these must be better understood. The recent Scale-up Report on UK Economic Growth, authored by Sherry Coutu, lists, in order of importance, the following key reasons why companies are unable to scale in the UK:

• Finding employees to hire who have the skills they need• Building their leadership capability• Accessing customers in other markets / home market• Accessing the right combination of finance and• Navigating infrastructure.

In this section of the report, we have chosen to profile four gazelle companies in the UK that are experiencing high growth, whose owners are members of The Supper Club, a membership club exclusively for fast growth entrepreneurs and CEOs. We have spoken to the entrepreneurs running these businesses to find out first-hand how they have successfully navigated some of the common challenges young businesses face on their paths to growth, in the hope that these lessons will prove useful to others seeking to emulate them.

EModeration

About the business EModeration was founded in 2002 with an aim of delivering high-quality multilingual community management and social media consultancy to clients across a range of industry sectors. The company now has offices in London, New York, Los Angeles and Miami, with around 370 staff. EModeration was listed at no.65 in The Sunday Times Hiscox Tech Track 100 in September 2014.

CEO and Founder Tamara Littleton

Head office London

Average revenue growth (past three years)

Headcount growth (past three years)

+43% +26%full time employees and freelancers

29

The importance of collaboration As EModeration has grown, Ms Littleton says that

forming collaborative partnerships with other firms has

become increasingly valuable: “We work with other

agencies, and sometimes that’s because we’re

supporting large advertising groups, but it’s also about

how we stay agile and stay aware of how the market is

changing,” she says. The firm has forged close ties with

technology companies because the industry around

social media changes so rapidly, and it helps them to

follow trends and can benefit both parties’ clients too.

Developing the vision

One reason entrepreneurial businesses can struggle

with growth is that founders often remain too hands-on

in the day-to-day running of the company, leaving no

time to plan for the future: “Working on the business

not in the business is an important theme for me, and

one of my key strategies over the past couple of years

has been how to push myself away, because I see my

role as creating the strategy and vision of the company,”

says Ms Littleton. “I need space to network and look at

what people are doing in different businesses as well.

Some of the best ideas are about seeing what other

companies are doing that are not in your industry,

and learning from them. For instance, we looked at

the way Addison Lee uses technology to make things

so process driven, such as the use of apps to manage

the team, and tried to incorporate some of that into

the way that we work.”

Tapping the best talent

EModeration operates using a remote-working model,

with only around 12 of its 370 employees regularly

attending the office. This approach has huge

advantages in terms of accessing top talent from all

over the world. “Sometimes where people have left

some of the top agencies, maybe to go and start a

family, it might be hard for them to get back into the

workforce, but we can benefit because with us, they

can choose their hours and work from home,” explains

Ms Littleton.

Low cost expansion

Though it was founded in London, around 55% of

EModeration’s business now comes from the US. The

company is growing its presence in Australia too. One

way it keeps costs down is that its overseas offices are

not staffed. One of the biggest challenges with winning

more overseas business has been bringing in people

fast enough. Ms Littleton has now solved this problem

by building a reserve team of freelancers around the

world, allowing her to rapidly scale-up capacity when

required: “It means that we’ve got some in-built scale

which is so much easier, because every time we win a

big client, we don’t have to open an office, but do often

need to bring in new people,” she says.

A different approach to marketing

One of the first things Ms Littleton did was to hire a PR

agency. She also committed to using thought

leadership as a marketing strategy from the outset.

“We do a lot around white papers, I blog for Huffington

Post and write various different blogs,” says Ms

Littleton. “In the last few years, you can really see that

was a good tactic for our business – over time you build

gravitas and our search ranking is good. It’s been a

PR-driven marketing approach – our sales team is

remarkably small, with only two people that are

dedicated to sales – but if you’re selling software, you

have to take a very different approach.”

Leadership support

Ms Littleton has also benefited from tapping into the

right support and guidance at key times during

EModeration’s growth journey. “I joined an

entrepreneurial network after I’d hit the £1m revenue

milestone, which was like having the mixture of an

advisory board and a support group, and almost feels like

I earned an MBA,” she says. “We also brought on a

non-executive chairman a year ago which has helped us

be more ruthless about what we’re trying to achieve,

setting our goals and monthly reporting.”

30

Wheels 4 Sure

Passing on the reins

As the business was growing during its first year, Mr

Larry-Cole began to gradually remove himself from its

day-to-day running, staying at home longer to spend

time setting strategy, and taking time to build

relationships with legal and accounting advisers as well

as other business owners: “This led to a few of the other

guys in the small team we had at the time taking the

reins and responsibility,” recalls Mr Larry-Cole. “It’s

important you can entrust that to a secondary team of

managers early on.”

