One of the innovations introduced for the 2023 UK StartUp Awards was the opportunity to gather real data on new businesses and their founders through the application process. This would give us a rare glimpse of what makes start-ups tick across the UK and, more importantly, what support they need to thrive in the future.
This week, the report drawing on responses from more than 1,200 founders of ambitious new UK businesses less than three years old was published in association with Starling Bank. In addition to featuring case studies of successful start-ups, the report presents data indicating that the UK has a thriving entrepreneurial ecosystem driven by a group of leaders whose businesses will generate economic growth, employment and innovation.
It shows that the background, experience, and expertise of these individuals maximise the opportunities for business success as they include founders with a history of entrepreneurs in the family, as well as a trend towards launching their start-ups with other co-founders and having previous expertise of setting up their own firms.
For example, 39% of founders had parents who were entrepreneurs, exposing these individuals to business concepts, challenges and opportunities from an early age. Additionally, with 41% of new businesses having two or more founders, team-based entrepreneurship increases the chances of success as co-founders can complement each other’s skills and expertise. Four out of 10 start-ups also had founders with prior experience in starting and managing a business, bringing valuable knowledge, skills and resilience gained from previous ventures to their current business.
Entrepreneurial role models are also found to be crucial in motivating aspiring entrepreneurs. Steven Bartlett with his highly popular podcast The Diary of a CEO and his appearances on Dragons’ Den is the most popular among today’s founders. Ben Francis of Gymshark is also mentioned in the list of the top five entrepreneurs that founders admire the most, suggesting that successful home-grown talent can inspire others to follow in their footsteps.
The report highlights that women play a central role in the start-up landscape, with involvement in half of new firms, whether as sole founders, within all-female teams, or as members of mixed-gender teams. Having a higher number of women involved in starting new ventures can lead to the creation of diverse and dynamic businesses that can have a positive impact on the overall economy. However, as in other recent studies, there is evidence of a gender difference in funding, with a low level of female-run businesses being financed by business angels or venture capital.
It also reveals that three-quarters of the start-ups are led by founders with a graduate degree or higher, a proportion that is notably higher than the one-third of the UK population holding similar academic qualifications. This reinforces a start-up ecosystem which promotes innovation, a skilled workforce, higher earnings, and aligns with a knowledge-based economy that contributes to growth and prosperity. That is not to say that start-ups in the UK do not require further support with over half of new businesses signalling they need better access to finance, marketing and sales support, talent and new markets.
The future potential and ambition of these firms is also exemplified by the finding that more than four out of 10 start-up firms are actively trading internationally, with a similar proportion of those that are not yet exporting goods and services planning to do so within the next 12 months.
Surprisingly, a lack of initial entrepreneurial success does not deter business creation with nearly a quarter of the founders having experienced previous failure, primarily due to financial challenges such as cash flow or inadequate funding.
Start-ups are also embracing a new and changing business environment, with entrepreneurs using a range of digital platforms for global reach, e-commerce and customer engagement, the two most popular being LinkedIn and Instagram. Their approach to accessing and managing finance is also evolving, with two-thirds of all new businesses opting for accounts with challenger banks or innovative fintech firms.
Therefore, at a time when the UK economy is facing uncertainty, this study demonstrates that we have entrepreneurs who possess many of the characteristics needed to succeed in business while embracing new ways of working.
Over the next few weeks, I’ll be taking a deeper dive into some of these findings and the implications for supporting new businesses and accelerating growth and competitiveness in all sectors.
