EMPA Master Thesis Pieter Guldemond · develop startup ecosystems the past decades. There is an ongoing competition between countries to become Europe’s leading startup hub. Startup

Executive Master of Public Administration 2017/2018

Master Thesis

How can national governments in Europe build scale-up ecosystems?

A case study of the United Kingdom, Sweden & the Netherlands

In cooperation with the Ministry of Economic Affairs & Climate Policy of the Netherlands

Contact person: Myrthe Hooijman

April 2018

Thesis Advisor: Professor Johanna Mair

Author: Pieter Guldemond MSc

Student ID: 176795

EMPA 2017/2018

[email protected]

+31 6 23032660

Warmoesstraat 15E, 1012HT Amsterdam, The Netherlands

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Acknowledgements

I would like to thank the Hertie School of Governance for the opportunity to spend a full year on my

Executive Master of Public Administration in Berlin. I am also grateful to my thesis advisor professor

Johanna Mair. She was very helpful in choosing this topic and supportive when I proposed changes to

the original research setup.

Next, I want to express my appreciation for the Ministry of Economic Affairs & Climate Policy of the

Netherlands. Their commitment to this research opened doors and made it possible to interview

leading researchers and policy makers in the European field of scale-ups. Myrthe Hooijman, Robert-

Jan Brooijmans, Joost Dieleman and Lucien Vijverberg dedicated a significant amount of time to this

research. Without Wilco Schuttelaar and Lieke Conijn, I would not have been able to meet so many

interesting people in Stockholm and London. Lastly, Pieter Waasdorp (director Entrepreneurship)

was very committed to this topic, so I am convinced the recommendations I presented to the

Ministry will be implemented in the Netherlands.

I am thankful to the 31 people I interviewed in the UK, Sweden and the Netherlands. It was a

privilege to travel to these countries and in addition attend the world leading startup event SLUSH in

Helsinki. In London I even had the chance to ask UK’s Scale-Up Minister Margot James a question.

Her response that ‘government picking winners often leads to losers picking government’ was a

rather cynical comment, but it motivated me to substantiate my recommendation for government

involvement in selecting scale-ups even better.

Last but not least, I want to thank my dear family, friends and Hertie Heroes for their loving support.

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Executive summary

This thesis analyses how national governments in Europe with a well-developed startup ecosystem can

support the development of a scale-up ecosystem, by comparing practices in the United Kingdom,

Sweden and the Netherlands.

The case studies reveal that in these countries there is a focus shift from startups to scale-ups. Access

to talent and access to markets are the two biggest scale-up issues. Surprisingly, there are no clear

policies in place to improve these issues. Some political developments are expected to even worsen

these issues, like Brexit. Compared to the number of programs for startups, the offer of scale-up

programs is limited. Current scale-up programs use a time-consuming selection procedure in which

participants are handpicked.

The UK is ahead of Sweden and The Netherlands regarding scale-up policies. It has been experimenting

for years and even has a dedicated Scale-Up Minister. TechCity UK offers a highly appreciated scale-up

program: Future Fifty. Sweden has a thriving, well-funded startup ecosystem but no strong policy focus

on scale-ups yet. The startup ecosystem in the Netherlands is not as developed as those in the UK and

Sweden, but in formulating scale-up policies the Netherlands is ahead of Sweden.

Based on this research, a proposal for an ex ante scale-up definition is presented, targeting high-

potential startups and SMEs aiming for growth. In addition, four steps for national governments are

proposed. First, by combining information sources and experimenting with the development of

algorithms, high-potential scale-ups should be identified proactively. Second, coherent policies

concerning access to talent and access to markets should be developed. Third, experiments with

dedicated scale-up support should be executed. Fourth, these efforts should be evaluated to improve

the policies to develop a scale-up ecosystem.

Key words: scale-up, high-growth firm, SME, entrepreneurial ecosystem, innovation policy

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Content

1. Introduction ............................................................................................................................................ 6

PART I: LITERATURE & METHODOLOGY............................................................................................................ 8

2. Literature study ...................................................................................................................................... 9 2.1 History of entrepreneurship policy .................................................................................................. 9 2.2 From startups to scale-ups ............................................................................................................ 10 2.3 Scale-up definition ........................................................................................................................ 11 2.4 Limitations OECD definition .......................................................................................................... 12 2.5 Myths about HGFs ........................................................................................................................ 13 2.6 Supporting HGFs ........................................................................................................................... 13 2.7 Interviews with scale-up experts ................................................................................................... 15

3. Methodology ........................................................................................................................................ 17 3.1 Demarcation: top performing European countries ......................................................................... 17 3.2 Combining rankings ...................................................................................................................... 17 3.3 Exploratory interviews .................................................................................................................. 19

PART II: CASE STUDIES & CONCLUSIONS ........................................................................................................ 21

4. United Kingdom (UK) ............................................................................................................................ 22 4.1 Government of Scotland ............................................................................................................... 22 4.2 Ministry of Business, Energy & Industrial Strategy (BEIS) ............................................................... 23 4.3 Simon Devonshire, serial entrepreneur & scale-up entrepreneur in residence ................................. 25 4.4 Nesta ........................................................................................................................................... 25 4.5 TechCity UK .................................................................................................................................. 27 4.6 Summary UK................................................................................................................................. 28

5. Sweden ................................................................................................................................................. 30 5.1 Stockholm, capital of unicorns ...................................................................................................... 30 5.2 Ministry of Enterprise ................................................................................................................... 30 5.3 Aggregated results other interviews Sweden ................................................................................. 31

6. The Netherlands ................................................................................................................................... 33 6.1 Ministry of Economic Affairs & Climate Policy ............................................................................... 33 6.2 Aggregated results other interviews the Netherlands .................................................................... 35

7. Comparison UK, Sweden & NL .............................................................................................................. 37 7.1 Similarities.................................................................................................................................... 37 7.2 Countries at different speed .......................................................................................................... 38

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8. Conclusions & recommendations .......................................................................................................... 39 8.1 Proposal for an ex ante scale-up definition .................................................................................... 39 8.2 Generic and dedicated governmental support ............................................................................... 41 8.3 Summary: four steps ..................................................................................................................... 42 8.4 Further research ........................................................................................................................... 43

APPENDIX ...................................................................................................................................................... 47

Appendix A: List of interviewees .................................................................................................................... 48

Appendix B: Interview protocol ..................................................................................................................... 49

Appendix C: Slides final presentation Ministry of Economic Affairs ............................................................... 50

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1. Introduction

In search for opportunities to strengthen their economies, national governments in Europe started to

develop startup ecosystems the past decades. There is an ongoing competition between countries to

become Europe’s leading startup hub. Startup Genome (2017) collects data of over 10.000 startups

globally and compares cities and countries based on this data.

However, investing in startup ecosystems is heavily debated in scientific publications. Shane (2009)

stated that encouraging more people to become entrepreneurs is bad policy. According to his

publication, startups are not innovative, create few jobs, and generate little wealth. Therefore, he

argues that policy makers should stop subsidizing the formation of the typical startup and focus on the

subset of business with growth potential. Although this is a rather negative and heavily criticized way

of looking at startup ecosystems, he does introduce an interesting new focus, namely businesses with

growth potential. Numerous labels are used for this group: gazelles, high-growth firms and scale-ups.

Regardless the exact definition, these labels are used to describe businesses where growth in terms of

jobs or revenue is expected or happening. National governments have a growing interest in this group

as they contribute to economic growth.

In 1987 the first big study concerning scale-ups was performed. This study showed that 4% of the US

companies are responsible for 70% of all new jobs (Birch, 1987). Another influential study on scale-ups

was published by the British innovation foundation Nesta in 2009. This study concluded that 6% of the

UK businesses with the highest growth rates generated half of the new jobs created by existing

businesses between 2002 and 2008. Both studies show that scale-ups are an important driver for job

creation. They fuelled the debate about if and what national governments can do to support scale-up

ecosystems.

This research aims to answer the question how national governments with a well-developed startup

ecosystem can support the development of scale-up ecosystems, by comparing practices in the United

Kingdom, Sweden and the Netherlands. It is a qualitative research that shows how these countries deal

with scale-ups, based on 31 interviews. This research is not about individual scale-up needs and does

not deliver quantitative insights in scale-up policies.

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The structure of this thesis is the following. In the first part, a literature study on scale-ups is performed

(chapter 2) and the methodology for this research is explained (chapter 3). In the second part, the case

studies and conclusions are provided. Chapter 4, 5 and 6 display the results of the interviews in the

United Kingdom, Sweden and the Netherlands. A comparison of these case studies is made in chapter

7. Finally, in chapter 8 the conclusions and recommendations are presented.

The research is executed in cooperation with the Ministry of Economic Affairs and Climate Policy of

the Netherlands. The Ministry invests heavily in entrepreneurial policies and founded an organisation

to strengthen the position of the Netherlands as a startup nation in 2014: Startup Delta. One of the

current interests of the Ministry and Startup Delta is how to effectively address the needs of scale-ups

in addition to the startups services they deliver. The Ministry is eager to learn from other countries

and therefore welcomed an international comparison of scale-up policies.

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PART I: LITERATURE & METHODOLOGY

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2. Literature study

When writing about entrepreneurship, small-to-medium enterprises (SMEs), startups, scale-ups and

innovation ecosystems, it is rather easy to lose yourself in discussions on definitions. As the goal of this

research is to study how national governments deal with scale-ups in practice, an effort is made to

limit the literature study to elements that will be relevant for the interviews. First, a short history of

entrepreneurship policy is presented. Second, the recent shift towards building scale-up ecosystems

is described. Third, attention is paid to the different definitions of scale-ups and high-growth firms.

Fourth, limitations of the most used definition are listed. Fifth, persistent myths regarding high-growth

firms are presented. Sixth, different views on how to select high potential firms and common scale-up

issues are described. Lastly, additional insights gathered by interviewing four leading scale-up

researchers are presented in this chapter.

2.1 History of entrepreneurship policy The importance of entrepreneurship has radically changed the past decades. In post-World War II

literature, the main insights about the role of SMEs during the post-war economies in the western

world were that SMEs are generally less efficient than their larger counterparts, provide lower level of

employee compensation, are only marginally involved in innovative activity and their importance is

declining over time (Audretsch, 2003). It was only in the late 80s and early 90s that studies like

Loveman & Sengenberger (1991) and Acs & Audretsch (1993) showed the growing importance of SMEs

again. There are numerous theories explaining this change, but those are less relevant for this thesis.

The relevant implication is that governments rediscovered SME policies at the end of the previous

century.

A distinction should be made between public policy towards SMEs on the one hand and

entrepreneurship policy on the other hand. SME policy typically refers to policies implemented by a

Ministry charged with the mandate to promote SMEs, focusing on promoting the viability of existing

enterprises (Audretsch, 2003). On the contrary, entrepreneurship policy consists of measures taken to

stimulate more entrepreneurial behaviour in a region or country (Lundstrom & Stevenson, 2001). From

2000 onwards, multiple publications on ‘entrepreneurial ecosystems’ were published. Stam & Spigel

(2016) define them as a set of interdependent actors and factors coordinated in such a way that they

enable productive entrepreneurship within a particular territory.

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Brad Feld (2012) wrote a highly popular book on Startup Communities and Daniel Isenberg (2010 &

2012) wrote famous articles in Harvard Business Review on how to start an entrepreneurial revolution,

describing nine prescriptions for creating an entrepreneurship ecosystem. These publications fuelled

policy making in the field of entrepreneurship on all levels. The European Union runs a huge program

called Startup Europe and spends billions of euros on startups and scale-ups in the European Institute

of Technology programs. National governments keep launching entrepreneurship policies, varying

from favourable tax measures till startup visa. And local governments invest in incubators and

accelerators, leading to an ever-growing landscape of innovation hubs.

2.2 From startups to scale-ups Shane (2006) wrote a critical article mentioned earlier on why encouraging more people to become

entrepreneurs is bad policy. He states that the typical startup is not innovative, creates few jobs and

generates little wealth. Therefore, policy makers should stop subsidizing the formation of the typical

startup and focus on the subset of businesses with growth potential. An important counter argument

is that in order to have a subset of high potential scale-ups, a broad base of startups is needed. Brown

& Mason (2017) introduce the concept of an entrepreneurial ecosystem and show that scale-up

ecosystems build on embryonic ecosystems. The implication is that there is no short-cut to building a

scale-up ecosystem, a basic level of startup activities and an entrepreneurial ecosystem is needed first.