Embedding the vision

Placing trust in his people and involving them in the

strategic direction of the business is something that

has been core to Mr Larry-Cole’s talent management.

“I created a weekly staff meeting to share the vision of

why we’re in business beyond making a profit and

what we we’re trying to achieve in terms of growth

objectives,” he says. This even came to form part of

the firm’s approach to recruitment – managers would

invite job applicants to these meetings ahead of

interviews, and one recruit even attended them

consecutively for five weeks.

Adaptable people

One of the most important things Mr Larry-Cole has

looked for in recruiting is people who will fit into the

start-up environment, whose ambitions match that of

the business: “We need a willingness to learn and

adaptability, as it gives us the agility we need,” he

explains. “We’re not interested in people who are just

there to pay their bills.” The company’s training

programme is core to this too. Mr Larry-Cole sets group

reading tasks as part of this, aimed at developing

ambition and drive, and educating employees on what it

takes to be part of a small team in a fast-growing

entrepreneurial business.

Innovative approach to finance

Mr Larry-Cole has found an innovative way to finance

Wheels 4 Sure that frees him from the constraints of

traditional financing routes. “If you talk about normal

banking/funding routes, you would either have

somebody coming in taking equity or someone backing

your assets based on invoice which is limited in terms of

your growth, because you have to wait for that asset to

start working for you in numbers before getting some

CEO and Founder Reginald Larry-Cole

Head office South Godstone, Surrey

Average growth in lease income – 2013-2015 (2015 projected income based on live opportunities)

Headcount growth (past three years)

+855% +320%Grown from five people in 2013 to 21 today

About the business Wheels 4 Sure is a car leasing business that was founded in 2012 in Kent. It has grown rapidly from an average of £10,800 per month in lease income during 2013, to an average of £97,400 per month by the end of 2014.

31

cash to fund the business. We’ve found a way to

structure everything whereby, just getting the asset on

the road, gives us money as well,” he says.

Leveraging partnershipsAs part of its successful marketing strategy, Wheels 4

Sure has established and developed relationships with

firms in related areas. For example, it has become a

preferred partner for Uber, the app-based transport

network, providing vehicles to taxi drivers who join the

network. “We also have a nationwide dealer referral with

one of our main manufacturers,” says Mr Larry-Cole.

“If you’re in Glasgow for example, but went into this

particular manufacturer and for some reason – perhaps

due to tightened credit criteria – they can’t help you, they

will refer you to us to see whether we can supply you

with a vehicle on the lease terms that we have,” he says.

“We need a willingness to learn and adaptability, as it gives us the agility we need. We’re not interested in people who are just there to pay their bills.”

Reginald Larry-Cole, CEO and Founder of Wheels 4 Sure

32

Secured Mail

Technology delivering competitive advantage

Secured Mail has benefited from growing strong

long-term relationships with its customers. Of its top ten

customers, eight have been with the firm for more than

three years. One key facet of this has been building trust

through employing technology.

“Customers want to know where their items of post or

parcels are in the network and when they’re going to

get delivered. Being able to provide information at such

a granular level with such a high volume requires a big

effort – sophisticated IT systems are needed,” explains

Mr Bigley. “Having transparency of what we do is

central to the commitment we have to our customers.

They have access to all of the systems, creating a

very transparent proposition and enabling us to

develop longer-term collaborative relationships with

our customers.”

Attracting (and valuing) good people

Mr Bigley says another core factor in building customer

loyalty has been a commitment to invest in improving

the firm’s talent base. Part of his strategy for attracting

and motivating the best talent has been to involve

people in the wider vision of the firm from the outset.

“You’ve got to sell people a vision of where you’re trying

to get to and what you’re trying to achieve, you don’t

want people just coming for a job,” he explains. “As a

business is growing, you’re not working 9-5, you’re

working 24/7. You need people to buy-in to that ethos,

because that’s the nature of the journey that you’re on.

Making sure that you’ve got people with the same

mindset around you and the same enthusiasm and

commitment is really important. The other thing that

we’ve always been a great believer in is that nobody has

a monopoly on good ideas. You’ve got to accept and

encourage and embrace challenge, because if you want

to attract good people, they’re going to have their own

view. If you aren’t prepared to listen to that, you won’t

keep those people.”

About the business Established in 2006 as a licensed postal operator, Secured Mail is now one of the largest technology-enabled ecommerce and postal logistics businesses in the UK. Secured Mail focuses on ecommerce, bulk mail, unsorted mail and international. The company has diversified into the rapidly growing economy parcels market, capitalising on the boom in

online shopping. The company has taken turnover from zero to almost £80m in the last eight years. Secured Mail has also been ranked several times in the The North West’s Fastest Growing Company report and The Insider’s Growth 100 Report.

