Bletchley Park – famous for British intelligence – hosted the AI Safety Summit last week. At an associated event in Lancaster House, London, a conversation took place that lacked intelligence. During a softball interview with tech mogul Elon Musk, Prime Minister Rishi Sunak suggested that more British business founders and entrepreneurs should be comfortable with giving up their regular pay cheques to start their own business.
Keen to boost UK entrepreneurship, it was suggested that fostering Silicon Valley’s culture of risk and reward here in the UK will help create the right environment for new businesses to thrive.
I disagree. Every week I speak to hundreds of British startup businesses who are just setting out on their entrepreneurial journey. For those founders, the security of having a regular pay cheque is exactly what they need to grow their business initially and build a solid, profitable enterprise before they take the leap of faith and give up their day job.
At Virgin StartUp, we are seeing a noticeable trend towards business founders applying for a Start Up Loan while still in employment. Before the cost-of-living crisis, 58% of people applying to us for funding were still on payroll. This has now risen to 86%.
Some of these founders stay in full-time employment, while others choose to reduce their hours and go part-time. But the key point is that an increasing number of founders are relying on their regular employment income stream to finance their new business ventures – and that’s ok.
Given the cost-of-living crisis, it is no surprise that these budding new business founders are being more cautious and having to do things differently. Not only have business costs across the board significantly increased but founders’ personal finances have been squeezed too.
It makes sense for them to hold onto a financial security net while nurturing their startup. And, although juggling two jobs is tough, it’s not impossible (as any parent who works full time knows!) and is a sensible option that many are willing to take for the added security it brings.
Less risk, more support
We can’t deny the fact that now is one of the most challenging economic times to start a business, but British entrepreneurial spirit has yet to be quashed. Our Start Up Loan applications at Virgin StartUp are not slowing down. Small businesses continue to be the beating heart of the UK economy and every week I am in awe of the steady stream of talented and creative people who come through our door with amazing new business ideas and big plans to change the world.
So how can we create an environment for new business founders to succeed when many simply cannot afford to fail? These founders don’t need a change in mindset. They are already well aware of the risks. Instead, they need practical, tangible tools to empower them and give them the best chance of success.
They need to be shown that there are different ways to succeed in business. Not everyone is going to be the next big unicorn. And fundamentally, they need an environment where there are equal opportunities for all, so that underrepresented founders including women founders, Black, Asian and ethnic minority founders and disabled founders can thrive in business.
If we want to scale up the next generation of British startups, let’s talk less about fostering a culture of risk and reward, and instead foster a culture of support, community and connection. Because in a world where the majority of new founders don’t have huge amounts of savings to lean on, these are the tangible things that will help new business founders to start, scale and succeed.
Andy Fishburn is managing director at Virgin StartUp.