Speech by Matthew Hancock on the ELITE coaching
programme, access to finance, and the advice and mentoring available to
entrepreneurs (28 April
2014).
Good morning. It’s great be here at the Imperial
College Business School today and thank you and LSE for inviting
me.
The LSE, of course, should not be confused with the
London School of Economics. I often wonder how much of each others’ post
you get. As someone who shares a surname with a Lib Dem MP called Mike Hancock,
I entirely sympathise.
We’re here today to support the launch of this
exciting programme for high growth companies. I would like to congratulate the
London Stock Exchange and Imperial College Business School for developing
ELITE, as well as the first 19 companies who have been selected to benefit from
it. And it’s great to see that the Technology Strategy Board and Tech
City UK are on board with this programme.
This scheme will provide a wealth of expertise and
support from over 50 corporate adviser and investment partners. Who for the
next 2 years will coach and mentor these fortunate businesses.
ELITE will be the business equivalent of Sir Alex
Ferguson. No, I don’t mean a one-off that’s impossible to
replicate.
Nor
an angry Scotsman who shouts a lot.
Rather, I mean the expertise and experience which can
turn raw talent into world-beating, market-leading global
competitors.
The
networking opportunities and access to investors will help these businesses
flourish. As someone from a small business background who is passionate about
supporting businesses I am delighted to see this happen.
For
this is exactly the kind of support businesses need in order to grow. And we do
need to support them. We know that small businesses are the building blocks of
the economic recovery. They alone employ over half of the private sector
workforce. They contribute half of private sector turnover and - importantly -
they create new jobs with almost half of total private sector jobs created. We
must all do everything we can to help them grow. Government has an important
role to play - working closely with the organisations and partners who are best
placed to support businesses.
Even better, the link-up to business schools matters -
bringing business schools closer still to the world of
enterprise.
For
me, a modern government industrial strategy is all about getting the right
people into the same room, making it easier for businesses new and old to do
business.
All
the evidence shows just how important coaching and mentoring is. Coming up with
the concept is only half the battle. James Dyson famously took his prototype
vacuum to Hoover. They turned him down.
So
as well as opening doors to investors, we need to show people how to sell their
ideas.
We
must harness the wealth of experience that successful entrepreneurs have
acquired. We must tap into the research that institutions have carried out. And
then we must share all of these lessons by mentoring small
businesses.
The
London Stock Exchange and Imperial College Business School have done a
fantastic job to do all of this in developing ELITE. This is exactly the kind
of collaboration between the academy and the marketplace, between commerce and
learning, which this country needs to see more of. The corporate and business
advice they will impart is critical to growing successful
businesses.
Financial support is also critical. But there are a lot
of options out there available for businesses, and ELITE will help businesses
to find what will be best for them. This will include coaching and mentoring
businesses to help them win investors’ support. Access to finance is
vital for businesses - in particular small businesses - which is why we are
also playing our role in this space.
The
City of London hosts world class financiers and advisors, but sometimes growing
companies think that seeking the next stage of their funding from the City
isn’t for them. That’s where ELITE will play a crucial role. It
will mentor growing companies to give them the space to think about the next
stage in their development. It will help these companies navigate around the
City much more easily, helping them connect with the best source of finances.
And it will facilitate much earlier engagement between potential investors and
growing companies. This earlier engagement will benefit both investors and
companies by starting to create a relationship between the 2 at an earlier
stage.
Last year, we put our support behind ‘The Future
Fifty’ initiative run by Tech City UK. This initiative, backed by
government, has selected 50 high growth companies. It is helping these
companies by providing a ‘concierge’-style service linking
companies with support and advice designed to facilitate continued growth. It
is also helping these companies connect better with institutional investors,
smoothing these companies’ access to the next stage of their funding.
It’s great to see ELITE now developing also to provide a crucial service
to growing companies.
It’s also important that growing companies
recognise that their options to obtain finance for their next stage of
development include the public equity markets. That’s why it’s so
welcome that the Stock Exchange itself has created the new ELITE programme to
help provide support companies to grow.
For
some businesses, particularly fast-growing innovative firms, access to early
stage equity is critical, but the market cannot meet the current need. We need
to mind the equity gap.
The
government is working with investors, making funds go further and helping more
businesses to grow. We have increased our commitment to venture capital
investment and filling the equity gap through the Enterprise Capital Fund
programme. Since 2006 this has invested nearly £200 million in 166
companies. We also launched the Business
Angel Co Investment Fund which aims to increase the quantity and
quality of business angel investment. To date, £72 million of public and
private investment has been made in 35 companies and we have recently increased
the size of the fund.
We
are encouraging a warmer climate for investment in small businesses through tax
incentives. Last year we launched the Seed Enterprise
Investment Scheme and expanded the Enterprise Investment Scheme. Over
1,600 companies have raised over £135 million from the Seed Enterprise
Investment Scheme since April 2012. And we announced in the recent Budget that
this hugely popular scheme is to be made permanent.
At
Budget 2013, the Chancellor announced that the government would abolish stamp
duty on trades on equity growth markets, such as the Alternative Investment
Market. This comes into effect today. With this policy we are improving the
long-term financing conditions for the many growing businesses that
use AIM and other equity growth markets to raise the funds they need
to grow and create jobs. And now we’re also today removing the Stamp Duty
charge on purchases of shares in exchange traded funds domiciled in the
UK.
It
sits alongside other measures that we have already taken to support the public
equity markets, including allowing the shares from growth markets to be
included in ISAs. Together, these are really clear signals that the public
equity markets are a strong source of equity finance for growing companies.
Initiatives such as ELITE will reinforce the idea that the public equity
markets are a viable and real choice for growing companies to obtain the next
stage of their investment.
We
also support bespoke support for small businesses that are ready to take it to
the next level. GrowthAccelerator is a £200 million programme for up to
26,000 high growth potential small businesses. It is a unique service led by
some of the country’s most successful growth specialists where small
businesses will find new connections, new routes to investment and the new
ideas and strategy they need to achieve their full potential. The scheme has
supported over 13,000 schemes so far.
Finally, we are tapping the reservoir of knowledge that
exists in our education establishments. Universities, in particular business
schools, are full of expertise that can help small businesses to start up and
grow. This was recognised by Lord Young is his report Growing Your Business as
well as Sir Andrew Witty’s review of Universities and Growth. On Lord
Young’s recommendation, we are supporting the Association of Business
Schools to create a Small Business Charter to recognise those business schools
that prioritise supporting start-ups and small businesses, and to provide an
incentive to the sector to do more. By committing to the ELITE programme,
alongside the incubator space here and the space for growing business being
created at Imperial West, Imperial Business School is leading the way amongst
the sector. I hope that you will apply for a Charter Award
soon.
There is much we have done but we need more people in
the world of business to help. The government is not always best placed to
provide advice and support. We want to encourage and enable private providers
to play a pivotal role. After all, you are the ones creating the jobs which are
driving this recovery. People who want to grow their companies should be
looking to you for guidance and inspiration.
So
well done to the London Stock Exchange and Imperial College Business School.
And good luck to the first 20 businesses. I hope to see many more pass through
this programme.