Founder and Chief Executive Mark Bigley

Head office Warrington

Compound Annual Growth Rate (past six years)

Headcount growth (past three years)

+58.3% +119.8%(from 91 in FY11 to 200 in FY14)

33

Relinquishing control Having created a business, Mr Bigley acknowledges

that letting others take control is not easy, but he has

recognised the need to free his time for other activities.

“I’ve consciously tried to build a senior management

team to develop an operating board within the business

to try and retain and share knowledge across the

business,” he says. Doing so has freed the business

founder to learn and apply lessons from successful

businesses in other sectors. “There are certain

businesses that have a total commitment to the

customer and will do whatever it takes to ensure they

receive the very best service. Those businesses really

inspire me and I’ve learnt from that,” explains Mr Bigley.

“We try to be a partner rather than just a service

provider to our customers – what we can do makes

a massive difference, because we’re part of the

supply chain and we are part of the delivery of a

customer promise.”

Two NEDs are better than one

Secured Mail has a non-executive chairman who has

taken a more active role to support the business as it

has grown. As he looks towards further growth that will

include further acquisitions, Mr Bigley says he will

continue to invest in non-executive directors (NEDs).

“As long as you’ve got a really good NED with good

sector experience, or experience in what it is that you’re

seeking to achieve, they really add value. Non-exec

directors should be challenging but in a positive way.

As a management team, we challenge ourselves. We

are challenged in the boardroom as well – it is an

important principle,” says Mr Bigley.

Capital that delivers more

It has been a deliberate strategy for Secured Mail to seek

out financing through venture capitalists, on account of

the additional benefits they can deliver.

“What they’re able to do is provide expertise in the

wider financial markets, which has been really useful

for us as we seek to get additional funding for growth,”

says Mr Bigley.

Remaining nimble

Mr Bigley says that businesses are becoming more

collaborative out of necessity: “Partners along the supply

chain, or across different markets, are starting to work

together and use the good bits of everybody.” He adds

that in today’s environment, the businesses that grow

quickest will be those that can fill a niche and do it

effectively. “What you’re finding now is businesses are

concentrating on core services and doing that very well.

You will find those organisations that can operate in

complex markets and complex supply chains will thrive,”

says Mr Bigley. Meanwhile, he says, those businesses

that still try to provide as many services as possible will

become big and cumbersome, unable to capitalise on the

way markets are growing and changing. “That flexibility

is key. Therefore you do need to be nimble. The only way

you’re going to be able to maintain that nimbleness

and flexibility is to remain focused on the core strengths

of what it is you’re trying to offer,” says Mr Bigley.

34

Seraphine

Thinking globalTaking the business into overseas markets was an

important part of Ms Reinaud’s growth strategy from

early on. In part, this was a natural step in the search for

growth given Seraphine’s narrow product niche. It was

also a case of diversifying geographical risk at a time

when the financial crisis was making market

performance incredibly tough to predict: “We’ve been

able to really take advantage of the fact that the UK is

an international platform for ecommerce and shopping,

and by doing that build brand awareness in lots of

countries, and develop distribution points with

department stores and independent stores in many

countries across the world,” says Ms Reinaud. According

to Ms Reinaud, the ease of compliance within other EU

member countries, and low freight costs, meant that

entering these markets was relatively easy. The biggest

challenge was entering the US market.

“As soon as you start doing any form of marketing, you

can take your budget for the UK and times it by ten. The

investment is much more significant – a lot of people

underestimate that, and I certainly did,” says Ms Reinaud.

A tight focus on the cost model was crucial for Seraphine

as it grew overseas to ensure it was still generating profit

despite increasing distribution expenses. “I’ve also tried

to use my network of other entrepreneurs and business

people, to ask for advice and piggyback on some of their

systems or service providers, rather than hiring external

consultants,” explains Ms Reinaud.

Making a media splash

In the last few years, Seraphine has managed to gain an

enormous amount of media coverage relative to the size

of the business, mainly through a string of endorsements

by A-list celebrities, including the Duchess of Cambridge,

and Hollywood stars like Jessica Alba and Gwyneth

Paltrow. This was initially achieved through having stores

in prominent London locations, though when they

branched out into the US, it was a very deliberate

strategy. “We started to have a more active relationship

with the celebrities in Hollywood because we knew they

were very influential. It was about being proactive and

telling them about the brand and introducing them, and

seeing if they’d be interested in wearing the brand,”

says Ms Reinaud.