Embryonic ecosystem Scale-up ecosystem

Dominant actors Limited number of startups High numbers of growth-oriented startups

Levels of entrepreneurial orientation

Low. Startups focus on early and/or premature exits

High. Strong growth focus on generating new blockbuster firms

Availability of funding Good sources of seed and early stage funding, often publicly funded through co-investment schemes

Full range of funding sources across the entire funding escalator. Nearly all privately funded

Fluidity and diversity of ecosystem actors

Low level of ‘transnational entrepreneurs’

Large number of entrepreneurs are non-native, immigration of ’transnational entrepreneurs’ is high

Nature of entrepreneurial recycling

Small number of major exits Large number of blockbuster exits. Large number of high net worth individuals who become angels

Importance and focus of public policy

Strong role for policy, typically focuses on increasing resources and new-technology based firms

Limited role for policy, many initiatives are industry-led and focus on building vertical network connectivity

Archetypical examples Scotland, Ireland, Finland, Portugal Silicon Valley, TechCity London, Berlin

Table 1. A basic typology of entrepreneurial ecosystems (Brown & Mason, 2017) – shortened version

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2.3 Scale-up definition When startups are discussed, there seem to be consensus about the definition. This is not the case for

scale-ups. The terms scale-up, high-growth firm and gazelle are used interchangeably. In literature the

most used term to describe firms with a high growth potential is ‘high-growth firm’ (HGF). However,

in policy initiatives the term ‘scale-up’ is used more often lately. The launch of the Scale-Up Report on

UK Economic Growth from the Scale-Up Institute in 2014 contributed to the popularity of this label.

Below a selection of the definitions currently used is presented.

Two definitions of a high-growth firm (HGF)

OECD An enterprise with average annual growth in employees or turnover greater than 20% per annum over a three-year period, and with more than 10 employees at the beginning of the period

European Commission (2017) & Eurostat

An enterprise with average annual growth in employees or turnover greater than 10% per annum over a three-year period, and with more than 10 employees at the beginning of the period

Four definitions of a scale-up

Scale-Up Institute (2014)

An enterprise with average annual growth in employees or turnover greater than 20 percent per annum over a three-year period, and with more than 10 employees at the beginning of the period (= similar to OECD definition of a high-growth firm)

Startup Europe Partnership (2014)

A development-stage business, specific to high-technology markets, that is looking to grow in terms of market access, revenues, and number of employees, adding value by identifying and realizing win-win opportunities for collaboration with established companies. A scale-up is past the search phase and rather in the execution phase of the business model. Scale-ups exists on top of a solid startup ecosystem.

Startup Amsterdam (2017)

Tech-centric companies with 51-500 employees

Bruegel (Duruflé, Hellmann & Wilson, 2017)

Entrepreneurial companies that are past their initial exploratory phase, have found their initial product/service offering and market segment, and are entering a growth phase where they seek significant market penetration. The term scale-up is reserved for companies that are aiming for fast growth, possibly seeking to become so called gazelles.

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Two definitions of a gazelle

Birch (1987) A company that doubles its sales every four years. European Commission (2017)

Gazelles are a specific, less than five years old subset of high growth firms as defined by the OECD

This overview shows there is no consensus on which definition to use. For some, high-growth firms are

similar to scale-ups but for others, scale-ups are focussed on technology and driven by innovation.

There are quantitative and qualitative definitions. Some are convinced that scale-ups have to be a

startup first, others think every SME can turn into a scale-up. The only common ground is the focus on

companies that experience growth, have growth potential or growth ambition.

2.4 Limitations OECD definition In literature, most researchers stick to the OECD definition as it is clearly defined and relatively easy to

measure. However, there are limitations to this definition. First, this definition omits firms which may

be growing rapidly but fall just outside this exacting growth threshold (Anyadike-Danes, Hart & Du,

2015). Second, turnover and employment growth do not necessarily reflect how entrepreneurs

themselves conceptualize growth (Achtenhagen, Naldi & Melin, 2010). Third, this definition might lead

to noisy data. For example, when independent companies start to merge into one company, this leads

to spectacular growth numbers on paper. However, in reality the economic activities of the new entity

might not have been growing compared to the combined activities of the separate activities. Fourth,

as the measurements can only be done ex post, a huge delay occurs. For policy makers this is a

disadvantage, as they will only know whether a certain company was a high-growth firm after the

growth occurred.

Lastly, the definition does not take capricious growth into account. Companies that have a spectacular

growth for two years, are stable for a third year, and have high growth in the fourth year again, are

not identified as a high growth firm according to this definition. As growth is highly episodic in nature

(Garnsey, Stam & Heffernan, 2006), this is a serious drawback of the definition. Mason & Brown (2011)

describe high-growth not as a characteristic of a subset of firms, but rather a state that some firms

temporarily experience. This means that HGFs are effectively a moving target, making them a difficult

cohort of businesses for researchers and policy makers to target. These shortcomings of the HGF

definition explain why policy makers often decide to use their own definition when discussing

entrepreneurial policies. In section 8.1 a proposal for a definition on scale-ups for policy makers is

proposed.

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2.5 Myths about HGFs To get a better picture of what kind of companies are (potential) HGFs, Brown, Mawson & Mason

(2017) identified a number of HGF myths.

Myth 1: HGFs are young and small

In the UK, 70% of the HGFs are at least five years old (Nesta, 2009)

Myth 2: HGFS are predominantly high tech

Again, in the UK only 15% of HGF are operating in the high-tech sector. However, the majority is highly

innovative, irrespective of their industrial sector (O’Regan, Ghobadian, and Gallear 2006; Segarra and

Teruel 2014)

Myth 3: Universities are a major source of HGFs

However, universities do play a key role in shaping the overall entrepreneurial ecosystem

Myth 4: HGFs undertake steady linear growth and grow organically

This myth was already pointed out in the previous paragraph

Myth 5: HGFs are mostly VC backed

This relates to the first and second myth

Consequently, policymakers should not limit themselves to startups turning into scale-ups when

targeting (potential) HGFs but include high potential SMEs in various sectors. However, the population

HGFs Brown, Mawson & Mason studied for their research are defined on an ex post base, so a critic to

this research can be that these myths are correct for HGFs of the past but might be less relevant for

HGFs of the future. It is for example very likely that the importance of technology will grow in the

scaling of future businesses (not necessarily high tech).

2.6 Supporting HGFs Shane’s (2006) proposal to zoom in on businesses with growth potential deserves closer attention.

Again, there is no consensus whether generic or selective business support is preferred. OECD (2010)

states that as it is difficult to identify firms that will grow faster based on a list of common

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characteristics, an appropriate strategy would be to create the conditions for any firm to become high

growth. However, programmes that specifically target firms with growth potential can be important,

provided that they are not the only policy tool.

Nesta (2009) proposes a more targeted approach. According to them, economic policy should focus

on promoting innovation and on the small number of companies with high growth potential, rather

than broadly based business support programmes for new startups and SMEs. Daniel Isenberg (2010)

is a strong proponent of favouring the high potentials as well. He states that if resources are limited,

programs should try to focus first on ambitious, growth-oriented entrepreneurs who address large

potential markets. According to him wealth creation and labour force enrichment of one rapidly

globalizing 500-person operation is much greater than 500 micro financed sole proprietorships. He

adds that in selecting high potentials, governments should remain sector neutral and unleash rather

than harness people’s entrepreneurial energies. They should observe which direction entrepreneurs

take and gently encourage supportive economic activity to form around already successful ventures.

Brown, Mawson & Mason (2017) also state that instead of supporting a large number of high potential

scale-ups, short periods of in-depth engagement with a small number of firms on the cusp of significant

growth is needed.

But how can the right high potential HGFs be selected? First, existing market knowledge can be used.

According to Stam & Bosma (2015) truly high potential ventures tend to be well known in a limited

industry circle, so it may be worth involving business angels, industry experts and incumbent suppliers

and/or customers to help identify ambitious entrepreneurs and connect them to each other. Second,

the ambition to grow is an important factor. Growth orientation cannot guarantee growth, but growth

in the absence of aspiration is extremely rare (Stam & Bosma, 2015). Determining an entrepreneur’s

ambition is not an easy task, as it takes little effort to simply state one is ambitious. Amongst

entrepreneurs it is highly encouraged to have an ambitious attitude, but this is not automatically

translated into the execution of an ambitious growth strategy. One potential indicator of growth

ambition is the desire to grow internationally. Third, Mason & Brown (2011) stress the importance of

account management in order to identify the growth trigger points (like the introduction of a new

product) and to be able to deliver customized, well timed support.

There a only a few quantitative studies that evaluate HGF support programs. One large OECD study

(2013) compared six European support programs and unsurprisingly concluded that there are big

differences in structure, delivery arrangements, intensity and forms of support and outcomes. None

of the programs had a specific sector focus, which reflects the finding that HGFs are found in all sectors.

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In order to determine how to support HGFs best, an understanding of their most pressing issues is

needed. The Scale Up Institute (2017) published a top five of scaling issues: access to talent and skills,

access to customers, development of leadership capacity, access to the right combination of finance

and navigating infrastructure. Although these issues are framed rather broad, this seems to be a good

summary of common scale-up issues. These issues will be validated later on in this research.

2.7 Interviews with scale-up experts This literature study revealed there is a small number of experts in the field of HGFs. To get a better

understanding of the latest developments in this field, interviews have been performed with four of

these experts: Daniel Isenberg (Harvard University, USA), Colin Mason (University of Glasgow, UK),

Ross Brown (St Andrews, UK) and Erik Stam (University of Utrecht, the Netherlands). Except for the

interview with professor Isenberg, the interviews were held in person. Four topics were addressed in

these interviews: focus, governance, programs and selection. The most relevant insights on these

topics following from the interviews are shared here.

Focus

First, the importance of entrepreneurial recycling was stressed. Bringing experienced people and

money back into the ecosystem is of great value to grow that ecosystem. Governments should observe

the ecosystem closely and come into action when a big exit takes place to ensure an ongoing

commitment of the people involved afterwards. Second, scale-ups will not easily come from university

spinouts, but ambitious people who can become great entrepreneurs can be recruited here. Third,

entrepreneurship policy should not be focussing on one specific sector. Innovation is likely to happen

cross sectorial, so make sure you create the circumstances that stimulate cross sectoral cooperation.

Fourth, governments should play a bigger role in innovative procurement. The involvement of scale-

ups in public tenders can be of great value.

Governance

There is consensus among the researchers that involvement of the private sector is very important.

The government needs to set the table, but the private sector should run it eventually. Isenberg

formulated this as ‘light touch policy’, where you nudge the private sector as a government. This can

be done by starting where the biggest energy is. There are serious concerns about the influence of

Brexit. Brown (2018) is working on a regression analysis that suggests Brexit could potentially result in

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weaker growth, lower levels of innovation, reduced capital investment and lower access to external

finance, especially for innovative and export-oriented SMEs.

Programs

Although there are several best practice programs, it is highly discouraged to simply copy models.

Adaptation to the local context is always needed, as there are big differences in terms of culture,

regulation, market access, etcetera. Another common mistake is to push certain technologies and

sectors. An often-cited best practice is the case of the UK Future Fifty program (which will be described

in chapter 4). A last observed element in strong programs is the move from grant-based support to

peer-based support. Entrepreneurs tend to listen better to their peers, especially when they are

slightly ahead of them.

Selection of scale-ups

Despite the focus on ex post identified HGFs in research, a shift towards ex ante identification of HGFs

was advocated. It is a very complex and perhaps even impossible task to pick winners, but if you had

to, the focus should be on entrepreneurs with growth ambition and growth experience. At the same

time a warning was articulated to focus not solely on high growth, but to include a way to judge the

sustainability of that growth.

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3. Methodology

The literature study provided valuable insights in entrepreneurial ecosystems in general and the

position of HGFs specifically. But to get a deeper understanding of why certain choices are made and

what their effects are, desk research will not be sufficient. Therefore, research is performed on how

national governments deal with this topic in practice by executing three case studies. This chapter

elaborates on the methodology of this research. First, it is explained why the choice is made to use top

performing countries for the case studies. Second, rankings are compared to pick the three best

performing European countries. Third, an explanation of the type of interviews that will be performed

is presented.

3.1 Demarcation: top performing European countries

For these case studies two demarcation choices are made. The first concerns the geographical focus.

Scale-up policies are mostly debated in the USA and in Europe. The challenges of scale-up policies in

the USA differ from those in Europe. The topics of access to markets and regulation for example are

more complex in Europe, due to the institutional arrangements. It is interesting to see how national

governments deal with these complexities, therefore the decision is made to focus on European

countries.

The second demarcation is about the choice to compare top performing countries, countries that lag

behind or a combination of those. As the topic of scale-up policies is relatively new, some European

countries have little to no experience in this field. From the examples often used in literature it is clear

that the western European and Scandinavian countries are pioneers in this field. As the focus is on

lessons learned and collecting best practices, the decision is made to focus on front runners only.

