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The importance of scaleups for the UK economy

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To give an idea of just how crucial scaleups are, a recent report estimated that if UK scaleups got just a 1 per cent boost, they’d drive an additional 238,000 jobs and £38bn to our economy, according to research.

But startups – not scaleups – are the ones stealing the limelight. Startups get the media attention, support, and, most importantly, money – it’s been revealed that tech startups took 75 per cent of all VC investment money in 2015. 

Giving the growth of the startup ecosystem and the ongoing media buzz, it’s no surprise that more young people than ever before to make the leap into entrepreneurship last year.

While it’s great news that more businesses are founded every year, for startups to be able to provide employment, raise more capital, contribute to the economy and impact a wider market, they need to scale. They need to expand their team, their product and their client-base. They need to become scaleups.

Why scaleups need help

Building a team and growing it into a scaleup is no mean feat. Startups have just a 0.5 per cent chance of becoming a scaleup,  so just 1 out of 200 of startups make the grade.

Those who have managed it attest to challenges in finding talent, restructuring the business and maintaining communication. Just ask Mary McKenna, co-founder of Learning Pool, who said about scaling her business recently: “I won’t pretend it was easy because it wasn’t.”

The operational side of scaling a business is also challenging. Erik Fairbain, founder of electric car charging company POD Point, outlines the scale of the logistical beast “each time your business doubles everything seems to break… so every time your company doubles in size, you end up redesigning every process you have”.

One of the hardest aspects for a scaling team is redistributing responsibility. Changing roles can leave employees uncomfortable and uncertain, as they are forced to give up positions they enjoy. Molly Graham (who’s worked at Google and Facebook and now works at Quip) talks about the nerves and anxiety involved when a team grows from 10 to 50.

To get to that larger, better functioning team, you have to get through a rollercoaster of emotions which are “not different from how a kid feels when they have to share their legos”.

My vision is to cultivate an environment where scaleups have what they need to grow. Think accelerator, but not in the traditional sense of taking equity and throwing in mentors and funding – I want to take a subtler, more flexible and more agile approach and a longer term partnership.

To achieve this in practical terms, that means grouping companies together based on mutual benefit, and nurturing a culture of knowledge sharing. They recognise that a service company, such as a marketing agency, stands to benefit from sharing space with, say, a company which creates apps. 

Coverage for scaleups is finally beginning to trickle through, but there still remains a gaping scaleup support-system shaped hole which needs to be filled.  

David Galsworthy is CEO of workspace provider Techspace.

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