About the business Seraphine provides high-quality maternity fashion. The firm was founded in 2002, opening its flagship boutique on Kensington High Street in London, and its online store was launched in 2005. Today, its site serves over 20 countries and Seraphine fashion is distributed in stockists all over the world, including Peter Jones and John Lewis in London, Galeries

Lafayette in Paris and A Pea in the Pod in the US. Paris-born founder Cecile Reinaud now leads a team of 60 people from its London creative studio.

Founder and Designer Cecile Reinaud

Head office London

Average revenue growth (past three years)

Headcount growth (past three years)

+51% +48%(from 41 people in 2013 to 60 today)

35

Turning people into pillars

Where possible, Ms Reinaud is keen to develop people

from junior level right up to senior managers. “I’ve had

some very good success of building talent within the

company. That is always the best and most satisfying

approach, if you can achieve that. I’ve got a number of

very successful case studies of people who have come in

as juniors and have risen rapidly and are now important

pillars of the company,” says Ms Reinaud. It has been

more of a challenge recruiting external candidates to fill

positions however. “I still feel that there aren’t enough

recruitment agencies out there which are specialised in

finding people who have the right assets to perform in

entrepreneurial companies,” she explains.

Benefiting from EIS Ms Reinaud raised finances to grow Seraphine through

the Enterprise Investment Scheme (EIS), tapping into the

business angels network. “As a result, the financing of

the business at the initial stage was very stable, and

because we were profitable from nearly year one, we

were able to self-fund the business growth from there

which means we’ve had this controlled growth strategy

so that we wouldn’t burn all our money too fast and have

to raise more and more funds,” says Ms Reinaud. “EIS is a

fantastic system that creates a virtuous cycle of

entrepreneurs who have done well who then re-invest in

other entrepreneurs – they often pass on valuable advice

too,” she adds.

“I’ve had some very good success of building talent within the company. That is always the best and most satisfying approach, if you can achieve that.”

Cecile Reinaud, Founder and Designer of Seraphine

Emulating gazelle companies

Clearly, every entrepreneur will face a specific set of challenges as they work to grow their business, but after talking to four successful gazelle companies spanning a range of sectors for this report, there are undoubtedly some commonalities and shared attributes that have been important in their path to high growth. We have sought to capture the top ten of these lessons below.

• Work on the business not in the business The entrepreneurs running the gazelle businesses we

have profiled are unanimous in agreement that while it

can be difficult for owners to remove themselves from the

day-to-day tasks of running the company, it is crucial to

future growth to make time to plan, network and develop

the vision of where the business is heading. This means

putting a trusted management team in place and

have confidence in them to make decisions.

• Bring in a mentor figure early on All the gazelle leaders we profiled have engaged

mentor/advisers or non-executive director figures to

benefit from their experience in growing a business

beyond a certain size.

• Be proactive about networking The founders and owners of the gazelle companies we

have profiled say their membership of an entrepreneurs

network has been a valuable source of learning for all

of them. It enables them to meet peers who are tackling

the same growth issues as they are, and to share

solutions to problems.

• Apply lessons from successful firms in other sectors Whether it’s eModeration seeking to replicate Addison

Lee’s smart use of mobile apps to better manage its

people, or Secured Mail adopting new customer

service practices, the entrepreneurs running the gazelle

firms we have profiled see huge opportunities in studying

successful businesses in other sectors.

• Get collaborative to get ahead To some degree, all the gazelle firms we have profiled

place value in forging strategic external partnerships or

close ties with outside firms. Wheels 4 Sure, for example,

has become a preferred partner for Uber, while

eModeration has close links with technology firms that

help it stay up to date with the latest trends in its market.

• Harness technology to gain competitive advantage Whether the business is built on technology or not, it is

being harnessed for competitive edge in some way by all

of the gazelles we looked at. Secured Mail, for instance,

has opened up its entire network so customers can track

and trace parcels in near real-time, while Seraphine has

used its online store to help it break into more than 20

international markets.

36

• Share the company vision with employees In order to attract the best talent, and keep that talent

motivated to remain with the business as it grows, there

is a clear approach by the gazelle companies we have

profiled to involve employees and recruitment targets in

discussions on the future of the business and what its

key objectives are.

• Recruit people with the right mentality for growth

The entrepreneurs we spoke to make a point of

recruiting people who are prepared not just to buy into

the company vision, but to go the extra mile to

contribute to the firm’s success. They were are not

interested in hiring employees who simply want a 9-5 job

– they want people who are flexible and agile, who can

help them overcome the inevitable stumbling blocks a

fast-growing company will face.

