A new research paper published by the Centre for Policy Studies, supported by UK tech firm Deliveroo, has called for government help to unlock the potential of its growing tech sector and expand its herd of ‘unicorns’.
‘Herding Unicorns’, written by a team led by former government special adviser Nick King, argues that any country that wants to play a leading role in the digital economy must foster the conditions to create and promote unicorn companies.
The CPS report was informed by extensive interviews with tech investors, entrepreneurs and staff at existing startups and scale-ups. It identifies that high-growth companies in the UK struggle to access talent with key digital skills, and that the ‘financing gap’ between British and American companies grows wider with successive rounds of fundraising.
The report calls on the Government to introduce a number of changes, including new tax incentives and a specific visa scheme to help high-growth companies address their skills problem, allowing the UK to grow its herd of unicorns further.
These measures include:
- Introduce a new class of ‘Unicorn Visas’ to address a lack of talent that is holding back companies, allowing them to attract the brightest and the best from around the world with a minimum of fuss.
- With 90% of scale-ups saying they face skills shortages – it is estimated 1.2m new tech and digitally skilled people are needed by 2022 – the government should implement an immediate ‘skills review’ led by the private sector and unicorn companies to improve the availability of homegrown talent.
- Help foster the next generation of Unicorn CEOs and staff through a new ‘National Tech Entrepreneur Mentoring Scheme’.
- Boost funding availability through changes to tax-advantaged venture capital schemes such as the Enterprise Investment Scheme (EIS), the Seed Enterprise Investment Scheme (SEIS) and Venture Capital Trusts (VCTs).
- Amend the rules governing ISAs to allow individuals to invest in privately held growth businesses and take steps to encourage UK institutional investors, and pension funds in particular, to allocate more of their capital towards growth companies.
The report contains eyewitness testimony from founders and funders about the challenges they face, together with feedback from an extensive programme of roundtables. Its findings address the two overwhelming concerns that were reported: access to talent and access to finance.
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The ‘unicorn visa’ would give companies immediate access to the skills they need to grow, while the ‘unicorn skills review’ would improve home-grown talent through a comprehensive review of adult digital training at universities, further education colleges and beyond, ensuring the UK is producing the right skills for the future.
The recommendations would also significantly improve the availability and quality of mentoring and guidance for entrepreneurs, and in particular improve links between high-growth firms and others looking to grow.
Nick King, head of business at the Centre for Policy Studies said: “Britain’s record to date has been impressive but we need to do more to create an environment which will allow the next generation of unicorn businesses to emerge and thrive in the UK.
“These proposals to improve the skills of the talent pool that we have in the UK, together with improving the ease of recruiting talent from further afield through ‘unicorn visas’, will help do just that.”
Dom Hallas, executive director of The Coalition for a Digital Economy (Coadec), said: “We know what tech startups and scale-ups need to grow – access to world-leading talent from both the UK and abroad, access to finance that helps them scale and compete globally, and practical regulation that adapts to innovative, high-growth business models.
“The government should be fully committed to tackling these core challenges to help our tech startups and scale-ups thrive.”