Hurun Report Chief researcher And Chairman, Rupert Hoogewerf
Looking at the United Kingdom’s startup ecosystem, it’s easy to form the impression that entrepreneurship – certainly in the arena of fast-growth, VC-backed businesses – is something of a young person’s game. Perhaps, to an extent, it is. Certainly, a disproportionate number of the founders that I speak to are under forty, a great many are in their twenties and a handful have yet to see their twenty-first birthdays.
You could argue that the relative youthfulness of the startup community reflects a willingness to take risks and pursue ideas before other pressures – such as bringing up children and meeting mortgage payments – begin to kick in. And you could also point to the fact that entrepreneurship is seen as much more of a career option for graduates and school leavers in Britan than it was fifteen or twenty years ago.
But here’s the question. Will the upcoming generation of Generation Z founders create the powerhouse companies of tomorrow or will the more successful of them be content to build their businesses to a relatively modest size before selling out and moving on to the next project. The U.K. has its share of successful startups, scaleups and, increasingly, unicorns, but as yet, there isn’t really a British innovation-economy company that could be described as operating in the “big tech” arena.
Some Kind Of Journey
But the hope must clearly be that some kind of a journey is underway. Today’s young (or relatively young founders) are on a pathway that will ultimately see some of them creating global, multi-billion dollar businesses. So how’s that going? A report by research institute, Hurun suggests progress is being made.
Released this week, Hurun’s U.K. Under 30s report bills itself as a celebration of young entrepreneurial talent and identifies the top 100 businesses created and run by founders who have yet to pass the big “three zero” milestone.
But perhaps more importantly, the report provides a pointer to what might happen next in the U.K. startup ecosystem.
But let’s start with the headlines. Hurun finds that the entrepreneurs featured on the list have built businesses worth on average £100 million. As Hurun Report Chairman and Chief Researcher Rupert Hoogewerf acknowledges, that average is skewed higher by the presence of three unicorns, in the shape of events company Hopin, insuretech business Marshmallow and fitness venture, Gymshark. Nevertheless, the £100 million average confirms that we are talking about some very successful businesses.
The average age of the founders appearing on the list is 28, with the youngest – Edward Beccle of religious app Glorify – being 23. Perhaps not surprisingly the largest number of the top 100 startups are based in London, with the English Midlands in second place. Fashion and food and drink are the most represented sectors.
But let’s look beyond the headlines. What does this list say about the future? Commenting on the findings, Hoogewerf said: “If they can build a business this big by the age of 30, imagine how big they could get when they get to the age of Jeff Bezos, James Dyson or Warren Buffett. You can safely say they are the most likely billionaires of the future, especially as founder teams and investors are becoming more experienced at knowing how to focus on value creation over sales.”
Climbing The Ladder?
In that analysis, you can extrapolate an entrepreneurial journey that starts with genuine success at a young age, equipping the entrepreneurs in question with the skills and experience to do greater things as they get older. And there’s some evidence of that happening. Hurun has identified 46 U.K. unicorns that are not publicly traded, for the most part, established by entrepreneurs from previous generations, namely those in their forties and fifties.
But that’s not quite the same as creating companies that can be categorized alongside the likes of Amazon, Google, or Facebook. So when I spoke to Hoogewerf I was keen to get his take on the challenges and opportunities for UK innovation.
There are, he acknowledges, some cultural issues that could stand in the way of a UK-founded startup going all the way to joining the major league. One of these is the tendency – which is baked into the playbook of many U.K. entrepreneurs – to start and grow their businesses to the point where a life-changing exit can be secured. “There is a significant trend in entrepreneurship. Young entrepreneurs achieve success and then they sell out,” he says.
And this has an impact. “If you look at the UK, we are in a good timezone, we have good universities, but there are very few businesses that are the equivalent of big tech,” he adds.
So how do change that reality? The obvious answer is to nurture the ecosystems that will give opportunities to grow cheetahs into gazelles and Unicorns into $10 billion businesses and beyond. But what does that mean in practice?
One way forward is more opportunities for flotation. “Businesses need to be given the opportunity to float on vibrant stock exchanges,” says Hoogewerf.
This is one area where the U.K. lags behind competitors in North America and Asia. AIM – the alternative investment market – was set up to provide fast-growth companies with a route to listed status. “But it has underperformed when compared to the NASDAQ or markets in China,” says Hoogewerf.
On the plus side, the report stresses the importance of UK universities, not just in terms of turning out potential entrepreneurs but also in the support they provide. Hoogewerf cites innovation centers and access to academics with expert science and technology knowledge as examples of where the support comes from. Importantly, it’s not just high Oxford and Cambridge that provide the entrepreneurial underpinnings. “Oxford was number one on our list but Warwick and Bath – both not so well known – were up there,” he says. “Clearly Warwick and Bath are doing something right.”
However, universities are not necessarily where founders meet. “U.K. unicorns tend to have two founders,”Hoogewerf says. “1 in 8 of them meet at university but the most common place was their previous place of work.”
Often that place will be a corporate business, emphasizing that there is a fair amount of human traffic between large companies and startups. Indeed, Hoogewerf stresses that large businesses are often, themselves, extremely entrepreneurial,
Also positive, as the report sees it, is a greater role played by VCs in terms of mentoring.
So where does that leave us? The UK isn’t quite there yet in comparison with Silicon Valley or the hotspots of Asia. But there the report does suggest a growing pipeline of ambitious entrepreneurs. Hoogewerf says that against that background he is hoping for the big one to emerge.
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