3.2 Combining rankings A clear measure to determine who are these European front runners does not exist, but with

combining key rankings and performances a selection of top performing countries can be made. One

of the leading rankings is the Startup Genome ranking (2017), in which global ecosystems are ranked

on five factors: performance, funding, market research, talent and startup experience. Their 2017

ranking is displayed in figure 1. It shows that London, Berlin, Paris, Stockholm and Amsterdam are the

five best performing European ecosystems.

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Figure 1. Global Startup Ecosystem Ranking (Startup Genome, 2017)

Nesta (2016) produced a digital city scale-up index, leading to the European top 15 displayed in figure

2. London, Stockholm, Paris and Amsterdam are again part of the five best performers. Berlin only

comes at the 7th position here and is replaced by Helsinki.

Figure 2. European Digital City Index (Nesta, 2016)

Another relevant measure is the share of HGFs in a country of the total amount of companies with

more than 10 employees. Figure 3 shows that the UK, Sweden, the Netherlands, France and Germany

are top performers in Europe (European Commission, 2017).

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Figure 3. Share of HGFs in Europe (% HGFs of total companies with >10 employees) (European Commission, 2017)

Lastly, the number of so called unicorns (companies with a valuation >1 billion euros) of European

countries is compared in figure 4 (GP. Bullhound, 2017).

Figure 4. Number of unicorns in Europe (GP. Bullhound, 2017)

These four figures reveal the UK and Sweden score consistently high. The Netherlands, Germany and

France come in changing orders right after these two countries. Ideally, five case studies would be

performed. However, due to time constraints the decision is made to focus on three countries in this

research. As the Dutch Ministry is highly motivated to share their insights, the decision is made to

make a comparison of the UK, Sweden and The Netherlands.

3.3 Exploratory interviews In total, 31 exploratory interviews with policy makers, entrepreneurs, researchers and other

representatives of the entrepreneurial ecosystem took place. The Dutch Ministry has an extensive

network, which made it possible to approach key persons at ministries in the UK and Sweden. Next,

these persons were very helpful in making links to other relevant actors in their entrepreneurial

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ecosystem. Researchers were happy to contribute as well. The only actor not able to participate was

the Scale Up Institute in the UK. I did attend their annual event, shortly spoke to the director and used

their reports, but they were unable to schedule a full interview. To get as much information as possible

out of the interviews, the preference was to have in person interviews. Only two interviews were held

using Skype. An overview of all interviewees is displayed in appendix A.

For the interviews, an interview protocol with semi structured questions was used, focusing on a

limited number of topics that followed from the literature research: scale-up definition and focus,

governance, scale-up issues and programs. The protocol is displayed in appendix B. This protocol was

sent to the interviewees in advance, so they had time to prepare themselves. Using semi structured

questions made it possible to incorporate new insights and if needed to change focus based on insights

gained during interviews.

In the second part of the thesis, the results of the interviews are summarised. The text is as close as

possible to the formulations the interviewees used. First, the UK interviews are displayed. As these

interviewees had deep knowledge and visions on scale-ups, every interview is presented separately.

Next, the results of Sweden and the Netherlands are presented. In these countries, only the interview

with the responsible Ministry is shown separately. The findings of the interviews with other

organisations in these countries are presented as aggregated results. After presenting the case studies

in chapter 4, 5 and 6, the similarities and differences between the countries are shown in chapter 7.

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PART II: CASE STUDIES & CONCLUSIONS

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4. United Kingdom (UK)

In this chapter the results of the interviews with consecutively the Government of Scotland, the

Ministry of BEIS, a scale-up entrepreneur in residence, innovation foundation Nesta and TechCity UK

will be presented. Lastly, the main findings are summarised.

4.1 Government of Scotland

Focus

In order to improve their entrepreneurial ecosystem, Scotland participated in a MIT study in 2014,

using the regional entrepreneurship acceleration program (REAP) methodology (MIT REAP, 2014). The

main conclusion was to use a collective impact approach which involves all players in in Scotland’s

entrepreneurial ecosystem in order to implement actions on five themes:

- Improve networking linkages between innovation capacity and entrepreneurial activity

- Improve skills for growth

- Improve access to growth finance

- Leverage the role of universities to improve entrepreneurship

- Promote innovation driven entrepreneurship to individuals of all ages

As a response, the Scotland Can Do (www.cando.scot) campaign was developed. It is a broad program

with activities that serve a huge range of actors: from primary schools to scale-ups. Their definition of

a scale-up is a company with the potential to reach a turnover of 100+ million pounds. However, global

impact is more important than the exact number. Although literature says scale-ups not only come

from the tech sector, they believe future growth will come from digital companies. Even a classical

company like Swiss Post invests now in setting up a drone network. Entrepreneurial Scotland is hosting

sessions about Scottish scale-ups in which they invite people of the ecosystem to contribute, varying

from the Scottish unicorn founder Tom Hunter till representatives from the London Stock Exchange.

Ranking scale-up issues

- Access to talent. It is especially hard to find good computer science students. Although this is

the most pressing issue, there is no real policy in place to address this

- Leadership (skills)

- Access to markets. If people have a growth mind set, this is less of a problem

- Finance. Bank debt is still an issue

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Governance

Scotland CAN DO is currently run by a public organisation, but it will be transferred soon to

Entrepreneurial Scotland (public-private), including a public budget of approximately 3 million pounds

per year. It has always been the vision to hand the organisation over to the ecosystem. In order to

realize this ambition, civil servants are trained to have an open, external attitude and spend time in

the ecosystem.

There is strong political support for scale-up policies in Scotland. As people want economic growth,

this policy is not heavily debated. The previous Minister who started the CAN DO program was a strong

defender of it. Results of the program are communicated using an online dashboard. This reveals some

specific issues, like the huge gender gap.

Programs

The CAN DO program includes some scale-up activities. One is a summer school program of MIT

entrepreneurship professor Bill Aulet, hosted by the University of Stirling. This program is not sector

specific and focuses on developing a growth mind set. In general, it is relatively easy to convince tech

companies to participate in programs like these as they are networked, and it is part of their culture.

Companies with a turnover of 1 to 5 million pounds who are in business for a longer time are much

harder to convince. They often need a trigger event (like the loss of the senior leader) before they start

thinking about scaling up and dedicate time to it.

4.2 Ministry of Business, Energy & Industrial Strategy (BEIS)

Focus

The Ministry just launched their new industrial policy, which includes many entrepreneurship

measures. They identified four grand challenges: growing artificial intelligence and data-driven

economy, clean growth, the future of mobility and ageing society. Investments of 725 million pounds

in an Industry Strategy Challenge Fund and 2,5 billion pounds in an investment fund are planned. They

will also invest in mathematics, digital and technical education to boost STEM skills. The policy explicitly

mentions to invest in identifying business with scale-up potential and encourage them to access the

support available (Ministry of BEIS, 2017). It also highlights the prioritised four areas as defined by the

Scale-Up Taskforce:

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- Better use of government and private held business data to identify and target growing

businesses when they need support

- Enhanced leadership and management capability and access to talent

- Greater awareness, and more take up, of equity finance and capital to help founders invest in

business growth

- Improved access to markets; through international trade, opportunities for government

procurement and better supply chain support

Lastly, the national network of Local Enterprise Partnerships and growth hubs will be continued.

There is no clear definition of scale-ups. Scale-ups can be found in any sector and are not only tech

companies. The local enterprise partnerships have their own approach to identify companies with high

growth potential, so the selection can vary across the country. Although there are non-tech companies

that can scale, most efforts are put into the development of tech clusters (see also TechCity UK

interview).


- Access to talent

- Access to markets: industrial policy addresses need for better chances for scale-ups in public

procurement

- Leadership

- Finance

Governance

A very interesting approach the Ministry uses is to appoint a scale-up entrepreneur in residence to

help the government in its mission to help small businesses grow. Simon Devonshire, serial

entrepreneur, was appointed in 2014 (interview with him is displayed in next section). The benefits of

the involvement of an external person is that she or he has specific knowledge, brings in new networks

and can serve as an ambassador. In addition, one of the ministers is appointed as Scale-up Champion:

Margot James. Both appointments show the dedication of the UK government to grow more scale-

ups.

Programs

A highly popular program called Growth Accelerator was stopped in 2016, as a result of changing

political priorities. In four years it supported 18.000 businesses with the potential to have 50% turnover

growth in three years. Participants were advised by experienced people from the private sector.

25

Participation helped founders to step back and think, as this is often the most difficult job as an

entrepreneur.

4.3 Simon Devonshire, serial entrepreneur & scale-up entrepreneur in residence

Focus

Scaling a company from 2 to 10 people is a difficult as scaling from 1000 to 2000 employees. Therefore,

it makes no sense to have a strict, number-based definition of scale-ups. In future businesses can only

scale successfully if they go online and access international markets as quickly as possible. High

potential scale-ups can be selected by zooming in on their ambition and their potential to grow. For

the latter, there are promising developments in the field of machine learning that can support this

selection. Basic algorithms looking at websites to identify the growth potential already exist and they

will become more sophisticated.

Ranking scale up issues

- Access to markets. Entrepreneurs should learn how to become better in sales, this requires a

growth mind set. Entrepreneurs with a small local market are better in this, as they have to

think global from the very beginning

- Finance. With paying customers and finance, it should be possible to find the right talent

- Access to talent. UK should make better use of a hidden force: top students from all over the

world come here to study, but few efforts are made to keep them

Governance

Governments should not be hesitant to intervene in an entrepreneurial ecosystem. Entrepreneurs

want and need positive interventions. They can for example organize more competitions for societal

challenges and connect procurement to these solutions. By doing so, more relevant entrepreneurs will

arise (‘Medtech instead of Adwords’). The UK growth hubs are inconsistent in their approaches and

are underperforming. Future Fifty is an example of a successful program celebrating and supporting

scale-ups (see next section).

4.4 Nesta

Focus

Nesta is an innovation foundation, focusing on policy and research, investments and the formation of

partnerships to promote innovation across a broad range of sectors. They produced the digital scale-

26

up index that was displayed in chapter 3. They also published an idea bank for local policy makers on

digital entrepreneurship (Nesta, 2016). The definition for scale-ups is not very clear but is a waste of

time to spend too much time on that. In general, scale-up companies often use business model

innovation, enabled by (internet)technology. Tech companies in the UK have grown faster than non-

tech companies. The industrial strategy of the Ministry of BEIS justly focuses on artificial intelligence,

machine learning and other digitalization opportunities for future businesses. The economy needs

productivity growth, this is closely related to digitalization.

Governments should also realize which companies not to support, like small businesses with no

ambition or potential to scale. As ambition is such a strong predictor, better tools need to be developed

to determine what the real ambition of an entrepreneur is. Positive flags are international sales.

Proxies for negative ambition or for example the founders name in the name of the company, but

more research is needed to deliver a full picture on the ambition of an entrepreneur.


- Access to talent

- Access to markets


- Finance

Governance

To support scale-ups better action is needed on a European, national and local level. On a European

level the Scale Up Manifesto (2016) sums up most important actions. On a national level, efforts are

needed on mid-career training, export vouchers and landing pads. On a local level, more results can

be obtained by using cities as a testbed and involve startups and scale-ups better in procurement.

Nesta is a strong proponent of experimental policies in combination with data collection, which will

provide you with valuable insights on the short-term and long-term results of a policy. It is highly

recommended to involve alumni entrepreneurs and their network. If you just ask, the chance is high

you will get their support. The UK honours system is a relevant factor in this regard, as it stimulates

successful people to give back to society.

Programs

Incubators and accelerators seem to work for startups but offering a relevant program for scale-ups is

more difficult. Scale-ups survived the first phase and already have a specific position in a certain

industry or vertical. The question is whether there are enough similarities if you put scale-ups together

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in one program to have a significant learning effect. Often scale-ups are too busy to participate.

However, if founders manage to step back and zoom out, they often enjoy this moment of reflection.

Team support is needed to realise this.

4.5 TechCity UK Focus

TechCity UK was founded after the financial crisis in 2007. Overnight 30.000 people lost their job and

therefore new initiatives for job creation were designed. The central idea was to use technology to

drive economic progress. TechCity UK supports the tech sector in general, but invests extra in fintech,

artificial intelligence and robotics. The geographical focus at the start was East London, but the UK

government recently decided to scale up TechCity UK to a national organisation: TechNation. The

majority of the TechCity UK team members comes from the tech sector. Currently they focus on three

tasks: advocacy, digital skills programs and life cycle programs for startups & scale-ups.


- Access to markets. There should be better European cooperation to solve issues on Value

Added Tax (VAT) and visa constraints

- Access to talent. Brexit is a big threat that will worsen this issue. The UK has an extensive visa

program, but it is not sufficient. An entrepreneurial visa scheme should be developed


- Finance

Governance

TechCity UK is 80% funded by the UK government. As it is a separate entity, the direct political

interference is limited. TechCity UK publishes an insightful annual report online, which both serves as

a marketing tool and an instrument to adapt actions.

