A barometer of the entrepreneurial environment and activity in the UK. This, the ninth volume, focuses on three main indicators: start-up activity, growth of new business and exits of young enterprises.
The UK entrepreneurship landscape is facing a tumultuous and varied picture of growth. While entrepreneurial outputs are at their strongest since 2011, the growth patterns driving this output have been less stable.
Enterprise growth has historically increased and decreased sequentially year-on-year, and this year has seen the highest upshot since 2013. This is driven by strong activity in start-ups and exits – a metric in turn mainly fuelled by a jump in mergers and acquisitions. Growth, on the other hand, is down for new companies for the second year in a row.
Start-up companies and total early-stage entrepreneurial activity (TEA) are still booming, with high levels of new companies incorporated in the past year. The share of people engaged in TEA has fluctuated in the past three years and is currently up by 8.2%. However, funding is an issue many start-ups are battling: the number of companies that have received seed, start up or early stage venture capital (VC) is at an all-time low since we began tracking these figures, and is now at just 244 companies nationwide.
Funding continues to be an issue as new businesses move into the growth phase. Year-on-year, expansion investment is down, and from its all-time high of 334 companies in 2011, has dropped drastically to just 284 companies. The number of employees in three-year-old companies, while fairly stable year-on-year, has again dropped since its peak in 2011 from 2.88% of employment in the UK, to 2.52%.
In fact, the number of high growth companies in the UK has been steadily declining in the past three years – a worrying sign for the overall economic climate. High growth companies peaked at 6,185 in 2013, and since then this figure has dwindled to only 4,140. This tracks alongside the trend we’ve seen overtime in the decline of both traditional VC and expansion funding.
Exits from enterprises under five years old has also revealed interesting patterns. IPO exits dramatically increased from 2014 to 2015, shooting up to 88, before decreasing equally quickly – settling at 51 in 2017. MBOs and MBIs have also declined, though less sharply. Most notably, M&A activity has increased since 2015, now up to 505 deals, a rise year-on-year from 395 and significantly higher than 2011’s 335 deals.
National data offers a conflicted snapshot of entrepreneurship, while regional data proffers a promise of diversifying new business activity. London and the South East remain strong incubators, and the North’s entrepreneurial growth is strong.
Become a client
Manage, enjoy, protect and grow your wealth with expert guidance and support. Do your everyday banking with ease, and access a suite of investment products and services, financing solutions and wealth planning expertise – all on your terms.
The value of investments can fall as well as rise. You may not get back what you originally invested.