APPG for Entrepreneurship Digest: February 2024

Spend almost any amount of time with a bunch of founders and it’s easy to appreciate why you often hear the phrase “entrepreneurship is contagious” being bandied around. People who create companies – on the whole – seem to be an inherently enthusiastic and encouraging breed. Even just a few conversations with one can be enough to leave you pondering whether to start a business of your own.  

What’s more, this idea is far from pure conjecture. A growing body of research suggests that exposure to founders really does increase the likelihood of someone going into entrepreneurship themselves. Just last week, The Entrepreneurs Network published their (full disclosure: my) latest report, Entrepreneurs Unwrapped, which was based on a wide-ranging survey of both founders and people who’ve never launched a business before. 

From it, we can see differences and similarities between the two groups. For instance, when asked whether they knew someone when growing up who owned a business, 71% of current entrepreneurs responded yes, while only 41% of those who haven’t started a venture yet said the same. 

Moreover, knowing a business owner seems to positively impact views of entrepreneurship. Among non-founders who reported knowing one while growing up, many more (47%) than not (10%) said that it has positively influenced their views on entrepreneurship. Entrepreneurs who reported knowing a business owner when growing up felt similarly, only to an even greater extent – with 85% saying that it positively affected their views on entrepreneurship, compared to just 3% who thought it negatively impacted them.

As I say, this is hardly the first piece of evidence that entrepreneurship is contagious. For a comprehensive rundown, readers can do no better than to read innovation expert Matt Clancy’s literature review on the subject. I’d also advise his follow up article which makes the claim that entrepreneurs “transmit to their peers the idea that “yes, even someone like you can become an entrepreneur.””

The upshot of all of this is that it should lead us to wonder about what we can do to increase exposure to entrepreneurship. The answers here will really depend on who we’re asking. For schools and universities, for instance, it might be to encourage them to invite founders in to inspire the next generation of entrepreneurs. For Members of Parliament, it might be using their unique role to convene networking sessions between existing and wannabe founders (as an aside, of all the events we put on, those in the Palace of Westminster receive the highest response rates by far).

One thing we shouldn’t overlook, however, is how spontaneous entrepreneurship can so often be. Successful startup ecosystems are precisely that not because of any great plan from on high, but because of the organic clustering of innovative, creative and ambitious minds, where ideas can cross-pollinate and collaborations can flourish. 

Doubling down on enabling agglomerative forces to run riot, therefore, might well be the best thing a government could do to increase the virality of entrepreneurship. Build good transport links, deliver livable neighbourhoods, and the serendipitous encounters between founders and non-founders alike will follow. 

Adviser Update

On Wednesday 21 February from 3.30-5pm, The Entrepreneurs Network is hosting an event at the House of Lords on what a potential Labour government would mean for Britain’s entrepreneurs. Learn more by clicking here.

The Entrepreneurs Network also published a short explainer on text-and-data mining, and how it is being regulated around the world. It can be found here.

Beauhurst published two reports recently. The first investigates new company incorporations in the UK after a record number of companies were started in 2023, and can be found here. The second explores the UK’s burgeoning engineering biology sector, and can be found here.

Tech Nation released their Global Talent Visa Report, which paints a picture of the changing face of global talent working in UK tech and outlines how the UK can continue to develop as an attractive destination for people around the world. It can be found here.

The Enterprise Research Centre published its latest State of Small Business Britain report. It draws together insights from a whole decade of ERC research, which are used to produce a manifesto for small business growth and productivity. It can be found here.

The ERC is also holding a free research showcase event on Thursday 22 February at Aston University. Delegates will hear about some of our latest work on the themes of exporting, productivity, digital adoption, rural enterprise, mental health and more. Find out more here.

In Parliament

In Business and Trade Topical Questions, Sir David Evennett asked about what steps are being taken “to help increase the number of female-led businesses.” In response, Business Secretary Kemi Badenoch replied: “Female-led businesses often face particular challenges, and in the Department for Business and Trade we work with the British Business Bank to ensure that those businesses continue to have access to finance. We have the Investing in Women code and a taskforce for women-led entrepreneurs.”

In a debate on pensions investment, Baroness Kramer asked: “is it appropriate to put pension money from small pots – people who cannot afford to lose part of that pot – into liquid, high-risk start-up investments, as the Mansion House compact seems to contemplate?” Replying was Baroness Vere, who said: “There are two things about that question. First, having a very large number of pension pots under £1,000 – I believe that there are now 4 million – is not a good way to manage pensions. We need to make sure that we can consolidate those into much larger schemes that can diversify their investments much better. However, the UK has a very poor record on pensions investing in unlisted securities, running at about 0.5% of pension pots. In Australia, the figure is 4.9% and in Canada, although it is not directly comparable, it is over 15%. Just because something is unlisted and illiquid does not mean that it cannot offer good returns over the long term.”

In a debate on the Finance Bill, Shadow Financial Secretary James Murray argued that “businesses in the UK that are keen to invest, grow, and make people across Britain better off are being held back by the lack of stability and certainty from this Government.” He went on to add: “We know that so much chopping and changing without any clear long-term plan has had a cost for our economy, by undermining prospects for investment, innovation and growth. Indeed, the Institute of Chartered Accountants in England and Wales has shared with us the view of its members that there is a lack of confidence when claiming R&D tax relief within the UK, and their belief that: “this has arisen due to the various changes made to the rules in quick succession over the past few years.””

Former Science Minister George Freeman asked in a debate: “What plans does the Department [for Business and Trade] have to make it easier for global investors to deploy money at scale in UK clusters?” Replying was the Minister of State Nusrat Ghani, who mentioned the “concierge service with the Office for Investment” and noted how: “We have also recently secured £4.5 billion through the advanced manufacturing plan. That, coupled with the research and development budget of around £39.8 billion between 2022-25, shows that we are ready to enable investment in the UK and to manufacture products in this area.”