Programs

The lifecycle programs offered by TechCity UK make it possible to keep good track of high potential

scale-ups. A lot of effort is put in identifying and supporting them. There are two programs specifically

for scale-ups: Upscale and Future Fifty (see box below). Upscale focuses on companies looking for

series A funding, a growth rate of 30% per month, a scalable digital component and an age of 2-3 years.

Future Fifty comes next and focuses on companies looking for series B funding, a growth rate of 30%

per month, and 5 million+ pounds revenue.

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Best practice: Future Fifty Future Fifty was launched in 2013 by the UK government. It aims to promote and support 50 of UK’s most rapidly growing digital tech companies. These companies are supported by a larger community of institutional investors, entrepreneurs, government officials and professional services companies. They connect them to key sources of funding, provide entrepreneurial mentoring and give access to government departments (like the Ministry of BEIS). The focus is on how to approach a public listing or undertake a big expansion. It is aimed at founders, but there are underlying workshops for e.g. CMO’s too. The foundations of the program are: - Peer-to-peer support - Active scouting and selection of participants (who often come from earlier stage programs like Upscale) - Learning from entrepreneurs who are just ahead of the participants - Key insights in common scale up issues, like scaling HR processes, leadership issues and International market expansion - Connection to relevant government departments As a result, the Net Promotor Score of participants is 60-70, which is considered ‘excellent’.

4.6 Summary UK

Focus

Although there is no unambiguous definition of what a scale-up is, the topic is high on the political

agenda. In addition to the Scale-up Institute, there is a Scale-up Taskforce and a Minister is appointed

as ‘scale-up champion’. The visions on which companies to focus on differ. Some organisations focus

on tech & digitalization, others think the focus should be completely sector agnostic. With the new

industrial strategy, the Ministry of BEIS made a clear choice to focus on solving societal challenges with

tech solutions. According to them scale-ups can play an important role in realizing this ambition.


Most of the interviewees consider access to talent the most pressing scale-up issue. Brexit brings lots

of undesired uncertainties and it is expected that it will worsen this issue. Most organisations plead

for more visa schemes to attract talent and extra efforts to maintain top talent from universities.

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Governance

The Ministry has many interactions with the private sector, amongst others by inviting experienced

entrepreneurs from the field to spend time at the Ministry and advise them. In general, influential

persons from the private sector are actively involved in societal challenges, like creating more jobs via

scale-ups. This seems to be deeply rooted in the British culture. TechCity UK is considered a strong and

successful organisation in the entrepreneurial ecosystem. In combination with the excellent research

of Nesta, they play a positive role in building the entrepreneurial ecosystem in the UK.

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5. Sweden

Before the results of the interviews are presented, an eye-catching element of the Swedish

entrepreneurial ecosystem is discussed: the high number of so called unicorns in the capital Stockholm.

Next, the efforts of the Ministry of Enterprise are displayed. Lastly, the aggregated results of the

interviews are presented.

5.1 Stockholm, capital of unicorns

Stockholm is considered the capital of unicorns. A total of seven unicorns in a city of less than 1 million

inhabitants is a rate that can only be found in Silicon Valley (Cole, 2016). Skype and Spotify are the

most famous examples. Numerous scientific and news articles try to explain this phenomenon. The

most comprehensive analysis is done by the Stockholm School of Economics (Skog et al, 2016). One

factor that is repeated in almost every analysis is the governmental subsidy scheme on buying Personal

Computers in the nineties. This led to highly developed technical infrastructure, enabling an early

adoption of IT. Another explanation can be the dependence of imported media, leading to excellent

English language skills. However, there are more countries that fit these requirements. In addition,

these explanations are presented:

- Entrepreneurs, business people, politicians and university researchers are highly connected in

formal and informal networks

- A strong presence of engineers in Sweden led to a focus on problem-solving through informal

networks

- The state offers a social safety net that reduces the risks faced by entrepreneurs

- Higher education is free, so students have time to devote to entrepreneurial endeavours

- Presence of a well-developed startup ecosystem (incubators, startup loans, investors, state

agencies, etcetera)

- Pay it forward culture: serial entrepreneurs share their expertise

- Strong international connections and global approach due to the size limitations of the

Swedish domestic market

5.2 Ministry of Enterprise Focus

The Swedish Ministry actively works on the topic of scale-ups, although they do not use a clear

definition. One of their drivers is to grow companies longer in Sweden, instead of being bought by

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American companies. Another driver is to diminish the big gap between traditional SMEs and startups.

Traditional SMEs should benefit more from the thriving startup ecosystem in Sweden and get infused

by these tech and innovation companies. In order to support traditional SMEs with digitalization, a

dedicated program is set up, called Digilift. Tech companies should be involved more in solving societal

issues. The Ministry defined five innovation partnership programs to meet societal challenges: next

generation transport, smart cities, circular and bio-based economy, life sciences and a connected

industry.


- Access to talent. Tax incentives for specialists are in place. From 2018 an employee stock

option program is introduced too

- Access to markets

- Finance. A more dynamic IPO culture is desired

- Leadership skills

Governance

There are limitations to what the government can do due to state aid regulations. On topics like

sustainability and promoting deep tech, the Ministry would like to do more but this is not always

allowed. In general, national governments should cooperate more to address scale-up issues on a

European level, for example at the European Innovation Council. The Ministry is very open to team up

on this topic with other governments.

Programs

High potential scale-ups like battery company Northvolt are very good in gaining attention from

government, media and investors and do not need extra support. The existing infrastructure of public

support organisations should be sufficient. A good way to support scale-ups is by offering peer-to-peer

programs.

5.3 Aggregated results other interviews Sweden Focus

Sweden has a well-funded, mature startup ecosystem. The next challenge is to produce more scale-

ups. Although there is a high number of unicorns, there does not seem to be a specific policy focus

nowadays on producing them. Most unicorns used mobile technology as enabler to scale. It is unclear

what might be a next enabling technology. The development of home systems like Siri and Alexa might

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play a role in this. According to most interviewees, the number of unicorns is not a satisfying measure,

instead the focus should be more on profitable growth. The topic of scale-ups is not intensely discussed

and defined yet, but there are some signs of shifting focus towards this topic (like supporting SMEs

with internationalisation and digitalisation).


- Access to talent. To create better access to talent, more foreign people need to be attracted.

Visa schemes need to be extended, but this is politically heavily debated. Another problem to

attract talent is the limited and expensive housing in Stockholm.

- Access to markets


- Finance

Governance

The Swedish government plays an active role in the development of the entrepreneurial ecosystem.

There is a range of public bodies who support them: Almi (funding and advice for entrepreneurs),

Vinnova (funding for research and development), Tillväxverket (Swedish Agency for Economic and

Regional Growth) and Startup Stockholm. There is a high level of cooperation between the players in

the startup ecosystem, by some explained by the Swedish phenomenon ‘lagom’: literally translated it

means ‘just enough’ and it is often interpreted as embracing a middle ground in life (McHugh, 2017).

The centre of gravity in the Swedish startup ecosystem is clearly Stockholm, but there is a strong

tendency to involve all regions in governmental policies. Corporate involvement is increasing, but only

recently.

Programs

There are no dedicated scale-up programs comparable to programs in the UK. There is a program to

support companies with accessing international markets (Going Global, offered by Business Sweden)

but they do not specifically focus on scale-ups. The culture in Sweden is to support everyone, so

selecting a small number of companies to support does not fit this culture well. However, some

agencies tend to move more towards selection in order to give targeted support. The experience of

account managers is needed to make a good selection. Furthermore, traction (customers and sales in

multiple markets) and the willingness to grow are relevant factors to identify high potential scale-ups.

The Swedish Agency for Economic and Regional Growth (2017) published a research that shows the

ambition of SMEs to grow in Sweden is high: 7 out of 10 want to grow. In the next chapter it will

become clear that this number can vary greatly in Europe.

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6. The Netherlands

First, the results of the interview with the Ministry of Economic Affairs & Climate Policy are presented.

Second, like in the case study of Sweden, the aggregated results of the remaining interviews are

displayed.

6.1 Ministry of Economic Affairs & Climate Policy Focus

The Ministry is heavily involved in developing the Dutch startup ecosystem. In 2014 they supported

the foundation of a new organisation: Startup Delta. It is their mission to merge the Dutch startup

ecosystem into one single connected hub, by improving access to talent, capital, networks, knowledge

and markets (Startup Delta, 2018). There is awareness at the Ministry that the next challenge for the

Dutch startup ecosystem is to move more startups to the scale-up phase. Although the name ‘Startup

Delta’ seems to exclude scale-ups, it is part of their mission to support them too. There is no clear

scale-up definition in place, but a range of options is currently discussed at the Ministry. Next to giving

better support to scale-ups, another priority is to connect startups and scale-ups to societal challenges.


- Access to talent. A separate policy is developed to address exactly this issue. The program is

called ‘warm welcome to talent’ and consists of a range of measures, varying from acquisition

and branding of the Netherlands for skilled people to visa schemes better tailored to the need

of startups and scale-ups (Werkgroep Warm Welkom Talent, 2017). A serious problem in

attracting international talent is the tight and therefore expansive housing market in

Amsterdam. One of the specific policies that is highly rewarded by international talent is the

so called ‘30% facility’: employers can grant highly skilled migrants moving to the Netherlands

a tax free allowance equivalent to 30% of the gross salary subject to Dutch payroll tax

(Gemeente Amsterdam, 2018)

- Access to markets. The Netherlands scores relatively low on this criterion in the Startup

Genome ranking. The networks in both Sweden and the UK seem to be stronger

- Finance. Multiple new initiatives to improve the funding situation in the Netherlands have

been launched over the years. The most recent one is the setup of the national fund InvestNL.

This fund of 2.5bln euros aims to support startups and scale-ups. Despite the efforts in this

field, the Netherlands is not a top performer on this issue

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- Leadership skills

Governance

The National Foreign Investment Agency (NFIA) focuses on corporate support. The State Agency for

Entrepreneurship (RVO) supports entrepreneurs in general. Startup Delta focuses on tech startups. But

there seems to be an institutional gap for supporting scale-ups. However, there is willingness at all

these organisations to support them more. RVO and Startup Delta started an experiment to support

entrepreneurs directly using Whatsapp. These types of hands-on support from a national government

(although indirectly via governmental organisations RVO and Startup Delta) are rather unique. Startup

Delta wants to serve scale-ups better and even considered to change their name, as the current name

might put off scale-ups.

Programs

The Ministry invested in a dedicated mentoring program for companies with a revenue of 1 million+

euros, called NL Groeit. It is accessible for both startups and SMEs, but in practice is it mostly used by

traditional SMEs. They also co-funded a dedicated scale-up program, called Scale-Up Nation (see box

in section 6.2). On a local level there are other scale-up initiatives, like Startup City Alliance Europe

(SCALE). It is initiated by Startup Amsterdam and aims to create a connected European city-to-city

startup ecosystem. Lastly, the Ministry co-funds Ideas for Europe, an event that collects ideas that

have the potential to scale and by doing so solve global challenges.

In a recent study it was revealed that 90% of the entrepreneurs in the Netherlands do not have the

ambition to grow (Ministerie van Economische Zaken & Klimaat, 2017). The contrast with Sweden (70%

has the ambition to grow) is remarkable. A possible explanation can be that in the Netherlands many

workers have to register themselves as entrepreneur (like general practitioners) although one can

question whether these independent workers without personnel are real entrepreneurs. But even if

this group is left out, the number is still very low.

There is no tradition of selecting high potential startups are scale-ups proactively. Only recently Startup

Delta organised a competition for startups and scale-ups who want to join the Dutch mission to

consumer electronics event CES in Las Vegas.

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6.2 Aggregated results other interviews the Netherlands Focus

Again, there is no clear definition of scale-ups in the Netherlands. Innovation hubs in the country

articulated their desire to let the Ministry decide on one. A perfect definition does not exist, but clarity

is needed to understand what the country is aiming for. Only then it will be possible for the innovation

hubs to contribute to that goal. The topic of scale-ups is high on the political agenda in the Netherlands.

Despite the fact there are no extensive scale-up policies in place yet, all interviewees were aware of

the importance and opportunities of this group.


- Access to talent

- Access to markets

- Finance. There are different views on whether funding is still an issue for Dutch startups and

scale-ups, but there is consensus that the situation in London and Stockholm is significantly

better

- Leadership skills

Programs

There should be a much stronger focus on companies that have the ambition and potential to grow.

The Dutch Chamber of Commerce started to experiment with predicting which companies will grow

fast by mining their data. The support delivered should be hands-on and on a peer-to-peer base. As

there is not much experience with supporting scale-ups yet, experiments have to be setup and

evaluated. That is the only way to build successful policies.

