Time to end the Muppet Show
Previous governments were good at encouraging 'muppets', or “marginal undersized poor performance enterprises”. Now they should focus on “gazelles”, the High Growth Companies (HGCs).
In his Autumn Statement on November 23rd the chancellor of the exchequer, Philip Hammond, announced that he would give £400m to venture capital funds specifically to invest in startups that want to scale up.
Yet this money, spread over the next four years, won’t do much. In Wiltshire, Robert Perks runs the country’s first local outfit dedicated to helping companies scale up. It is funded by businesses and government. He argues that what firms most need are management skills, and so he arranges mentoring for entrepreneurs who want their companies to grow. Management in Britain is distinctly average, and is most obviously improved by exposure to foreign markets and even takeovers. But, since most SMEs do not export, this remains a problem.
In the absence of home-grown skills, argues Mr Perks, the government needs more immigrants. And to keep the increasing volumes of venture capitalists’ money coming into HGCs, investors must be able to exit easily when companies mature, for instance by selling to bigger foreign companies, so they can take their profits and pour them into new projects. Encouraging more immigration and foreign takeovers; just the ticket for the prime minister’s new brand of Conservatism.