• Keep financing simple and get more for your money Some of the gazelle companies we looked at have had

the luxury of self-funding because of high profitability,

which keeps them in control of financing. Where they

have turned to external support, they have used a

measured approach, and often looked for more than

just finance from their investors. Seraphine, for example,

took on finance through EIS, and Secured Mail had

venture capitalist funding – in both cases the investors

delivered guidance too.

• Think outside the box with marketing eModeration pursued a thought leadership marketing

strategy from the outset, at a time when it was still a

relatively new discipline. Seraphine has gained massive

media coverage through celebrity endorsements, while

Wheels 4 Sure has linked with external partners such

as Uber.

37

38

Entrepreneurship across the UKIn our last Entrepreneurs Index we observed a mixed story among the regions. The greatest increases in wealth creation were seen in England, particularly in the East, the Midlands and London. Meanwhile, there was positive change in the proportion of high-growth companies in regions outside of England – Northern Ireland and Scotland.

Our latest data shows that London and the South East continue to perform strongly in terms of wealth creation, with the highest number of deals occurring there. We also saw deal numbers growing in Wales and Scotland.

For high-growth companies however, the picture across the regions reflects the broader trend discussed in the report, with all but two regions – Scotland and Northern Ireland – experiencing some level of decline in the proportion of firms achieving this status.

Section 3

39

Chart 10: UK and Ireland regional enterprise activity

Key

Number of enterprises Proportion of high-growth companies Number of deals

Source: ONS; Experian for BGF; Wealthmonitor.

North West Scotland

North East

Yorkshire and Humberside

South West

South East

Midlands

227,000

20.5%

123

The East

401,000

20.7%

373

London

Northern Ireland

Wales

217,000 21.8% 176 157,000 24.0% 75

59,000 19.2% 30

156,000 20.9% 131

330,000 20.8% 191

67,000 20.7% 11

90,000 21.6% 62

207,000 20.6% 109

353,000 20.9% 234

40

London

19 Powering the digital economy, Tech Nation, 2015 techcityuk.com/wp-content/uploads/2015/02/Tech%20Nation%202015.pdf

London saw the largest number of deals resulting in wealth

creation of £0.2m or greater during 2014, at 373, up 13.4%

from the number in 2013. Its businesses have not been

immune to the challenges of reaching high growth however,

as the number achieving this fell from 1743 to March 2013,

to 1672 to March 2014.

A 2015 report from Tech Nation found that Inner London

has seen a 92% increase in new digital companies

incorporated between 2010 and 201319. The digital sector

employs around 251,590 people in London and its

ecosystem contains more than 36 business accelerators.

For further detail please refer to the methodology. Source: ONS; Experian for BGF; Wealthmonitor.

373 deals in 12 months to December 2014

13.4%

1672 high-growth companies

-5.8%

401,000 enterprises as at March 2014

7.8%change in number of deals (12 months to December 2014 vs 12 months to December 2013)

change YOY (2014 vs.2013) change in percentage of high-growth companies (12 months to March 2014 vs 12 months to March 2013)

41

South East

The South East also saw an increase in the number of deals

that occurred during 2014, with 234 recorded, as compared

with 221 during 2013. The region saw a decline however in

the number of high-growth companies in the £2.5m to

£100m revenue bracket, falling from 983 to March 2013, to

848 to March 2014.

The South East Local Enterprise Partnership (LEP) recently

agreed an expansion to its Growth Deal with the government,

which will see an extra £46.1m invested in the area between

2016 and 2021. This is in addition to the £442.2m of funding

committed by the government in July 2014. The additional

proposed projects include the Southend and Rochford Joint

Area Action Plan, which provides for further expansion of

London Southend Airport onto a 55-acre, greenfield site to

create a high-end Business Park.

For further detail please refer to the methodology. Source: ONS; Experian for BGF; Wealthmonitor.

234 deals in 12 months to December 2014

5.9%

848 high-growth companies

-4.4%

353,000 enterprises as at March 2014

3.8%change in number of deals (12 months to December 2014 vs 12 months to December 2013)

change YOY (2014 vs.2013) change in percentage of high-growth companies (12 months to March 2014 vs 12 months to March 2013)

42

Midlands

David Bharier is Policy & Research Adviser at Birmingham Chamber of Commerce

What local government initiatives are currently

promoting entrepreneurship in your region? The Green

Bridge Supply Chain Programme is a new competition for

SMEs who are invited to apply for funding to develop their

businesses within the West Midlands green sector. The

competition is funded with £20m from the Regional Growth

Fund and businesses can apply for grants ranging from

£10,000 to £1m. In addition, the Birmingham Skills for

Enterprise and Employability Network (BSEEN) programme

offers students and graduates a package of intensive

start-up support for new ventures including workshops,

business grants and free workspace opportunities.