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ScaleUp Nation ScaleUp Nation was launched in 2017 by THNK School of Creative Leadership, McKinsey and New Venture, supported by the Dutch government. It aims to empower entrepreneurs through the transition from starting up to rapidly scaling their 3P (people, planet, profit) enterprises (ScaleUp Nation, 2018). Eligible for the program are enterprises that focus on innovation, are not older than 10 years, have international traction and first million euros in revenue. In the Netherlands there are approximately 300 companies annually that match these criteria. The scouting of these participants is a time-consuming task, as they are handpicked. The program consists of a kick-off of four times 1,5 day and a 3-year support program. It is a mixture of plenary sessions and individual sessions. The focus is on leadership coaching, organisation of internal processes and other activities to scale successfully. Most of the participating scale-ups are found by serial entrepreneurs. The desire of ScaleUp Nation is to cluster the participants based on their sector, but participants often resist that. As the program only started recently, it is too early to report on the results. One observation of the ScaleUp Nation organisation is that working in a scale-up is very different from working in a startup. It is extremely demanding. Ambition and the willingness to work a lot of hours is crucial to be successful as a scale-up. One can question whether this fits the desires of millennials. ScaleUp Nation is working on a publication on ScaleUp DNA. According to the preliminary results these factors are important to successfully scale: - Experienced entrepreneurs need to be in the founding team and/or board - Scale-ups are more likely to be founded by a team (two or more founders) - Perseverance: walk the talk, again and again - Pick attractive markets, often B2B markets - Create irresistible products - Focus on innovation - Original CEO should stay on board during the scaling process - Clear goals and operational KPIs - On-board the best talent

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7. Comparison UK, Sweden & NL

In this chapter the case studies are compared with each other. First, similarities between the countries

are presented. Second, the differences are described leading to a picture of countries operating at a

different speed.

7.1 Similarities A common finding is there is no consensus which scale-up definition to use. Most of the interviewees

are aware of the OECD definition, but criticise the value of it for policy making. Instead, they come up

with different definitions, leading to a very blurry picture. It is confusing when using the term scale-

up, some people think of a young, high potential, early stage, high-tech startup and other people of a

well-funded, experienced, international operating family trading company. In the next chapter, a

proposal for a definition of scale-ups for policy makers is presented.

Without any doubts, access to talent is the most pressing scale-up issue. Interviewees identified this

issue without any hesitation but surprisingly could not clearly formulate what is done to solve this

issue. Moreover, in the political arena proposals that will make this issue even worse are debated.

Brexit and demands for stricter migration rules are seen as a big threat to provide better access to

talent in all three countries. Access to markets is the second biggest scale-up issue in all countries. But

there are differences between the countries. The UK has a huge domestic market compared to the

Netherlands and Sweden. According to many, this results in a global mentality at ambitious business

owners in the latter countries.

In all countries there is little experience in proactively selecting high potential scale-ups. Future Fifty

and ScaleUp Nation are the most experienced actors in this field, but both use a rather traditional way

of selecting candidates. Experiments with data mining and using artificial intelligence for selection are

performed on a small scale but are believed to play a bigger role in future.

A last similarity is that all governments connect societal challenges to their policies. In defining these

challenges, a lot is expected of technology to solve them and a link to startups and scale-ups is often

made. However, in their own spending governments struggle with providing better chances for scale-

ups. In all countries interviewees criticised the lack of opportunities for scale-ups in procurement

procedures.

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7.2 Countries at different speed

The UK is clearly ahead of Sweden and the Netherlands regarding scale-up policies. From the Scottish

government to Nesta, all British organisations had a good understanding of the definition struggle and

the scale-up challenges ahead. They have been experimenting for years with different programs.

TechCity UK is responsible for running the most prominent scale up program Future Fifty and manages

to attract top scale-ups to participate. The consecutive programs they developed enables them to

observe a pipeline of promising startups and scale-ups. The peer-to-peer approach contributes to a

networked community. Their data driven reports contribute to a good insight in the development of

their entrepreneurial ecosystem. The label ‘scale up ecosystem’ that was introduced earlier clearly fits

the UK situation, in which London is the focus point.

In Sweden scale-up policies are a rather new phenomenon. Until now the focus has been on developing

a startup ecosystem. Most of the interviewees did not have a clear picture of what scale-ups are and

how they should be targeted. The word ‘scale-up’ is hardly used in Swedish policies, the focus is on

how to solve societal challenges by startups and on connecting startups to traditional SMEs. However,

at the agency for economic growth there is awareness that digitalisation and internationalisation are

priorities for economic growth. Compared to the UK, the private sector is less involved in developing

the entrepreneurial ecosystem.

In the Netherlands there is growing awareness at both governments and partners in the

entrepreneurial ecosystem to do more to support scale-ups. The startup ecosystem is improving

rapidly but is slightly behind Sweden and the UK, especially in terms of networks and funding. Private

actors in the Netherlands are not as actively involved as in the UK, but more than in Sweden. Both

Sweden and the Netherlands have great potential to grow more scale-ups, based on their thriving

startup ecosystem. They are past the embryonic ecosystem phase and are moving towards a scale-up

ecosystem. Like in the UK, capital cities Stockholm and Amsterdam are the central points of this

ecosystem. Sweden has more unicorns that serve as a role model, but Amsterdam is catching up.

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8. Conclusions & recommendations

In this chapter conclusions and recommendations are presented. First, a scale up definition for policy

makers is proposed. Second, a plea for both generic and dedicated scale-up support is stated. Third,

recommendations are summarised in four steps. Lastly, suggestions for further research are

presented.

8.1 Proposal for an ex ante scale-up definition The literature overview revealed scale-ups and high-growth firms are poorly defined. The interviews

showed in practice even more definitions exist. Governments tend to use their own definition, as a

consequence an international quantitative comparison is almost impossible. Governments tend to

move away from the OECD definition, because this ex post definition gives limited policy insights.

Instead they experiment with ex ante definitions in order to support high potential growth firms in an

early stage with scaling up. Based on this desire and the insights gained in this research, the following

definition of scale-ups for policy makers is proposed.

A scale-up is a company with a minimum of 10 employees, a validated business model, paying

customers, aiming for growth, in which technology plays an important role.

A minimum of 10 employees is similar to the OECD definition and makes sure the companies are past

the startup phase. A validated business model and paying customers means a problem-solution fit is

found and people are willing to pay for it. As long as customers are not willing to pay for the product,

the best problem-solution fit is not found yet. Stam & Bosma (2015) showed growth in the absence of

aspiration is extremely rare. Ambition to grow is key in becoming a scale-up. Lastly, most interviewees

agreed that technology will play an important role in scaling up businesses. This does not mean that

every scale-up is a high-tech firm, it simply means that it is unlikely that any firm will scale

internationally without using a form of technology, whether this is a certain algorithm or an online

platform.

Consequences of this definition

First, although some of the elements might sound rather obvious, this would be a highly selective

definition. When it would be applied to the 1 million companies in the Netherlands for example, only

roughly 10.000 of them would match this definition. This estimation is based on the insights the

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Chamber of Commerce and NL Groeit shared in the interviews. Second, as age of the company is not

included in this definition, a mixture of startups and SMEs would be present in this group. One might

expect mostly startups, but let’s take the Netherlands as an example again. Based on the insights

ScaleUp Nation and NL Groeit shared in the interviews, a division of 10% startups and 90% SMEs is

expected in this group of 10.000 companies. This figure once again demonstrates the confusion of the

term scale-up, as most people associate scale-ups with a startup reaching the next phase (and not a

SME reaching a next phase).

Limitations

The use of this definition has its limitations. First, it contains several subjective elements. What does it

mean to aim for growth? How can be determined if technology plays indeed an important role? One

can only develop an understanding of these elements by applying it to a group of businesses and

discussing it. Second, there will be high potential scale-ups excluded using this definition. But as shown

in the literature study, this will be the case with any definition.

Defining high potential growth firms is not an exercise one can execute by looking at databases only.

It requires an extensive discussion in which in-depth knowledge of these companies is needed. This

can only be done by combining knowledge of policy makers, investors, journalist and account

managers of regional development agencies, incubators and accelerators. All of them own pieces of

information. When these are put together a rich picture can arise. There are limitations to knowledge

sharing due to different interests of these actors, so this process should be designed carefully. A

possibility would be to organize an annual joint selection of the most promising scale-ups. Events like

this already exist, but often do not include all different actors as listed before.

In addition to this, artificial intelligence tools can support the process of selection. When more

databases are combined and experiments with algorithms to make a selection evolve, this process

could be automated partially and eventually even fully.

Include societal impact?

Governments can narrow this definition even further down by adding that companies should

contribute to societal impact. The UK, Sweden and The Netherlands stress in their economic policies

that in addition to economic growth a contribution to solving societal issues is needed. This adaptation

would make the definition even more subjective. But as governments in these countries recently

formulated economic policies where they added social elements, it should not be too difficult to

implement this. Cristian Seelos and Johanna Mair (2017) dedicated a book on how effective social

41

enterprises scale and innovate. Their insights are beneficial for both governments supporting high

potential social enterprises to scale and social enterprises with the ambition to scale.

From reactive to proactive support

The core idea of shifting focus from startups to scale-ups is to move from reactive to proactive business

support, in which fewer companies are targeted who have the ambition and the potential to grow. The

preciseness of the definition is not the key point. The importance lies in the fact that national

governments make a conscious decision on who they see as high potential firms and communicate this

clearly to their entrepreneurial ecosystem partners, so they know who to focus on. The execution of

this selection is not necessarily a task of the national government. Best practice Future Fifty showed

that a dedicated organisation that acts on behalf of the governments is perfectly able to execute this

task.

8.2 Generic and dedicated governmental support Governments mostly focus on startups when developing an entrepreneurial ecosystem as was

provocatively described by Shane (2009). This approach however makes sense from the perspective

Mason & Brown described. One cannot build a scale-up ecosystem without going through the

embryonic phase first. However, when moving from an embryonic ecosystem towards a scale-up

ecosystem it is possible to shift focus from startups to scale-ups. The goal of narrowing down as

described in the previous section is not to make a perfect analysis that is comparable with other

countries, but to get a deeper understanding of who are the high potential scale-ups, what their needs

are and what measures can be taken to stimulate their growth.

Generic support: access to talent & access to markets

The support scale-ups need differ from what startups need. As a company develops, the support needs

to be more specific. This does not mean generic support has no value for scale-ups. Access to talent is

identified as the most pressing scale-up issue. It is perfectly possible to develop generic policies

addressing this issue, like improving the availability of housing in popular hubs or distributing more

visa for international employees. Although countries realise access to talent is the most pressing scale-

up issue, they lack coherent policies to tackle this issue. National governments could work together to

attract or maintain talent from outside Europe. And sometimes countries will compete with each

other, like they currently do in attracting software developers. Similar coherent policies should be

developed for access to markets, as this is the second most pressing scale-up issue.

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National political developments can frustrate the development of these policies. As shown in the

interviews, people fear Brexit will have a negative influence on access to talent and access to markets.

The rise of populistic political parties will also have consequences for the availability of visa, while this

is an important instrument to improve access to talent. Therefore, efforts are needed to explain why

scale-ups are important, not only by policy makers but also by politicians. Dedication from trusted

politicians and annual reports on the economic impact can greatly contribute to ongoing support for

scale-up policies. Another possibility is the appointment of an entrepreneur in residence like the

Ministry of BEIS did. She or he can be very helpful to get the topic on the political agenda and to give

unorthodox advice on how to improve policies.

Dedicated scale-up support

In addition to generic measures, specific scale-up support is needed. How this support looks like is

beyond the scope of this research. The main point is that in order to give dedicated support, a proactive

selection of high potential scale-ups is needed first. Dedicated support for every company is

impracticable. Support can take place in programs like Future Fifty and ScaleUp Nation. The

governance models of these organisation differ. Future Fifty is executed by an organisation that is

mostly funded by the UK government. ScaleUp Nation is run by a private organisation and supported

by the Dutch government with a subsidy.

Key elements in the design of a scale up program are to include peer-to-peer support, to get inspiring

serial entrepreneurs on board and to offer direct access to governments. The latter is highly

appreciated by entrepreneurs, especially when there are clear links to government procurement,

which increases the chance to attract top entrepreneurs. In addition to these programs the

government can work with account managers to support high potential scale-ups at the right time with

the right support. Lastly, efforts should be made to stimulate entrepreneurial recycling (successful

cashed out entrepreneurs investing their time, money and expertise in supporting new

entrepreneurial activity) as this is an important feature of successful entrepreneurial ecosystems.

