Industry leaders explain why the current disruption could create opportunities for a fairer, more diverse startup ecosystem.
Covid-19 has caused massive disruption for startups in the UK. It has also prompted levels of support and investment from government that have never been seen before.
A panel of industry experts discussed the startup investment landscape at a recent CogX event, welcoming the support provided and highlighting that now is the time to improve all aspects of diversity within the UK startup world.
Speaking on the panel were Ben Davey, CEO of Barclays Ventures, John Spindler, CEO of Capital Enterprise, Irene Graham OBE, CEO of ScaleUp Institute, Dr Ian Campbell, Executive Chair for Innovate UK, and Katrin Herring, CEO of Funding Xchange.
John Spindler said that, while government support had exceeded expectations in many areas, some key groups risked not being supported. He suggested that very early stage tech entrepreneurs were one such group and the lack of funding for these entrepreneurs could be seen as a diversity issue.
“I think we all need to think about this, because if there is a cry of pain out there it’s about the inequities of opportunities that are facing some groups,” Spindler said.
He accepted that there were funding gaps at every stage in both the private and public sector, but added: “Lack of support at early stages is particularly impactful for black and ethnic minority founders that don’t come from privileged backgrounds.”
Irene Graham identified other gaps in the funding landscape and highlighted how investment was not spread evenly across the country.
“A lot of equity and growth capital currently sits within London and the Southeast, and we need to find ways to make sure that's levelled up across the country.”
Graham cited the Northern Powerhouse, the Midlands Engine and initiatives in Scotland and Wales as helping to address regional inequality, but acknowledged there were still “really significant gaps”.
Funding, including venture debt, needs to reach every sector of the economy and every type of business leader, she said, adding that the issues raised by the Rose Review on female entrepreneurship also needed addressing.
Graham said that a huge opportunity existed to improve regional access to capital and diversity.
“A big question is what scale do we need government agencies, like Innovate UK and the British Business Bank, to be in the future to allow us to fully address the gaps that have existed for some time,” she said.
Ian Campbell quoted research showing that companies with the greatest gender and cultural diversity in their executive teams were at least 25% more likely to outperform equivalent businesses. He explained that following ‘women and innovation’ programs, the number of applications from a female lead at Innovate UK had doubled to 24%.
“We are still missing a huge population of female entrepreneurs and that has real impact on the economy,” he said.
Campbell went on to say that knowledge transfer was a key part of addressing inequality: “We’ve got to be great mentors and great business advisers, as well as great funders.”
Ben Davey, who chaired the panel, agreed that startups have the opportunity to make a real difference.
“I think we would all agree that driving the diversity agenda across the UK has never been more important,” he said.
“We have an opportunity to use the resources made available through Innovate UK and a number of other government and private investor schemes to really act as a force for good. Both in the context of the diversity agenda, but also the restarting of the UK economy, which is also going to be absolutely critical over the next few months.”