John Lazar, Chair of the Enterprise Committee at the Royal Academy of Engineering, says unicorn businesses must not be the only focus if we are to create a world-class ecosystem for UK businesses to thrive.
Earlier this year, Cambridge University announced its aim to double its number of unicorns by 2025, and at the UK government’s much-awaited AI Safety Summit in November, Elon Musk advised Rishi Sunak on how to turn the UK into a ‘unicorn breeding ground’. Undeniably, this elusive type of business – privately held startup organisations with a value of over $1 billion – remains a key indicator of power, success and wealth for individuals, universities and the government.
Yet, it is crucial that other businesses are not neglected, and the system monopolised by big tech founders. From ‘Zebra’ businesses (those that are both profitable and aim to improve society) to ‘Gazelles’ (young, fast-growing companies that bring sustained growth and employment opportunities) and even ‘Mice’ (smaller firms), a whole range of business fauna co-exists across the UK’s economy and must be supported fairly if we are to create a diverse, world-class entrepreneurial ecosystem.
Forget Silicon Valley
Earlier in the year, Jeremy Hunt identified unicorn companies as central to creating the next ‘Silicon Valley’. However, is a replication of the existing tech growth models all that we should be aiming for? The UK has its own unique offering for the world economy, with hotspots of engineering, scientific and technological innovation across the country. For example, alongside the Oxford-Cambridge “arc”, London is a leading hub for deep tech development, due to the access it provides to world-renowned universities and research institutions, as well as links with investors and high-quality talent pools. Separately, as the Royal Academy of Engineering’s Engineering Economy and Place report shows, high concentrations of R&D activity can be found in cities like Edinburgh and Belfast, with other hidden engineering gems scattered across the UK, in places like South Derbyshire, North Warwickshire and Ribble Valley. Hotspots like West Cumbria, Mid Ulster and Aberdeenshire provide some of the nation’s largest engineering epicentres, with high proportions of local employment in engineering and technology. By understanding, nurturing and combining these unique strengths in engineering across the country, the UK could enhance local and national prosperity, build a more inclusive economy, and kick-start its own, new form of global entrepreneurial hub.
Recalibrate the commercialisation strategy
To become an entrepreneurial superpower, the UK must implement more effective commercialisation strategies. This will unlock capital across its different regions and strengthen the confidence of the nation’s entrepreneurs.
The latest iteration of the Department of Science, Innovation and Technology’s UK Innovation Strategy is a start, with its emphasis on “the whole ecosystem of businesses”. It is essential that the government follows this ethos and recognises the risk of overlooking the needs of other fast-growing businesses, or business models that serve all communities and bring wider societal benefits. Supporting a diverse ecosystem helps to boost the UK’s appeal as an investment destination and conducive environment for business growth and fosters a broader range of innovations that can transition from the laboratory to the market more quickly.
Sustainability in both senses
Along with fostering steady, sustainable growth for companies, the nation needs businesses that contribute towards a sustainable society. Innovations that solve complex environmental, economic and societal problems do not just come from Unicorn companies. One example of such a business is Notpla, a Royal Academy of Engineering Enterprise Hub Member that won The Earthshot Prize in 2022 for its alternative biodegradable solution to plastic made from seaweed and plants. Focusing solely on unicorns risks encouraging investment away from such businesses, which have a vital part to play both in the entrepreneurial ecosystem, and wider sustainability goals.
Whilst they undoubtedly promise a plethora of economic benefits, unicorns are not all that matters. A collective psychological shift away from their magical allure – one that is epitomised by their mythological title itself – must take place. Only then will we truly begin to recognise the power of more ‘ordinary’ animals and achieve the broader societal benefits that come from a diverse, thriving entrepreneurial ecosystem.