8.3 Summary: four steps Summarized, the following steps are proposed for national governments aiming for economic growth

by supporting high potential scale-ups:

1. Take the initiative to select high potential scale-ups by defining this group and putting actors

with market knowledge together

43

2. Develop coherent scale-up policies to support these companies focussing on access to talent

and access to markets

3. Experiment with dedicated scale-up support, varying from subsidising scale-up programs to

appointing account managers

4. Evaluate these efforts and fine-tune scale-up policies

8.4 Further research As the topic of scale-ups is relatively new, there are endless opportunities for further research. First, it

would be interesting to make a comparison between scale-up policies in Europe, the United States and

Israel. The latter is interesting because it was labelled as a Start-up Nation (Senor & Singer, 2009) and

they have the ambition to further develop towards a Scale-Up Nation. Second, the effectiveness of

scale-up programs like Future Fifty could be studied in depth. This research showed participants and

external parties evaluate the programs positively, but it would be interesting to have more quantitative

insights in the results. Based on that, improvements can be made and other countries willing to

support scale-ups can benefit from it. Third, more insight is needed in how to solve the most pressing

scale-up issues (access to talent and access to markets). Policy makers in the UK, Sweden & the

Netherlands struggle with these issues and are willing to join forces in Europe and develop joint policies

to tackle them. The development, implementation and results of these policies should be studied to

learn which policies are most effective in building scale-up ecosystems.

44

References

Achtenhagen, L., L. Naldi & L. Melin (2010). “Business Growth” – Do practitioners and scholars really talk about the same thing? Entrepreneurship Theory and Practice 34 (2), 289-316 Acs, Z. & D. Audretsch, (1993). Small Firms and Entrepreneurship: An East-West Perspective. Cambridge: Cambridge University Press Anyadike-Danes, M., M. Hart & J. Du (2015). Firm Dynamics and Job Creation in the United Kingdom: 1998–2013. International Small Business Journal 33 (1): 12–27 Audretsch, D.B. (2003). Entrepreneurship. A survey of the literature. Enterprise Papers 14 Birch, D. L. (1987). Job Creation in America: How Our Smallest Companies Put the Most People to Work. Free Press, New York Brown, R. & C. Mason (2017). Looking Inside the Spiky Bits: A Critical Review and Conceptualisation of Entrepreneurial Ecosystems. Small Business Economics 49: 11-30 Brown, R., S. Mawson & C. Mason (2017). Myth-Busting and Entrepreneurship Policy: The Case of High Growth Firms. Entrepreneurship & Regional Development Brown (2018). What Happens if the Rules Change? The Impact of Brexit on the Future Strategic Intentions of UK SMEs Cole, N. (2016). The Second-Largest Unicorn Breeding Ground in the World? Sweden. Retrieved from: https://www.inc.com/nicolas-cole/the-second-largest-unicorn-breeding-ground-in-the-world-sweden.html Duruflé, G., T. Hellmann & K. Wilson (2017). From Start-up to Scale-up: Examining Public Policies for the Financing of High-Growth Ventures. Bruegel. Working Papers. Issue 04 European Commission (2014). Policies to Support High Growth Innovative Enterprises. Final report from the session II of the 2014 ERAC Mutual Learning Seminar on Research and Innovation Policies – by Jana Kolar. European Union, Brussels European Commission (2017). Annual Report on European SMEs 2016/2017. Focus on self-employment. European Union, Brussels Feld, B. (2012). Startup Communities: Building an Entrepreneurial Ecosystem in Your City. Garnsey, E., E. Stam, & P. Heffernan (2006). New Firm Growth: Exploring Processes and Paths. Industry and Innovation 13: 1–20. Gemeente Amsterdam (2018). 30% tax ruling in Amsterdam. Retrieved from: https://www.iamsterdam.com/en/living/take-care-of-official-matters/highly-skilled-migrants/thirty-percent-ruling)

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GP. Bullhound (2017). European Unicorns 2016. Survival of the Fittest Isenberg, D. (2010). The Big Idea: How to Start an Entrepreneurial Revolution. Harvard Business Review Isenberg, D. (2012). Focus Entrepreneurship Policies on Scale-up, not Start-up. Harvard Business Review Loveman, G. & W. Sengenberger (1991). The Re-emergence of Small-Scale Production: An International Perspective. Small Business Economics, 3(1), 1-38 Lundstrom, A. & L. Stevenson (2001). Entrepreneurship Policy for the Future. Stockholm: Swedish Foundation for Small Business Research Mason, C. & R. Brown (2011). Creating Good Public Policy to Support High-Growth Firms. Small Business Economics, 40(2), 211–225 McHugh, J. (2017). Lagom: this Swedish Lifestyle Trend Will Help Balance your Life. Retrieved from: http://www.travelandleisure.com/trip-ideas/yoga-wellness/lagom-swedish-lifestyle Ministry of BEIS (2017). Industrial Strategy. Building a Britain for the Future Ministerie van Economische Zaken & Klimaat (2017). Staat van het MKB 2017. Nederlands Comité voor Ondernemerschap en Financiering. Den Haag MIT REAP (2014). Increasing Innovation-Driven Entrepreneurship in Scotland through Collective Impact. Nesta (2009). The Vital 6 per cent. How High-Growth Innovative Businesses Generate Prosperity and Jobs. London Nesta (2016). Digital Entrepreneurship. An ‘Idea Bank’ for Local Policymakers. London Nesta (2016). European Digital City Index. Retrieved from: https://digitalcityindex.eu/ OECD (2010). High-Growth Enterprises: What Governments Can Do to Make a Difference. OECD studies on SMEs and entrepreneurship, Organisation for Economic Cooperation and Development, Paris OECD (2013). An International Benchmarking Analysis of Public Programmes for High-Growth Firms. Organisation for Economic Cooperation and Development, Paris Scale-Up Institute (2014). The Scale-Up Report on UK Economic Growth. London Scale Up Institute (2017). Review 2017. Executive Overview. London Scale-up Manifesto (2016). A Manifesto for Change and Empowerment in the Digital Age. Lisbon Council, Nesta & Open Evidence ScaleUp Nation (2018). ScaleUp DNA. What Drives Scaling Success? A Preview of the ScaleUp Nation Findings. Retrieved from: http://scaleupnation.com/wp-content/uploads/2017/12/Scale-up-DNA-summary-report.pdf Seelos, C & J. Mair (2017). Innovation and Scaling for Impact. How Effective Social Enterprises Do It. Stanford, California

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Senor, D. & S. Singer (2009). Start-up Nation. The Story of Israel’s Economic Miracle Shane, S. (2009). Why Encouraging More People to Become Entrepreneurs is Bad Public Policy. Small Business Economics. August 2009, Volume 33, Issue 2, pp 141-149 Skog, A., M. Lewan, M. Karlström, S. Morgulis-Yakushev, Y. Lu & R. Teigland (2016). Chasing the Tale of the Unicorn – A Study of Sweden’s Misty Meadows. Stockholm School of Economics. Innovative Internet: Report 1 Stam, E. & N. Bosma (2015). Local Policies for High-Growth Firms. The Oxford Handbook of Local Competitiveness Stam, E. & B. Spigel (2016). Entrepreneurial Ecosystems. U.S.E. Discussion Paper Series nr. 16-13 Startup Amsterdam (2017). Employment in Amsterdam’s Tech Scene Startup Delta (2018). National Point of Entry. Retrieved from: https://www.startupdelta.org/national-point-entry/ Startup Europe Partnership (2014). Scale-ups. When Does a Startup Turn Into a Scale-up. Alberto Onetti. Retrieved from: http://startupeuropepartnership.eu/scaleups-when-does-a-startup-turn-into-a-scaleup/ Startup Genome (2017). Global Startup Ecosystem Report 2017 Swedish Agency for Economic and Regional Growth Tillväxtverket (2017). Presentation by Karin Rydén. Stockholm Werkgroep Warm Welkom Talent (2017). City Deal Warm Welkom Talent. The Hague

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APPENDIX

48

Appendix A: List of interviewees

Researchers

- Ross Brown – University of St Andrews, Scotland, UK - Daniel Isenberg – Harvard Kennedy School, USA - Colin Mason – University of Glasgow, Scotland, UK - Erik Stam – Universiteit Utrecht, The Netherlands

United Kingdom (UK)

- James Muldoon & Tom Craig – Scottish Government - Angelina Cannizzaro & Kevin Sharp – UK Ministry of Business, Energy & Industrial Strategy (BEIS) - Chris Haley – Nesta - Stephan Kuester – TechCity UK - Simon Devonshire – serial entrepreneur & scale-up entrepreneur in residence - Lieke Conijn – Embassy of the Netherlands in London

Sweden

- Tyler Crowley – founder STHLM Tech - Karin Rydén – Tillväxtverket, Swedish agency for economic and regional growth - Kjell Håkan Närfelt – Vinnova, Sweden’s innovation agency - Magnus Lundin – Swedish Incubators & Science Parks - Joseph Michael – Invest in Stockholm - Karin Tell – Almi, advisory services, loans & venture capital - Per Thulin – KTH Royal Institute of Technology - Carl Rosén & Marie Wall – Ministry of Enterprise - Wadi El-Achkar – Startup Stockholm - Wilco Schuttelaar – Embassy of the Netherlands in Stockholm

The Netherlands

- Constantijn van Oranje & Katja Berkhout – Startup Delta - Leon Klinkers – Brightlands - Leon Hoek – NL Groeit - Menno van Dijk – Scale Up Nation - Bas Beekman – Startup Amsterdam - Ministry of Economic Affairs & Climate Policy

o Paul Tops & Paul Heemskerk o Tess Rutgers o Rutger de Graaf & Nelleke Corbett o Sebastiaan van Lunteren o Team Ambitious Entrepreneurship: Joost Dieleman, Myrthe Hooijman, Robert-Jan

Brooijmans, Lucien Vijverberg Other

- Simon Devonshire – Endeavor Insight

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Appendix B: Interview protocol

Scale-up definition

- Tech versus non-tech - Speed versus sustainable growth - Data and monitoring - Startup vs Scale-up

Focus

- National versus regional - Generic versus sector specific - What would justify a sector specific focus? - Generic scale-up success factors - Main challenges of the ecosystem

Governance

- Role of the national government - Role of private parties and how to activate them - Role of other parties - How to sustain a long-term agenda in a political setting - Other governance issues

Ranking scale-up issues & possibilities to address these

- Access to talent - Access to markets - Leadership (skills) - Finance - Infrastructure - Other

Programs and best practices

- Scale-up programs - Policies and government behaviour

Final remarks

- Relevant insights or persons you would like to share - Issues we did not address

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Appendix C: Slides final presentation Ministry of Economic Affairs

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How do national governments support scale-up ecosystems? A comparison of the United Kingdom, Sweden & the Netherlands

Pieter Guldemond

Presentation results, February 1st 2018

IntroductionBackground• Executive Master of Public Administration (MPA) Candidate

@Hertie School of Governance, Berlin

• Former director tech incubator YES!Delft

Contact [email protected]

+31623032660

Programma & doel vandaagProgramma14.00 – 14.10 Welkom14.10 – 14.45 Presentatie onderzoek & feitelijke vragen14.45 – 15.30 Discussie & vervolg15.30 – 16.00 Uitloop

Doelen• Delen resultaten• Kansen en urgentie scale-up beleid bespreken• Discussiëren over volgende stap

Content• Demarcation• Why are scale-ups important?• Definitions• Methodology• Literature review• Country studies: United Kingdom, Sweden & The Netherlands• Recommendations

Demarcation

• What governments can do to build a scale-up ecosystem

• Qualitative insights in how UK, Sweden & NL deal with scale-ups based on 30 interviews

• Recommendations for the Dutch government how to define and how to improve the Dutch scale-up ecosystem

• Individual scale-up needs• Quantitative insights in scale-up policies• In-depth analysis of support programs and

national policies

What this study is about… What this study is NOT about…

Why are scale-ups important?Conclusion

First big scale-up study US (Birch, 1987)

UK study (NESTA, 2009)

NL study (Staat van het MKB, 2017)

4% of US companies are responsible for 70% of all new jobs

6% of UK businesses with the highest growth rates generated half of the new jobs created by existing businesses between 2002 and 2008

A small group of fast growing companies (2,5%) create a significant part of the new jobs

Scale-ups are an important driver for job creation

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DEFINITIONS

High-growth Firm (HGF) ≠ scale-up

A high-growth firm is an enterprise with average annual growth in employees or turnover greater than 20 per cent per annum* over a three year period**, and with more than 10 employees at the beginning of the period.

OECD definition

*Eurostat & CBS use a percentage of 10 per cent per annum for employee growth** A subset called ‘gazelles’ can be constructed by adding a maximum age of the company of 5 years

In 2014 The Scale-up report on UK economic growth (Sherry Coutu) was published, in which the definition of HGFs was used to define scale-ups. It is confusing that although the terms ‘HGF’ and ‘scale-up’ are different, they are used interchangeably

HGF definition focuses on companies that meet specific growth metrics and can only be identified ex post

Scale-up is a broader term with multiple definitions

HGF ≠ scale-upHGF definition

Was every scale-up a startup before? Decision needed: what is a scale-up?

