CBI research highlights the steps that can be taken to support more high-growth businesses in the UK.
Key takeaways
- There are nine decacorns in the UK. They contribute £4.6bn in Gross Value Added (GVA) to the UK economy, they’ve grown at over 20% per annum over the last five years and they employ 107,000 people.
- If we had 50 decacorns there would be £24bn increase in GVA. If we had 100 decacorns, it increases to £74bn.
- We can do more to build a globally competitive business environment that nurtures more scaleups – especially on investment, regulation and skills.
The CBI wanted to better understand the competitive environment needed for innovative scaleups to thrive. So it commissioned research from CBI Economics estimating the economic contribution of decacorns, unicorns and soonicorns and the potential benefits if we increased the number of them; analysis from OC&C on UK decacorns and the challenges they face; as well as research by The Entrepreneurs Network on how more institutional investment can flow into science and technology scaleups.
Decacorns – private companies valued at over $10bn – help increase economic growth, support more companies to grow and create new innovations. The UK currently has nine of them (founded after 1990), with a strength in fintech, including organisations such as Admiral, FNZ, Revolut and Checkout, and a relative weakness in R&D intensive firms.
These decacorns are situated across the UK, with over half of their employment outside of London and the South East. Our decacorns are high growth, with over 20% annual growth over the last five years, and they contribute £4.6bn to the UK economy, rising to £11.2bn once their wider economy contributions are included.
Although this contribution is impressive, our CBI Economics analysis has shown that the benefits could be vastly increased. If the UK had 50 decacorns, the GVA impact would be £24bn and this rises to £74bn if we had 100.
But to develop more ambitious scaleups and keep them in the UK we need to create the globally competitive business environment for them to flourish. This includes unleashing investment, adopting a future-focussed regulatory approach, accessing the brightest and best talent and pointing our national strengths in public data and our excellent universities towards commercialisation. This needs political will and a holistic approach.
We’ve welcomed an increasing focus from government on innovation and unleashing investment. The Chancellor’s Mansion House announcements in July were positive: by working with investors and addressing policy barriers, we should ensure more money flows into scaleups from institutional investors.
Our research also highlighted the benefits of regulation improving behaviour, but as investors lack specialist expertise and have a lower risk appetite, more change will need to follow.
Find out more about the economic impact of decacorns from CBI Economics
Read an exec summary of the OC&C analysis - Building the Next Generation of Decacorns
Read the accompanying fact pack from OC&C with further detail
Read The Entrepreneurs Network's report on driving more investment to science and tech scaleups
