How important are start-ups to economic growth? Academic studies over the last fifty years have shown that they create most new jobs in any economy, drive innovation and disruption in many new sectors and help to regenerate communities that were previously dying.
And during the last two and half months, I have been privileged to highlight the successes of over a thousand new businesses through the UK StartUp Awards which we have taken to ten nations and regions in 2023.
From social enterprises supporting their local communities to innovative firms developing leading-edge technologies, all the finalists I have met this year have created amazing start-ups that are having an impact across all sectors.
Of course, not all of them will succeed in growing to larger businesses and some will fail on their entrepreneurial journey, hopefully to pivot and start again.
However, with record numbers of firms being started in the UK - analysis of data from Companies House reveals 774,420 new businesses were registered in 2022 - they are collectively having a considerable impact on prosperity and employment.
Yet some of those tasked with supporting economic development through public funding are still reticent to support the potential of new businesses in their regions.
Take, for example, the case of the Cardiff Capital Region (CCR), which is responsible for supporting economic regeneration in South East Wales. They recently released a new Regional and Economic Industrial Plan to guide its strategy for the next five years and many will be disappointed that there is little to support entrepreneurship, start-ups, and scale-ups across the region.
Incredulously, ‘entrepreneurship’ is not mentioned once in the plan, demonstrating a real lack of ambition on behalf of CCR in supporting those businesses that create jobs and wealth in all parts of the region.
In fact, not one outcome or measure is focused on increasing the number of new or growing businesses which, given this a plan for sustainable economic growth, is perplexing to say the least given the millions of pounds of public funding they have provided for the fintech, cyber and creative sectors.
It’s as if it’s been conveniently forgotten that Admiral – the only Welsh FTSE 100 company – began its operation as a start-up in Cardiff thirty years ago and now employs more than 7,000 in South Wales and 11,000 globally.
Research studies also demonstrate unequivocally that entrepreneurship ecosystems work at the city region level to kick start entrepreneurial activity yet there is no focus at all on this within the strategy.
This is despite the CCR stating, in its response to Covid, that “ensuring that entrepreneurs are supported through the process of starting up and developing a business is vital to ensure that the region recovers, especially as new businesses create the majority of the jobs in an economy.”
It just makes no sense whatsoever given that CCR also noted that “entrepreneurs need access to expertise, knowledge, seed capital and to a supportive community but the Covid 19 lockdown has seen many start-ups unable to access support,” and that such funding provision would be an ideal fit for Shared Prosperity backing.
Yet its recent tender for its cluster development and growth programme, which is being supported by nearly £4m of Shared Prosperity funding, has nothing on supporting new businesses.
Instead, there seems to be a focus on “picking winners” through key clusters and ignoring all other businesses outside of these sectors. This is despite only one in twenty new businesses being technology-based and many of the fastest-growing companies in the UK being in traditional sectors such as construction, business to business services and retail.
The most depressing thing about this whole situation is that there seems to be no rationale as why this has happened. Is there no understanding of what entrepreneurs can achieve for the local economy or just no appreciation of what CCR itself could do to transform the entrepreneurial landscape within the region?
This is exceptionally disappointing given that having spoken to some of the council leaders within the ten local authorities in the region, I know they remain wholly supportive of creating and supporting new businesses in their areas.
But the aim of the CCR is to harness funding from both the Welsh and UK governments to work collectively and ensure that the sum of the parts to be greater than the whole.
In fact, many of us believe that with the right approach, there is no reason why CCR cannot become one of the most entrepreneurial regions in the UK by establishing a coherent strategic approach that already been developed successfully in many other parts of the world.
This would also add value to the some of the support already being provided by councils, private firms, Business Wales, universities, entrepreneurs, and investors to new businesses. Most importantly of all, as AOL founder and investor Steve Case notes in his sublime book The Rise of the Rest, it would create a strong and coherent ecosystem to help those businesses that can create jobs for the people and places that have been left behind, like much of industrial South Wales.
Unfortunately, the ball has again been dropped by those in charge of public funding who should know better and I make no apologies for raising what I consider is a critical policy failure here i Wales.
In fact ,with large firms continuing to rationalise as we saw this week with 540 jobs under threat at Zimmer Biomet in Bridgend, there is an urgent need to back those start-ups that can create employment in the region.
Given this, one can only hope that someone will read this, ask why this is happening and encourage a change of heart to ensure there is relevant support for those amazing founders who, through their sheer hard work, talent, and perseverance, are creating jobs and prosperity across the Capital Cardiff Region.
They deserve no less.
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