As there is no clear definition of what a scale-up is, the Ministry should make a decision on the definition they want to use:• Only (former) startups or include traditional SMEs?• Only innovative tech companies or all companies?• Only companies that have a growth ambition or all companies?• Companies that can scale from 10 to 100 or from 100 to 1000

employees?

Considerations Proposal

My proposal presented after country studies in recommendation #1

METHODOLOGY Interviews with four leading HGF researchers

Literature review

Recommen-dations

InterviewsRound 1

Selection of countries

Interviews round 2

Selection of relevant HGF literature as preparation for the interviews

Selection of top performing European countries to compare to NL

Exploratory interviews in these countries with 26 people based on an interview protocol

12 recommendations for improving the Dutch scale-up ecosystem

Methodology

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Interviews with four leading HGF researchers

Literature review

Recommen-dations

InterviewsRound 1


Interviews round 2





Why encouraging people to become entrepreneurs is bad policy (Shane, 2009)‘Policy makers should stop subsidizing the formation of the typical start-up and focus on the subset of businesses with growth potential.’

On entrepreneurial ecosystems (Brown & Mason, 2017)Embryonic ecosystem Scale-up ecosystem

Dominant actors Limited number of startups High numbers of growth-oriented startups

Levels of entrepreneurial orientation

Low. Startups focus on early and/or premature exits High. Strong growth focus on generating new blockbuster firms

Availability of funding Good sources of seed and early stage funding, often publicly funded through co-investment schemes

Full range of funding sources across the entire funding escalator. Nearly all privately funded

Fluidity and diversity of ecosystem actors

Low level of ‘transnational entrepreneur Large number of entrepreneurs are non-native, immigration of ’transnational entrepreneurs’ is high

Nature of entrepreneurial recycling

Small number of major exits Large number of blockbuster exits. Large number of high net worth individuals who become angels

Importance and focus of public policy

Strong role for policy, typically focuses on increasing resources and new-technology based firms

Limited role for policy, many initiatives are industry-led and focus on building vertical network connectivity

Archetypical examples Scotland, Ireland, Finland, Portugal Silicon Valley, TechCity London, Berlin

Myths of HGFs (Brown, Mason & Mawson, 2017)

1. HGFs are all young and small• UK: 70% of HGFs are at least five years old (Nesta, 2009)

2. HGFs are predominantly high tech• UK: 15% of HGFs are operating in high-tech sector• But: majority is highly innovative, irrespective of their industrial sector ((O’Regan,

Ghobadian, and Gallear 2006; Segarra and Teruel 2014)3. Universities are a major source of HGFs

• But: they do play a key role in shaping the overall entrepreneurial ecosystem4. HGFs undertake steady linear growth and grow organically

à So: rather than supporting a large number of high potential scale-ups, choose for short periods of in-depth engagement with a small number of firms and focus on relational and peer-based support

Generic or selective business support?OECD (2010)As it is difficult to identify firms that will grow faster based on a list of common characteristics, an appropriate strategy would be to create the conditions for any firm to become high growth. But, programmes that specifically target firms with growth potential can be important, provided that they are not the only policy tool

NESTA (2009)Economic policy should focus on promoting innovation and on the small number of companies with high growth potential, rather than broadly based business support programmes for new start-ups and SMEs


Literature review

Recommen-dations

InterviewsRound 1


Interviews round 2





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Interviews four leading HGF researchers

Prof Colin Mason, University of Glasgow, ScotlandProf Ross Brown, University of St Andrews, ScotlandProf Daniel Isenberg, Harvard Kennedy School, Boston, USAProf Erik Stam, Universiteit Utrecht, The Netherlands


Literature review

Recommen-dations

InterviewsRound 1


Interviews round 2





Selection of three countriesDesire Ministry of Economic Affairs & Climate Policy: lessons for The Netherlands based on top performing European countries

Nesta Digital City Scale-up Index 2016

1. London

2. Stockholm

3. Paris

4. Helsinki

5. Amsterdam

6. Copenhagen

7. Berlin

8. Munich

9. Dublin

10. Vienna

Startup Genome ranking 2017 Share HGFs in Europe

European Commission, Annual report on European SMEs 2016/2017 & Eurostat

13.012.5

9.58.58.5

UK

EU28: 9

NL SwedenGermany France

% HGFs of total companies >10 employees

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Number of unicorns in Europe449

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31

OtherNL GermanyFrance Sweden EuropeUK

# of unicorns, 2016

• High scores in relevant rankings• High share of HGFs• High number of unicorns• Policy focus on scale-ups?

Geographic focus Rationale

Decision: compare NL with UK and Sweden


Literature review

Recommen-dations

InterviewsRound 1


Interviews round 2





Interview protocol: main topics• Focus• Scale-up issues• Governance• Programs• Selecting scale-ups

UK

List of interviewees UK• James Muldoon & Tom Craig, Scottish Government• Angelina Cannizzaro & Kevin Sharp, UK Ministry of Business, Energy & Industrial

Strategy (BEIS)• Chris Haley, Nesta• Stephan Kuester, TechCity UK• Simon Devonshire, serial entrepreneur & investor• Lieke Conijn, Embassy of the Netherlands in London

+ Rhett Morris, Endeavor Insight

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Ministry of Business, Energy & Industrial Strategy (BEIS) (1/2)

Focus• New: industrial policy (December 2017)

• Four grand challenges: growing artificial intelligence and data-driven economy, clean growth, the future of mobility, ageing society

• Investment of £725m in Industrial Strategy Challenge Fund & £2,5bn investment fund

• Invest in mathematics, digital and technical education to boost STEM skills• Existing: national network of Local Enterprise Partnerships (LEPs) & growth hubs with

local approaches

Ministry of Business, Energy & Industrial Strategy (BEIS) (2/2)

Program: Business Growth Service & Growth Accelerator • £200m program that was executed from 2012-2016• 18.000 business supported with potential to have 50% turnover growth in 3 years• Experienced people from private sector advised them• Helped founders to step back and think, most difficult job as an entrepreneur• Killed after 4 years despite good review (budget moved to local growth hubs)

Nesta – the innovation foundation (1/2)Focus• We want economic growth and productivity à tech & digitalization will bring us there,

so that is our focus

Governance• Difficulty of short term experiments versus long term policies• Private sector individuals are involved too because of the British honours system…

Programs• Are there enough similarities to learn together? • Are scale-ups not too busy to participate? If you can find a way to let founders step

back, that is wonderful. Team support needed to realise this• Better involve successful entrepreneurs and their network, just ask!

Nesta – the innovation foundation (2/2)Selecting scale-ups• Start with deciding who not to support: small business with no ambition or potential to

scale• Key question to answer is how to check the ambition of the entrepreneurs. Proxies

should be used:• Negative flags: e.g. owner’s name in company’s name• Positive flags: e.g. exporting

TechCity UK (1/2)Focus• Tech startups and scale-ups, with special focus on AI, fintech & robotics

Scale-up issues• Talent: we need a better entrepreneurial visa scheme• Internationalisation: make better use of trade missions and global network• Talent and internationalisation are key: Brexit is not helping• Regulation: we organise delivery panels in which scale-ups are involved in future talks

for a sector, e.g. fintech

TechCity UK (2/2)Governance• TechCity focuses on

• Advocacy: investment schemes, future regulations• Digital skills: online academy• Life cycle programs from early stage to series A+ funding

• April 2018 TechCity UK transforms into a national organisation: Tech Nation• Annual TechNation report: https://technation.techcityuk.com/

Programs• Two later stage programs

• Upscale: series A, 30% growth per month, scalable digital component, 2/3 years old

• Future Fifty (next slide): series B, 30% growth per year, £5mln+ revenue

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Best practice: Future Fifty (1/2)History• Launched in 2013 by UK government• Aimed at promoting 50 of the UK’s most rapidly growing digital tech companies

What?• Network of entrepreneurial companies for intensive levels of support and connections

to key sources of funding, entrepreneurial mentoring and government support• Introduction to institutional investors and guidance from professional services

companies, investors and veteran entrepreneurs on how to approach a public listing or undertake a big expansion

• A ‘concierge-style’ approach which connects firms with key resources within various government departments such as BEIS, UK Trade & Investment and Her Majesty’s Revenue and Customs

• Aimed at founders, but there are underlying workshops for e.g. CMOs too

Best practice: Future Fifty (2/2)Strengths• Peer to peer support• Active scouting and selection of participants• Learn from entrepreneurs who are just ahead of them• Connection to relevant government departments• Net Promotor Score 60-70

Simon Devonshire (1/2)Focus• Online and global should be the focus in order to scale, whether a company is high

tech or not does not matter• Scaling from 2 to 10 is as hard as from 10 to 200 and as hard as from 1000 to 2000

employees

Scale-up issues• Talent: top universities attract people from all over the world, we have to put more

efforts in keeping those people• Leadership skills: train people to have an entrepreneurial mindset, that is key

Governance• Government should not hesitate to intervene, entrepreneurs want and need positive

interventions

Simon Devonshire (2/2)Programs• No consistency in growth programs from UK growth hubs• Governments should organize more competitions for their societal challenges and

connect procurement to these solutions. So in future we will have hopefully more MedTech than AdWords

Selecting scale-ups• Simply ask scale-ups: do you have the ambition to grow?• On top of that: apply machine learning to identify potential growth. Basic algorithms to

do this analysis are present and will develop further soon

Ranking scale-up issues UK• Access to talent

• Fear that Brexit will influence this negatively• Living costs in London are a serious problem

• Leadership skills• Access to markets• Finance• Other

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Endeavor Insight (1/2)Focus• Scale-ups create jobs that disappear, they are needed for growth• Focus on companies with the ambition to grow from 10 to 100 and on companies with

100+ employees and an ambition to grow, as they have similar needs and challenges• Use networks to discover cluster strengths. You won’t find scale-ups that are not

connected in a community

Scale-up issues• Talent needed: specific functions (e.g. developers) and middle & upper management• Leadership: founders have difficulties making tough decisions on team composition

due to loyalty, this can hamper growth

Endeavor Insight (2/2)Programs • Develop a program for a group of companies that addresses their common needs• Scale-ups attract scale-ups• UK, Sweden & NL are first movers on formulating scale-up policies

Selecting scale-ups• Ambition to grow = key question• Don’t choose a sector as a policy maker. Entrepreneurs do ‘economic research’ for

you: they will guide you to where the action is

Key insights from the UK interviews (1/2)Focus• Although there is no clear definition used, scale-ups are high on the political agenda.

There is a scale-up taskforce and a minister is appointed as ‘scale-up champion’• Different vision on target group exist: focus on tech & digitalisation (TechCity and

Nesta, both mostly public funded) vs. generic approach (Scale-up Institute, private sector, not for profit company)

• Ministry is focusing on societal challenges with growth & tech potential

Scale-up issues: talent is most pressing• Interviewees emphasize more efforts are needed to maintain top talent from

universities• Fear for consequences Brexit, especially for attracting talent• Visa schemes are important to attract talent (e.g. exceptional talent visa, judged by

TechCity UK)

Key insights from the UK interviews (2/2)Governance• Ministry has many interactions with private sector, amongst others by inviting

experienced people from the field to spend time at the ministry and advice them• Influential persons from private sector are challenged to contribute to societal goals• TechCity UK is a large, powerful and well funded organisation with a clear

communication strategy • Nesta executes very relevant research on a variety of entrepreneurship topics

Programs• Inspiring later stage programs executed by TechCity UK

Selecting scale-ups• Upscale and FutureFifty invest in identifying high potential scale-ups• Ambition is a crucial factor in determining the potential of a scale-up

SWEDEN

List of interviewees Sweden• Tyler Crowley – founder STHLM Tech• Karin Rydén – Tillväxtverket, Swedish agency for economic and regional growth• Kjell Håkan Närfelt – Vinnova, Sweden’s innovation agency• Magnus Lundin – Swedish Incubators & Science Parks• Joseph Michael – Invest in Stockholm• Karin Tell – Almi, advisory services, loans & venture capital• Per Thulin – KTH Royal Institute of Technology• Carl Rosén & Marie Wall – Ministry of Enterprise• Wadi El-Achkar – Startup Stockholm• Wilco Schuttelaar – Embassy of the Netherlands in Stockholm

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Why is Stockholm the ‘unicorn capital of the world’? (1/2)• Direct promotion by the government of the use of computers and the internet through

a variety of measures (e.g, subsidies to buy PCs in the 90’s)• Highly developed technical infrastructure that enabled early adoption of IT• Highly connected formal and informal social networks among entrepreneurs, business

people, politicians and university researchers• Strong engineering background à focus on problem-solving through informal

networks• Social safety net that reduces the risks faced by entrepreneurs• Higher education is free, students have time to devote to entrepreneurial endeavors

