The Anatomy and Insights to a Scale Up
Many years of research by Innovate UK and other UK Government departments have revealed overwhelming evidence that that for small and medium sized businesses, achieving rapid growth and scale is challenging, and also that investors and experienced advisers, and management teams play a vital role in enabling this to be successful and contribute significantly to our economy.
UK scale-up companies demonstrate enormous potential to contribute to the UK economy but lag behind their US counterparts on various measures of success. Our view is that the UK investor community remains risk averse to scale up companies and whilst VCTs under EIS investments may take a punt, the amount of cost, effort and due diligence to secure funding is too off putting to business owners.
But what are the key points to try and identify with a Scale Up and how do potential investors and the business owners actually align on their views?
A strong management team was most often identified by both investors and businesses as very important for a company to scale up successfully.
Strategy and vision, access to finance, financial expertise and a willingness to take risks were other factors most often rated as very important, together with market demand for the product or
service.
Businesses also ranked a skilled workforce as a particularly important factor, something which investors more often overlooked. While neither group considered international growth as critical, half of investors and business leaders interviewed acknowledged that it was fairly or very important to a successful scale-up.
When asked to choose which one role they thought should be put in place first when building a team to scale up the business, both investors and businesses most often picked sales. Operations and technical were the second most often prioritised role by businesses, while investors emphasised finance.
In summary Scale Ups play a huge part in the UK ecomony but with the right level of financial support and guidance could do more.
Many thanks to the following resources for access to their research
www.oecd.org/std/39974588.pdf
Picture courtesy of Isomer Capital
www.scaleupreport.org/scaleup-report.pdf