RE$EARCH MONEY London FinTech Conference

An influential report by Canadian-born Sherry Coutu is having a major impact on the way the UK government supports high-tech companies, shifting emphasis from start-ups to high-growth firms commonly known as scale-ups. Since the release of The Scale-Up Report on UK Economic Growth a year ago, the document has been widely embraced by governments on both sides of the Atlantic, including the Province of Ontario which announced a $25-million Scale Up Ventures fund to be overseen by the Scale Up Leadership Council (R$, April 30/15).

Coutu explained the rationale for shifting support to scale-ups last month at the first FinTech RE$EARCH MONEY Conference in London UK, noting that this class of enterprise is responsible for the majority of economic growth and job creation, not start-ups.

"We need to turn policy attention to scale-ups, not start-ups," says Coutu, an angel investor and chairman and supporter of Founders4Schools. "Very few start-ups survive and grow."

The report says a 1% increase in the number of scale-ups will generate nearly 240,000 new jobs and $76 billion in gross value added to the economy within three years.

That contrasts with the anemic track record of start-ups. Between 1998 and 2008, there were 221,731 start-ups created in the UK but only 5,934 or 2.7% achieved at least one year of high growth.

"Start-ups do not contribute to national output and they do not contribute to productivity," says Coutu.

The Coutu report defines a scale-up enterprise as one with average annual growth in employees or revenue greater than 20% annually over a three year period, and with more than 10 employees at the beginning of the period. It identifies six gaps that aspiring scale-ups must overcome to be successful (see chart).

Commissioned by the recently created joint industry-government Information Economy Council, the report contends that for the UK to become a "scale-up nation", it requires an ecosystem in which high-growth firms are able to flourish, with collaboration as a central focus. Examples of policies and support mechanisms from 20 other countries were examined and their potential impact if they were to be adopted in the UK and aimed at the identified scale-up gaps.

"If the skill set is not in the culture (of a company), you need to import it," says Coutu, adding that there are currently 990,000 open positions in the UK. "Speed it critical because people with scale-up skills are in high demand."

To facilitate the transition to scale-ups, the report recommends that:

• national data sets be freely available to public and private sector organizations;

• a minister should be responsible for reversing the scale-up gap by 2025;

• regional leaders should collaborate with private sector initiatives to promote the top 50 scale-ups in their jurisdictions;

• scale-up visas should be provided to top scale-up firms for recruiting foreign workers;

• governments and industry should ensure progress is being made on the finance gap for promising firms; and,

• progress on infrastructure catering to scale-ups is maintained.

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