Newcastle University Business School: Unlocking the barriers to growth

Newcastle University Business School was delighted to welcome the ScaleUp Britain Roadshow at the conclusion of a whistle-stop, two-day North East tour, during which Irene Graham, Dame Julia Hoggett and Bod Buckby barely had time to pause for breath.

The trip began at the Port of Tyne summit, held at the National Maritime Innovation Hub, where Innovate UK joined investors, scaling businesses and research teams in sessions, showcases and networking that emphasised the green economy.

It then travelled to Sedgefield’s Hardwick Hall Hotel, where Dame Julia, chief executive of the London Stock Exchange, and Irene, chief executive of the ScaleUp Institute, addressed the Entrepreneurs’ Forum’s Fortune Favours the Brave spring conference, which was attended by more than 200 North East entrepreneurs.

The roadshow made its final stop at Newcastle University Business School.

Here, guests heard from Newcastle University vice-chancellor and president, Professor Chris Day, who revealed that, over the last five years, the estimated turnover of the university’s 37 active spin-out companies has risen from £4.7 million to £9.8 million, with the firms now employing more than 300 people.

Chris also highlighted the success of Newcastle graduate Phil Beahon, who set up sportswear brand Castore with his brother Tom in 2015.

Castore has now raised more than £150 million, and this success story provided a great jumping off point for a conversation between Irene and Dame Julia that outlined exciting new initiatives to help meet the needs of scaling businesses in the region.

Throughout the roadshow, two names stood out: PISCES, a new market that is set to launch this year with a bespoke regulatory framework that offers private companies periodic access to public market liquidity infrastructure while remaining private; and Floww, a global end-to-end private markets platform designed to streamline fundraising and investing for scaling businesses.

Before the event, Irene had time to reflect on two fulfilling days in the North East and, as she took in the view of St James’ Park across the road and the Tyneside skyline, she could also look back on almost a decade where the ScaleUp Institute, working closely with the local ecosystem, has lived up to its name for the entire North East.

 

• Dame Julia Hoggett, London Stock Exchange chief executive

 

Highlighting the “buoyancy and aspiration” of North East entrepreneurs, she says: “Thanks to initiatives that have evolved in the local economy, such as ScaleUp North East and the Entrepreneurs’ Forum’s ScaleUp Leaders’ Academy, and the tangible collaboration between public authorities, universities, business schools, hubs and businesses, we can see the growth of the scaleups in the North East, and the aspirations and sectoral diversity and desire to go even further.

“Scaling businesses value peer support, and that comes in these types of activities and the imparting of knowledge about what is in place, and evolving, and how to plan for the future to meet their global aspirations.”

The ScaleUp Institute was founded two years after 2013 Organisation for Economic Cooperation and Development analysis of its 38 members’ economies.

It showed the UK was third in the world for the number of business startups.

However, taking them to the next phase was a significant issue, with the UK finishing 13th in that analysis.

Nearly ten years on, UK scaleups number 34,000 – an increase of 26 per cent – with those companies contributing more than £1.4 trillion to the nation’s economy.

According to ONS and Companies House data, the North East now has 1545 scaleup and scaling businesses.

These are generating £14.6 billion for the local economy and employing more than 118,000 people.

Furthermore, almost 300 companies are breaking through £10.2 million in turnover, have £5.1 million assets and/or 50-plus employees, are creating 44,400 jobs, £6.7 billion turnover and £1.4 billion total investment.

A recent ScaleUp Institute survey showed companies scaling across all sectors in the region, with wholesale and retail leading the way, followed by health, professional science and technology, accommodation and food.

Manufacturing and industrial sectors make up a significant proportion of the visible scaleups, with emerging companies operating in the green economy.

Innovate UK has awarded 56 grants, worth £17.3 million supporting businesses’ scaleup journeys, and 18 of these entities have raised a total equity investment of £192.3 million – more than 11 times the amount of their grant funding, supported by wrap-around support through their tailored growth programme.

Irene says: “When we started, we observed those countries doing better than us at growth and made sure there was an understanding of what they did to drive scaleups forward, as well as making sure the UK – everywhere – across the public, private and education ecosystems, understood the value of the UK scaleup economy and their local scaling businesses.

“The SME economy is absolutely critical to the UK; 5.5 million businesses generate around £2.6 trillion a year and within that, you’ve got scaleups – businesses growing at 20 per cent or more in turnover, employment or both – and around 34,000 of those today generate more than 55 per cent of that SME economy.”

“The importance of segmentation is vital and SMEs must not be treated as one homogeneous group.

“At every level – nationally, regionally and locally – we’ve got to have the right startup policies, the right scaleup policies and the right stay ahead policies for our general SMEs.“If we can get our arms round these businesses and help them unlock the barriers to their growth, we have a huge opportunity for the UK economy and the North East.

