Scaleups: A hidden powerhouse of the UK economy
While startups grab headlines, it’s scaleups that are quietly powering growth in the UK economy, generating £1.4 trillion in revenue and employing 3.2 million people.
The ScaleUp Institute held its annual review at the Tate Modern in London this week.
Scaleups are a hidden powerhouse in the UK economy, providing the potential to unlock significant growth. The Institute has identified more than 34,000 of these companies across the UK. They’re spread across every region and sector, from manufacturing to retail, healthcare to creative industries.
A hidden growth lever in industrial policy
Scaleups make an outsized contribution to the economy. They grow by more than 20% annually and generate £1.4 trillion in revenue, equivalent to more than half of the output of all small and medium-sized businesses, despite accounting for less than 1% of all UK businesses.
The ScaleUp Institute has another 16,450 companies in its sights which it has identified as growing between 15 and 20% annually.
“I was delighted to welcome the ScaleUp Institute’s Annual Review, given the progress made since the ScaleUp Institute was set up. Scaleups are a critical part of employment creation and make a significant positive impact to UK economic growth across all sectors," said Gareth Thomas MP, Minister for Services, Small Businesses and Exports.
Building better business
Scaleups employ 3.2 million people across the country and are improving the dynamics of the UK workforce.
They're not just focused on profits but building better businesses – two in five actively work towards environmental and sustainability goals. They offer opportunities to young people through internships and apprenticeships and promote diversity, with 37% having female directors.
These companies think big and act globally. Half are already trading internationally, and seven out of ten plan to expand into new markets. They're particularly interested in emerging economies, taking British expertise and innovation to new frontiers.
In its ScaleUp Annual Review, Faster, Higher, Stronger: Scaling Together, the Institute makes ten policy recommendations to government and industry.
#1 Connect government data to transform support
HMRC data could help identify and support scaling businesses at an early stage. Making better use of these resources through the Data Bill would allow support organisations to reach scaling businesses and proactively fast-track them to relevant resources.
#2 Make scaleup a unique business category
Scaling businesses face unique challenges that need solutions different from typical SME support programmes. A more segmented approach, including a dedicated Enterprise Agency, would ensure policies and support are properly tailored to scaling businesses' needs.
#3 Build strong relationships with scaling businesses
Many scaling businesses struggle to navigate the complex landscape of available support. A dedicated relationship management approach with high-growth teams could help scaleups access everything from trade missions to R&D collaboration while efficiently using government resources.
#4 Create local hubs where growth happens
Physical spaces where scaleups can access talent, investors, mentors and peer networks are vital to scaling success. Every local growth plan should include specific provisions for scaleup support, with clear funding allocations through city and regional authorities.
#5 Focus export support on scaling businesses
International expansion is a key driver of scaleup success, but many businesses struggle to access the right support. Creating dedicated scaleup desks in embassies and targeted trade missions could help more businesses successfully enter new markets.
#6 Engage big business in supporting scaleups
Large companies could be transformative in supporting scaleup growth through procurement and partnerships. A new Corporate Collaboration Charter, alongside mandatory reporting on scaleup engagement, could help drive meaningful change in this area.
#7 Use government procurement to drive innovation
Public sector spending could be better leveraged to support scaling businesses, particularly in innovation. Taking lessons from the US model, a more streamlined procurement process with longer-term funding commitments could help commercialise more UK innovations.
#8 Address the talent challenge
Finding skilled workers continues to be one of the biggest challenges facing scaling businesses. To address this fundamental issue, a multi-pronged approach, including better visa implementation, apprenticeship reform, and stronger education links, is needed.
#9 Connect peers to drive success
Learning from other business leaders who have successfully scaled is one of the most valuable resources for scaling businesses. Enhanced support for peer networks, alongside better access to experienced NEDs and leadership programmes, could help more businesses successfully navigate the scaling journey.
#10 Close the growth capital gap
Despite progress, many scaling businesses still struggle to access the funding they need to grow. To close this gap, a coordinated approach, including institutional capital reform, consistent tax incentives, and expanded British Business Bank programmes, is needed.
The Wadds Inc. perspective
Startup culture is celebrated in the UK for its potential to drive economic growth. Scaleup businesses offer a more significant opportunity. The work of the ScaleUp Institute sets out significant policy interventions.
As the Government looks to deliver on its Industrial strategy and build a more resilient and innovative economy, scaleups should be at the heart of its economic strategy. They're not just growing businesses but creating jobs, driving innovation, and building a more sustainable future.
Supporting these companies isn't just good business sense - it's essential for our economic future. Whether it's improving access to talent, making it easier to enter new markets, or ensuring they can access the right kind of growth funding, helping these companies succeed means helping the whole UK economy grow stronger.
If you need NED support, please contact Sarah or me at Wadds Inc., and we’ll be happy to help.