In which sectors have entrepreneurial businesses been

growing most strongly within your region in the last 12

months? Birmingham’s technological and creative sector is

currently growing strongly, with many creative hotspots

emerging around the city. The Custard Factory in Digbeth,

home to over 500 businesses, has become the heart of

Birmingham’s digital district, hosting some of the city’s best

young creative talent. The hotspot now provides creative

workspaces and incubation to young entrepreneurs.

What do you feel are the biggest growth barriers facing

entrepreneurs in your region and how could these be

addressed? The skills gap currently being experienced

throughout the region is proving to be a major barrier for

business growth and development, with 65% of West

Midlands firms facing recruitment difficulties in Q4, 2014 .

Skilled manual jobs are proving problematic for

manufacturers, while managerial staff are the hardest to

recruit for service sector firms. The Skills Hub, a partnership

between regional further education colleges and the

Greater Birmingham Chambers of Commerce, aims to

alleviate this problem by providing a vital link between

business and academia.

For further detail please refer to the methodology. Source: ONS; Experian for BGF; Wealthmonitor.

191 deals in 12 months to December 2014

6.1%

688 high-growth companies

-21.5%

330,000 enterprises as at March 2014

4.1%change in number of deals (12 months to December 2014 vs 12 months to December 2013)

change YOY (2014 vs.2013) change in percentage of high-growth companies (12 months to March 2014 vs 12 months to March 2013)

43

North West

The North West is another region performing relatively well

in terms of the number of deals taking place. This figure

increased to 176 in 2014, up from 171 in 2013.

Liverpool City Region LEP and the North West Fund for

Loans Plus recently announced a joint initiative, whereby

SMEs operating in Merseyside that take advantage of the

35% subsidy available under the Liverpool City Region

LEP’s New Markets Programme to fund their growth, can

also benefit from a 50% reduction in the arrangement fee on

a loan of up to £250,000 from the North West Fund for

Loans Plus. These loans will be available until the end of

2015 in an attempt to support local businesses seeking

funding for growth.

For further detail please refer to the methodology. Source: ONS; Experian for BGF; Wealthmonitor.

176 deals in 12 months to December 2014

2.9%

502 high-growth companies

-11.2%

217,000 enterprises as at March 2014

4.8%change in number of deals (12 months to December 2014 vs 12 months to December 2013)

change YOY (2014 vs.2013) change in percentage of high-growth companies (12 months to March 2014 vs 12 months to March 2013)

44

Yorkshire & Humberside

Mark Goldstone is Head of Policy and Representation at West & North Yorkshire Chamber of Commerce

How has access to funding evolved within your region

over the last couple of years? What developments are

expected in 2015? There is funding available through

Local Enterprise Partnerships in our region and the West

and North Yorkshire Chamber has its own loan fund that

provides funding to those businesses unable to raise finance

through traditional channels. We have also seen a rise in

crowdfunding which appears to be better understood by

business owners in the region now.

In which sectors have entrepreneurial businesses been

growing most strongly within your region in the last 12

months, and what do you think is driving that growth?

The Yorkshire region continues to record growth in new

businesses within the media and digital sector, as the

relatively low cost of entry provides less of a challenge than

most other sectors. The Chamber has also seen interesting

growth in artisan food and drink, with consumers becoming

increasingly aware of provenance and willing to pay extra for

premium products. Yorkshire, with its rich heritage in food

manufacturing, access to quality ingredients and ready

access to UK and world markets is a great location for this

type of activity.

What benefits do you think your region offers to

entrepreneurs that choose to set up their businesses

there? Yorkshire has a well-established business support

network that includes chambers of commerce, community

development finance institutions (CDFIs) and angel investor

networks. There are some world-class universities that

provide support, collaboration and incubator space for new

businesses. Leeds is also one of the largest centres for

finance and legal professionals in the country, and as a

consequence there is a very large and well-connected

network of advisers.

For further detail please refer to the methodology. Source: ONS; Experian for BGF; Wealthmonitor.

131 deals in 12 months to December 2014

0%

364 high-growth companies

-16.6%

156,000 enterprises as at March 2014

3.7%change in number of deals (12 months to December 2014 vs 12 months to December 2013)

change YOY (2014 vs.2013) change in percentage of high-growth companies (12 months to March 2014 vs 12 months to March 2013)

45

South West

The number of deals in the South West has fallen slightly,

from 114 in 2013, to 109 in 2014. There has also been a

decline in the number of companies achieving high growth,

from 375 to March 2013, to 332 to March 2014.