“Since our set up, we’ve worked with local areas, such as the North East, because we know we’ve got to drive scaleup growth at local ecosystem level – which we learned from observing other countries.

“The ecosystem is thriving in the North East, it has buoyed the trend compared to some areas in its growth, and there’s opportunity to go even further.

“The way the ecosystem is working, and the tangible ambition present, means there are very good ingredients for an even brighter scaleup future.”

 

• Fiona Whitehurst, Newcastle University Business School associate dean engagement and place

 

Fiona Whitehurst, associate dean engagement and place at Newcastle University Business School, is someone who has worked closely with the ScaleUp Institute from the start, and is a member of its committee.

She says: “The ScaleUp Institute has been vital in bringing together partners in the region, like the universities, Entrepreneurs’ Forum, RTC North and the now North East Combined Authority, to focus on scaling businesses.

“Universities have a wealth of talent and ideas that can support the regional economy.”

Irene adds: “Universities are a fundamentally important part of the ecosystem, helping get students into scaling businesses and fostering the market, research and development and investor connections.

“They are a convener, an anchor for the entrepreneurial and scaling economy.

“We’ve been a big champion of collaboration between universities and we’re seeing more of that happening across the country – the Northern Accelerator programme in the North East, for example – you can see a stepping up of that collaboration, which is so important for local economies and businesses.

“Some of our scaleups are working with their business schools and universities, and making sure the talent pipeline is coming through.

“Businesses want to see ever more tailored growth support, and we’ve got great things that have been developed in the North East.

“There have been a lot of developments since our establishment in addressing the finance challenges scaleups face, for example, British Business Bank’s growth solutions, which include funds such as the Regional Angel programme, and the Capital Markets Industry Taskforce.

“We must raise awareness, connect businesses with finance and growth capital, and the people involved in that to break down barriers.”

There are clearly still major challenges for all businesses outside London, and the ScaleUp Institute survey shows North East scaling businesses still feel external funding is London-centric, with six out of ten businesses in the region convinced most funding will go to their counterparts in London and the South East.

Access to debt and equity finance is difficult; 60 per cent would like easier local access to investors and introductions to key players, including regular investor briefings and meet-ups.

But the biggest obstacles to further growth are access to talent, and to UK and international markets.

Finding the right partners to work with at home and abroad, and collaboration and export opportunities, are difficult and complex areas to navigate.

The new Innovate UK Contracts for Innovation should help with some of that collaboration and access, and more can also be done with tailored trade missions for scaleup companies.

Access to talent issues, from senior management to apprentices to board needs, is a key hindrance, and 64 per cent of scaleup businesses in the region cited future talent as a major concern for their development.

 

• Bod Buckby, London Stock Exchange head of UK primary markets (north)

 

Again, this is where universities have a role to play.

For Bod Buckby, the London Stock Exchange’s representative in the north, the visit to the region was an opportunity to make the connections that will help shape businesses’ futures.

He says: “We’re here to help direct and signpost companies, connect them with other entrepreneurs who are a step or two further along, so they can share their perspective and what they went through.

“A lot of the time, for entrepreneurs, it feels like London is so remote.

“They don’t think investors are really going to be interested in their business when actually they are.

“But, quite often, there’s nobody bringing the two together – that’s really my role.

“The Stock Exchange has been busy helping companies understand and access the markets, and assist much earlier stage growth businesses spinning out of universities that are looking to raise early-stage growth capital to help make their ideas into a viable business.

“That has hugely opened up our relevance, and the types of conversations we have to help entrepreneurial ideas be made a reality.”

Bod adds: “If you speak to businesses that are growing quickly, they’re going through the same challenges in terms of funding, people, talent, locating premises, growing the board and making sure systems and governance keep pace with the scale as it grows.

“It’s quite a hard period for a company to go through, and for a founder to take a business through.

“It requires a lot of work, effort and learning many new skills, but it’s where a huge amount of value is created for those founders and the economy.

“Through new initiatives like Floww and PISCES, we want to make accessing the right capital easier, giving entrepreneurs more time to focus on growing their business instead.

“It’s amazing, when you start scratching the surface, how much innovation and entrepreneurial growth is happening in the North East.

“The North East is going through something of a golden patch, and we have a huge amount of follow-ups from this visit, which is great.”

 

Pictured above: Irene Graham, ScaleUp Institute chief executive

Photography by Jamie Haslam

www.ncl.ac.uk/business

LinkedIn: Newcastle University Business School

www.scaleupinstitute.org.uk

www.londonstockexchange.com

www.scaleup-britain.co.uk