Forward Partners

The “Scale up report” and job creation

By November 19, 2014 No Comments

Sherry Coutu’s much anticipated Scale Up Report has now been released with the clear argument that job creation comes from fast growing companies, or ‘scale-ups’ rather than all startups, and hence that’s where we should focus our policies. The report goes on to make a set of practical recommendations for government to help the UK’s scale-ups and hence improve job creation and GVA. The Scale Up Report’s recommendations are designed to produce better data so scale-ups and the effectiveness of scale-up policies can be tracked, to reallocate resources from start-ups generally to scale-ups specifically, and to make individuals, including a Minister, responsible for increasing the number of scale-ups we have in the UK.

I’m interested in the impact that a venture capital fund like Forward Partners can have on job creation and GVA. On page 106 of the report there’s a table showing the number of scale-ups by region. This year there are 8,923 scale-ups in the UK, with 2,264 of those based in London. Thames Valley Berkshire is the next biggest region with 562 scale-ups. (Scale-ups are defined as companies with 20% growth p.a. in turnover or employees for three years and with more than 10 employees at the start of the period.

Like many venture funds Forward Partners has a target portfolio of around 30 companies which we will invest in over a three year period. If all of our partner companies were to become scale-ups that would be 0.3% of the UK total and 1.3% of the London total. Research cited in the report predicts that scale-ups will create 238,000 new jobs over three years and contribute £38bn to GVA. If we have invested in 0.3% of the scale-ups then we will have had a hand in the creation of 714 jobs and £114m of GVA (which curiously enough isn’t far away from the amount we project our share of our partner companies will be worth).

That’s a nice target to aim at and a result that would make us proud.