The Heart of the South West LEP has announced a £5m

loan programme to support business growth in the region

that will be delivered as a partnership between North

Devon+ and Plymouth University. HM Treasury also

announced the south-west infrastructure package in

March, which will see the government focusing on

improving the region’s road, rail and businesses. These

investments are expected to provide a huge boost to the

region’s economy: a total of 38 projects, worth nearly

£23bn, are in the south-west infrastructure pipeline.

For further detail please refer to the methodology. Source: ONS; Experian for BGF; Wealthmonitor.

109 deals in 12 months to December 2014

-4.4%

332 high-growth companies

-3.0%

207,000 enterprises as at March 2014

3.0%change in number of deals (12 months to December 2014 vs 12 months to December 2013)

change YOY (2014 vs.2013) change in percentage of high-growth companies (12 months to March 2014 vs 12 months to March 2013)

46

North East

Ross Smith is Director of Policy at the North East Chamber of Commerce

What impact have local enterprise partnerships had on

entrepreneurship within your region? Tees Valley

Unlimited, the local enterprise partnership for Tees Valley,

has introduced two very helpful schemes. The Tees Valley

Catalyst Fund provides security for performance bond

guarantees and so helps firms bid for bigger contracts

than they would typically be able to. The Jobs and Skills

Investment Scheme provides a wage subsidy to support

new jobs, and has been particularly helpful in enabling

entrepreneurial firms in the digital sector to take on

local graduates.

In which sectors have entrepreneurial businesses been

growing strongly within your region in the last 12

months? The North East has always had expertise in the

field of energy, and new, fast-growing firms are continuing

this legacy – such as Nortech, who are providing a wealth of

engineering services to the energy sector, and Utilitywise,

who take innovative approaches to help businesses reduce

their bills. Digital is another fast-growing sector, with a host

of young tech start-ups following in the footsteps of Sage,

one of the region’s greatest business success stories.

How has access to funding evolved within your region

over the last two years? The North East has achieved

disproportionate success within the Regional Growth Fund

(RGF), and programmes like Let’s Grow – backed through

RGF to provide smaller packages of support for growing

SMEs – have been very successful. North East firms are also

benefiting from exciting accelerator programmes – notably

Ignite 100 in Newcastle – while North East-based Growth

Funders is helping to introduce crowdfunding as a fresh

finance option. Securing the next wave of JEREMIE funding

from the EU for the North East has been a crucial project to

ensure growth finance is available in the next six years.

For further detail please refer to the methodology. Source: ONS; Experian for BGF; Wealthmonitor.

30 deals in 12 months to December 2014

-36.2%

108 high-growth companies

-12.0%

59,000 enterprises as at March 2014

5.4%change in number of deals (12 months to December 2014 vs 12 months to December 2013)

change YOY (2014 vs.2013) change in percentage of high-growth companies (12 months to March 2014 vs 12 months to March 2013)

47

East of England

The East of England saw the third highest percentage

growth in deal activity measured by Wealthmonitor, after

Wales and London. The number of deals rose from 109 in

2013 to 123 in 2014. There was however a 14.2% decline

in the number of firms achieving high growth, from 588 to

March 2013 to 454 to March 2014.

Tech Nation’s recent Powering the digital economy report

highlights Norwich and Norfolk as a newly developing digital

cluster, with an ever-increasing body of technology

start-ups emerging, including online carpooling service

company Liftshare, and customer feedback survey company

Servicetick.

In February, the government approved a £2bn project for

a major wind farm off the coast of East Anglia that has

already led to £15m of contracts being awarded to

businesses in the region.

For further detail please refer to the methodology. Source: ONS; Experian for BGF; Wealthmonitor.

123 deals in 12 months to December 2014

12.8%

454 of high-growth companies

-14.2%

227,000 enterprises as at March 2014

4.1%change in number of deals (12 months to December 2014 vs 12 months to December 2013)

change YOY (2014 vs.2013) change in percentage of high-growth companies (12 months to March 2014 vs 12 months to March 2013)

48

Scotland

Liz Cameron is Chief Executive of the Scottish Chambers of Commerce

How has the Scottish government been promoting

entrepreneurship? In November 2013 the Scottish

government announced its ‘CAN DO’ entrepreneurship and

innovation framework. Part of CAN DO has involved a review

of the private sector-led mentoring environment within

Scotland. Scottish Chambers has played a pivotal role in this

work as the leading deliverer of business mentoring in

Scotland. We have also introduced financial investment

programmes aimed at supporting businesses to export.

