Interview: Jim Duffy, Gary Deans and Gordon Merrylees
ESpark: ‘the university for start-ups’
- Partnership with RBS and KPMG has accelerated ESpark’s growth and widened its influence
- Partners reveal how England has fewer vested interests building barriers
- ESpark initiative may be taken overseas
When Jim Duffy began drawing up his plans for a series of Scottish start-up incubators he wondered if one day the idea might take-off south of the border.
More than three years on since his first “hatchery” opened in Ayrshire he has got his answer: the English cannot get enough of them.
The former policeman and cabin crew flight attendant is revelling in the growth of his Entrepreneurial Spark initiative which is spreading around the UK so fast that he is already thinking of taking it overseas.
“We knew were on to something from the start,” he says, speaking via a conference call from Bristol where the latest incubator is about to hatch. “I thought we might do one or two in England as we were being approached by local councils, but it has been phenomenal.”
The programme is now in cities from Leeds to Brighton where Duffy was heading after he had finished up in Bristol. There are plans to take it to Manchester, then roll-out into Wales and Northern Ireland with units in Cardiff and Belfast.
Locations are not chosen randomly, or on population size, but on where business accounts are being opened with programme partner Royal Bank of Scotland. Brighton, for instance, is in the top five start-up cities outside London with 63% of the working population in self-employment.
“After getting the pilots up and running and settled in Scotland it almost feels like we are starting again,” says Duffy.
Its growth has exceeded Duffy’s expectations and much that has been a result of its partnerships, first with RBS, and more recently KPMG. Both provide valuable knowledge, expertise and networking resources and have enabled the programme to take a massive leap forward.
“We have a proven system that works from idea to investment. We encourage our network to collaborate, share their knowledge and help each other. We call it a “university for start-ups”, says Duffy who is now regarded as an increasingly influential voice in government circles.
The impact of the RBS-KPMG partnership should not be understated. They are able to provide as much advice as any would-be entrepreneur is ever likely to need. They can also open doors, gaining access to the right people and ensuring those people also take note of what the entrepreneurs themselves are demanding.
Clearly, there is a commercial interest for both institutions in working closely with an important sector of the economy, but the benefit is mutual.
Gordon Merrylees, whose expanded role as RBS’s UK-wide adviser to small firms was revealed in Daily Business last November, says the number one gain for the bank is building trust.
“We are finding the entrepreneurs of tomorrow, mentoring them and helping them grow. We want to be the go-to bank that understands entrepreneurs,” he says.
The bank is building an entrepreneurial academy “so we stand out in the market place” which involves learning from entrepreneurs as well as advising them. Bank staff will attend boot camps organised by ESpark and make themselves available online.
“It means we will create a more capable team of relationship managers who understand entrepreneurs.”
Merrylees says the stats from ESpark are impressive, but the one he believes is a “game changer” shows how its survival rates for young firms surpass the accepted 40-50% after three years to 83%.
KPMG shares the desire to plug into the start-up and growth sector. Gary Deans, head of family business, says: “We looked at where to drive growth and that’s the SME market. We are under-represented at that level but we can make a real difference.”
It has set up an online accounting system, providing firms with what he calls an “online finance director”. Tools such as this help overcome the perception that Big Four accountants are not really interested in small businesses and even one-man bands.
Deans says the results internally have been startling. “Since we launched the deal with ESpark we have got staff wanting to get involved. It gets them back to why they wanted to be a business adviser in the first place.”
ESpark began in January 2012 with seven staff and now has 20. In 18 months time that figure will double with half based in England.
So how is it making a difference?
“I could rent space, fit it out and promote it to startups. That would be the simple way,” he says. “But people are cottoning on to the fact that ESpark is about building the people and changing the culture. Over the next five to ten year we will change the way businesses are started.”
Already ESpark claims responsibility for 1,000 jobs and £18m of investment. Duffy describes it as the “biggest equity-free non-sectoral business accelerator in the world”. In other words, it is free and handles start-ups in all sectors.
“Yes, there are plans to take it overseas one day,” says Duffy, who admits that he and his partners have encountered differences north and south of the border. In Scotland, the business advice services are more established and work across the country, whereas in England they are more fragmented and more open to new processes. This has given ESpark an ability to overcome some of the barriers encountered in Scotland.
“A lot of people [in Scotland] did not like what we were doing because we were disruptive and cut across a few organisations.”
Merrylees agrees that in some respects it has been easier to work in England unencumbered by networks that have a preferred way of doing things.
Even so, they are both in praise of the help they had received from Scottish finance secretary John Swinney. Duffy says: “John Swinney is one of those guys who get it.” He notes how many ministers come along to its events and use its track record as a reference point.
So does ESpark see itself as a political lobbying organisation?
Merrylees says: “It is already happening, I think we are already seen as a lobby group.”
With the help of its two institutional partners, ESpark has not only influenced the Scottish Government but is now making moves on Westminster. Duffy has asked each of the parties to include a “minister for micro-businesses” in their manifestoes.
“The Prime Minister is considering it,” he says. He is hopeful that Scottish Labour will include the measure in its own plans for business, though in spite of John Swinney’s support he has heard nothing from the SNP.
Picture: Jim Duffy, left, Gary Deans and Gordon Merrylees