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Barclays puts scale-up community on alert

Terry smiling headIs there a looming crisis in funding next stage companies? New figures from Barclays tell us that the number of high-growth companies is shrinking and that investors have become a little shy about providing support.

Venture capital funding of £12m last year is down sharply on 2014’s £53m amid a greater willingness of the owners of startups to sell, rather than scale-up.

This has been a long-standing problem, particularly in Scotland, where getting good ideas to market has proved to be the easy bit, only for bigger companies to come along and tempt the founders with a big cheque.

We have seen it time and again as Scotland loses out on the benefits that emanate from indigenous companies growing to mid-sized and, ultimately, large enterprises.

The new data in the Barclays Entrepreneurs Index suggests that in spite of the combined efforts of numerous agencies this trend is becoming more commonplace.

It has already set a few alarm bells ringing.  Sandy Kennedy, chief executive of Entrepreneurial Scotland, issued a statement on the back of the report stressing that scale-ups are “vital to the Scottish economy as they create jobs, wealth and increased ambition and confidence.”

Mr Kennedy’s organisation adopted a scale-up theme for one of its recent gatherings at Gleneagles. He will have seen the Barclays research as another spur to encourage organisations across the public and private sectors to work together to support leaders who are seeking to scale their businesses.

“No one organisation can do this alone. That’s why we are working together with partners such as SE, HIE, Scottish Government, universities, investors, banks, advisers – and above all the entrepreneurs – to establish a collaborative scale-up movement,” he said. 

He must surely make reference to this on Thursday night when the report may temper some of the excitement that will surround his organisation’s annual awards night.

Jim Duffy, who set up Entrepreneurial Spark for start-ups, is now part of the team that launched the Moonshot Academy, another attempt at helping businesses to reach the next stage of growth.

It has been busy hiring big hitters and partners and signing up its first clients. It promises to work with companies through their journey to growth.

The Moonshot team will also see the Barclays report as re-setting the challenge and showing that the growth in entrepreneurialism is not a one-way street.

Without providing much detail the Index points to other factors at work – not least the uncertain economic outlook and Brexit – that are largely beyond the influence of the best of mentors, advisers and others involved in the growth factory.

 

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