What financing challenges are facing Scottish

entrepreneurs? Access to funding continues to be a

significant challenge for entrepreneurs and businesses in

Scotland. Demand for credit/funding is still very low among

Scottish businesses and the Scottish Chambers Quarterly

Economic Indicator has found that recent impressive levels

of capital and training investment across the economy have

been funded through retained profits and cash, and not

through applications for new credit. We are aware of an

increase in the activities of angel investor networks but

it is not clear if this has transpired into improved credit

conditions for business.

What benefits do you think Scotland offers to

entrepreneurs that choose to set up businesses there?

Entrepreneurs will have access to a very skilled and diverse

workforce on their doorstep, and the country’s compactness

makes its talent and its businesses highly accessible.

Scotland has excellent universities that are putting students

through world-class courses and delivering highly sought-

after qualifications. Scotland’s airports lie within a short

distance of the urban population centres, delivering

effective links to many of the world’s key aviation hubs. We

also have a devolved Parliament which enables us to be

more flexible in our investment packages and tailor support

to suit potential investors.

For further detail please refer to the methodology. Source: ONS; Experian for BGF; Wealthmonitor.For further detail please refer to the methodology. Source: ONS; Experian for BGF; Wealthmonitor.

75 deals in 12 months to December 2014

5.6%

400 high-growth companies

5.7%

157,000 enterprises as at March 2014

4.0%change in number of deals (12 months to December 2014 vs 12 months to December 2013)

change YOY (2014 vs.2013) change in percentage of high-growth companies (12 months to March 2014 vs 12 months to March 2013)

49

Wales

Wales had the largest percentage increase in the number of

deals recorded between 2013 and 2014, albeit from a

relatively low base. There were 62 deals that resulted in

wealth creation of £0.2m or greater during 2014, compared

to 49 in 2013.

In November 2014, Welsh Finance and Government

Business Minister Jane Hutt announced the European

Commission’s approval of the European Social Fund (ESF)

for Wales. The European Regional Development Fund

(ERDF) programmes, worth around £960m for West Wales

and the Valleys, and £162m for East Wales, will include:

• £310m for research and innovation

• £198m to boost competitiveness, including through

business finance

• £439m for connectivity and urban development, which

includes £252m for transport, including scope to support

transformational public transport investments and

• £154m for renewable energy and energy efficiency.

For further detail please refer to the methodology. Source: ONS; Experian for BGF; Wealthmonitor.For further detail please refer to the methodology. Source: ONS; Experian for BGF; Wealthmonitor.

62 deals in 12 months to December 2014

26.5%

135 high-growth companies

-13.1%

90,000 enterprises as at March 2014

2.3%change in number of deals (12 months to December 2014 vs 12 months to December 2013)

change YOY (2014 vs.2013) change in percentage of high-growth companies (12 months to March 2014 vs 12 months to March 2013)

50

Northern Ireland

Ann McGregor is Chief Executive of the Northern Ireland Chamber of Commerce and Industry

In which sectors have entrepreneurial businesses been

growing most strongly in Northern Ireland? Northern

Ireland is fast becoming a location of choice for international

film and TV companies, including Universal, BBC, C4, UTV

and a host of others, opening up new opportunities for

entrepreneurs. The Knowledge Economy Index has also

highlighted that during the last year, Northern Ireland

started 295 technology companies and increased

employment within knowledge-based companies to over

35,000 people.

How has access to funding evolved within your region

over the last couple of years? What developments are

expected in 2015? Invest NI, InterTradeIreland, NISPO, Halo,

NISP, and others in the private sector have put significant

investment into supporting entrepreneurial growth in

Northern Ireland in the last few years. Invest NI has already

developed a suite of funds under its Access to Finance

Strategy through the Northern Ireland Small Business Loan

Fund and the Growth Loan Fund, which provides £55m of

debt finance over the next five years. There is a willingness

amongst local businesses to look at alternative sources of

finance too. Halo, run from the NI Science Park, acts as a

route to NI companies to be considered for crowdfunding

from the two biggest equity crowdfunding sites in the UK

– Seedrs and Crowdcube.

What benefits do you think your region offers to

entrepreneurs that choose to set up their businesses

there? With Northern Ireland designated as a European

Entrepreneurial Region for 2015, this could raise the profile

of Northern Ireland-based entrepreneurs to potential

investors and make over €1bn of finance from a range of EU

programmes accessible to them.

For further detail please refer to the methodology. Source: ONS; Experian for BGF; Wealthmonitor.

11 deals in 12 months to December 2014

-8.3%

103 high-growth companies

5.5%

67,000 enterprises as at March 2014

0.0%change in number of deals (12 months to December 2014 vs 12 months to December 2013)

change YOY (2014 vs.2013) change in percentage of high-growth companies (12 months to March 2014 vs 12 months to March 2013)

51

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