Stockholm School of Economics (2016). Chasing the tale of the unicorn – A study of Sweden’s misty meadows

Why is Stockholm the ‘unicorn capital of the world’? (2/2)• Well-developed startup ecosystem (incubators, startup loans, investors, state

agencies, etc.)• Pay it forward culture: serial entrepreneurs sharing their expertise and reinvesting in

new firms• A few actors can provide the necessary resources such as capital, experience and

know-how within a startup network• Imported media à good English language skills and American sensibility• Strong international connections and global approach due to the size-limitations of the

Swedish domestic market

Stockholm School of Economics (2016). Chasing the tale of the unicorn – A study of Sweden’s misty meadows

Ministry of Enterprise (1/2)Focus• Shift focus towards growing companies in Sweden, they should not be bought too

early by American companies• Traditional SMEs should get infused by tech & innovation startups• Five innovation partnership programs to meet societal challenges: next generations

transport, smart cities, circular and bio-based economy, life sciences, a connected industry and new materials

• Sustainability challenges need huge amount of funding. We need more deep tech companies to address these challenges. We want to close the investment gap for these companies but have to take state aid regulations into account

Scale-up issues• Access to talent

Ministry of Enterprise (2/2)Governance• We have to formulate a joint EU agenda on these topics and address them at the

innovation council

Programs• Digilift - Tillväxverket (focus: traditional SMEs, see next slide)• Peer to peer groups - Almi (focus: fast growing companies)• Going Global - Business Sweden (focus: potential scale ups)

Selection• No need to select and support high potential scale-ups, they will make it themselves

Surprising fact: Swedish SME willingness to grow

§ 7 out of 10 want to grow

§ Declining willingness to grow among the smallest companies

Share of companies wanting to grow

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Ranking scale-up issues Sweden• Access to talent• Access to markets• Leadership skills• Finance• Other

Key insights Sweden (1/2)Focus• Startup ecosystem is well developed, especially the funding possibilities• No clear policy focus now on producing high number of unicorns• Scale-ups are not intensely discussed and defined yet, but focus is shifting towards

supporting scale-ups• Priorities Tillväxverket 2018 fit a scale-up agenda: digitalisation & internationalisation

Scale up issues: talent is most pressing• Handing out more startup visa for foreign talent is needed, but is a political sensitive

topic• Availability and costs of housing is a serious problem in Stockholm

Key insights Sweden (2/2)Governance• Dominant position of public actors in the startup ecosystem• Not easy to prioritise Stockholm over other geographical regions Sweden in policies• High level of cooperation between players in the startup ecosystem: ‘lagom’

Programs• Digilift focuses on traditional SMEs, there is no selective scale-up program

Selection• Selective programs do not seem to fit well in the Swedish culture• Willingness to grow is very high amongst SMEs

NL

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List of interviewees NL• Constantijn van Oranje – Startup Delta• Leon Klinkers – Brightlands• Leon Hoek – NL Groeit• Menno van Dijk – Scale Up Nation• Bas Beekman – Startup Amsterdam• Ministry of Economic Affairs & Climate Policy

• Paul Tops & Paul Heemskerk• Tess Rutgers• Rutger de Graaf & Nelleke Corbett• Sebastiaan van Lunteren• Team Ambitious Entrepreneurship: Joost Dieleman, Myrthe Hooijman, Robert-Jan

Brooijmans, Lucien Vijverberg

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Ministry of Economic Affairs & Climate Policy (1/3)Focus• No clear scale-up definition• Successful development of startup ecosystem, climbing in the rankings• Startup Delta 3.0 will be more data driven and opportunity driven, focusing on hands-on

support for startups• Innovation policies need to be better connected to societal challenges

Scale-up issues• Access to talent

• Program ‘warm welcome talent’ with recommendations for improving position NL• Housing market Amsterdam is a problem • 30%-facility is important regulation

• Access to markets: low score in Genome ranking, not as networked as Sweden & UK• Funding: new investment fund InvestNL is launched. Despite improvements NL is not a

top performer in the European rankings

Ministry of Economic Affairs & Climate Policy (2/3)Governance• NFIA focuses on corporates, RVO is national entry point for international startups.

There seems to be a gap for companies in between • Direct WhatsApp contact via Startup Delta portal is unique• Top sectors do not specifically focus on startups & scale-ups, but are interested to

accommodate them more

Programs• NL Groeit: mentoring program for companies with €1mln+ revenue (SMEs & startups)• Ideas from Europe: working together to scale ideas that can solve global challenges• Startup City Alliance Europe (SCALE): creating a connected European city-to-city

startup ecosystem (lead: Startup Amsterdam)• Scale-up Nation: young (max 10 years), innovative scale-ups with € 1mln+ revenue

and international traction

Ministry of Economic Affairs & Climate Policy (3/3)Selection• 90% of SMEs do not have the ambition to grow (Staat van het MKB, 2016)• No proactive selection of startups/scale ups (but for CES Las Vegas selection and

training took place)• Challenge Dutch startups to move from tech push to pull

Aggregated results interviews (1/2)Focus• No clear definition of scale-ups. Guidance of the ministry is needed• More attention for deep tech is needed

Scale-up issues• Different views on whether funding is still an issue for Dutch startups and scale-ups,

but there is consensus that the situation in London and Stockholm is better

Governance• Big differences between regions à more support for ambitious regions is desired

Aggregated results interviews (2/2)Selecting scale-ups• Focus on companies that have the ambition and potential to grow only• Hands-on and peer to peer support is needed• Experiment & validate policies, starting tomorrow• Chamber of Commerce experiment to predict which company will grow fast (e.g. .com

extension)

Ranking scale-up issues NL• Access to talent• Access to markets• Finance • Leadership skills• Other

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UK, SWEDEN & NL

Common insights interviews UK, Sweden & NL• No clear definition of scale-ups• Access to talent is the most pressing scale-up issue• Despite the urgency of access to talent, this issue is not high on the political agenda• Little experience with proactively selecting high potential scale-ups• National governments connect societal challenges to their economic policies


Literature review

Recommen-dations

InterviewsRound 1


Interviews round 2





Conclusion: UK is slightly ahead…• UK has for years actively been working on supporting scale-ups• Sweden only recently started to address them, but has a well funded startup

ecosystem and unicorn role models to build on

…but if we act now, we can become a Scale-up NationWhy The Netherlands?

• Many of the circumstances explaining why Sweden has many unicorns are present here too

• There is a solid startup ecosystem with plenty of high potential scale-ups

• Amsterdam is an asset in attracting international talent. Although housing is a problem, the situation is not as bad as in Stockholm and London (and not as good as in Berlin)

• National government is willing and able to invest in scale-ups and experiment with scale-up policies?

• External experts (like Endeavor) confirm the strong opportunities for The Netherlands as a leading Scale-Up Nation in Europe

Why now?

• UK and Sweden are slightly ahead, more entrepreneurial ecosystems are on the rise

• Both startups and SMEs can become scale-ups, which can lead to great economic impact and address societal issues at the same time à fits the political vision of the new government?

What does it take?

à To become a leading Scale-up Nation a shift is needed from generic startup support to dedicated scale-up support, starting today

How to become a Scale-up Nation?

I Support a selective group of scale-ups – - – -– Directie entrepreneurship

§ Decide which scale-ups to focus on and communicate this internally and externally

§ Identify proactively ambitious, high-potential scale-ups

§ Dedicate account managers for this identification and support

§ Recognize the value of these high-potential scale-ups by labelling them and/or offer a program

§ Use these selected scale-ups to zoom in on their needs and test policies

§ Develop a plan to make better use of entrepreneurial recycling

II Develop generic policies for potential scale-ups – Multiple ministries§ Develop a joint plan on talent in which actors on a national, regional and

local level join forces§ Continue the implementation of generic policies to stimulate growth§ Invest in stimulating ambition of high-potential SMEs who do not have

ambition to grow

III Be inspired by Europe and inspire Europe – European collaboration, Directie Entrepreneurship in the lead§ Work on a European scale-up agenda in cooperation with UK and

Sweden§ Make use of the knowledge and network activated by this study§ TechCity UK / TechNation can serve as an inspirational model for the

organisation of the Dutch ecosystem

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I Support a selective group of scale-ups

#1 Decide which scale-ups to focus on and communicate this internally and externally

Multiple definitions are used interchangeably, leading to a blurry picture

Choose and communicate a clear definition (see next slide)

Discuss this definition with Startup Delta, the hubs, NL Groeit, etc. and take a collective decision on which definition to use

WHY

WHAT

HOW

Proposal for a scale-up definition

A scale-up is a company with a minimum of 10 employees, a validated business model,paying customers, aiming for growth, in which technology plays an important role

Role of technology can be discussed• If job creation is the only goal of the ministry, this part could be dropped

• If stimulating innovation and/or contributing to societal challenges are goals of the

ministry, this part should not be dropped à UK & Sweden explicitly connect

achievement of societal goals as rationale for growth & technology policies

Consequences of this definition• Highly selective (NL: max 10.000 out of 1mln companies)

• Expected mix of startups (~10%) and traditional SMEs (~90%)

• Age of company does not matter

à Make sure this is not seen exclusively as a startup (delta) topic

#2 Identify proactively ambitious, high-potential scale-ups

If companies are not ambitious, it is very unlikely they will become a scale-up

Develop a mechanism to identify ambitious, high-potential scale-ups

There is a huge amount of knowledge on Dutch businesses at different organisations. Venture capitalists, startup journalists, accelerators, regional development corporations and organisations like ScaleUpNation have a good overview of young and innovative high potential scale-ups. RVO, KvK and programs like NL Groeit should be able to add more traditional SMEs with the potential to scale. On top of that, experiments can be setup to identify high-potential scale-ups by using algorithms and machine learning

WHY

WHAT

HOW

#3 Dedicate account managers for this identification and support

Growth happens non-linear and interventions should be timely, but also time limited. Therefore support should be tailored

This could be achieved with account managers, in regular and close contact with companies and able to identify needs (Mason & Brown, 2013)

Train account managers, preferably with an entrepreneurial background. In addition to this an ‘entrepreneur in residence’ could be appointed at the ministry (like Simon Devonshire in the UK) to spend time at the ministry and advise on how to implement this successfully

WHY

WHAT

HOW

#4 Recognize the value of these high-potential scale-ups by labelling them and/or offer a program

Recognition for being a high-potential scale-up in itself can help to conquer the world and contribute to growth

Develop a Future Fifty-like program in close cooperation with existing parties like NL Groeit and ScaleUpNation

§ Focus on peer to peer support§ Seduce high potential scale-ups with direct access to government and valuable

knowledge on procurement§ Get inspiring serial entrepreneurs on board

WHY

WHAT

HOW

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#5 Use these selected scale-ups to zoom in on their needs and test policies

This group can function as a test group to experiment with policies. Their main issues are known, but to support them effectively more knowledge and customisation is needed

Identify their needs, track their progress and test what type of support works best

Set up policy experiments and/or studies in cooperation with experts (see also recommendation 11)

WHY

WHAT

HOW

WHY

WHAT

HOW

#6 Develop a plan to make better use of entrepreneurial recycling

The principle of entrepreneurial recycling (successful cashed out entrepreneurs investing their time, money and expertise in supporting new entrepreneurial activity) is an important feature of entrepreneurial ecosystems (Mason & Brown, 2014)

Select successful entrepreneurs who are not active in the Dutch entrepreneurial ecosystem yet and track down why they are not

Make use of the hubs in identifying and targeting them

II Develop generic policies for potential scale-ups

#7 Develop a joint plan on talent in which actors on a national, regional and local level join forces

Access to talent is the most pressing scale-up issue

Efforts on all levels are needed, varying from operational local issues (housing in Amsterdam) to strategic national issues (visa)

Ministry of Economic Affairs & Climate Policy and Startup Delta can take the lead to build a coalition and action plan

WHY

WHAT

HOW

#8 Continue the implementation of generic policies to stimulate growth

National policies on taxes, labour market, education and capital market are of great influence on the entrepreneurial ecosystem

As these topics concern several ministries, interdepartmental cooperation is a necessity

The ScaleUpEurope Manifesto and the views of amongst others Erik Stam provide valuable insights in promising measures that are needed to stimulate growth (VAT simplification, radical tax benefits, etc). These ideas should be prioritised and translated into policies.

WHY

WHAT

HOW

#9 Invest in stimulating ambition of high-potential SMEs who do not have ambition to grow

90% of the SMEs do not have the ambition to grow. Within this group there should be SMEs who do have the potential to scale, using technology

Get better insights in the causes of this problem

Do research and perform policy experiments to change this situation

WHY

WHAT

HOW

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III Be inspired by Europe and inspire Europe

#10 Work on a European scale-up agenda in cooperation with UK and Sweden

National governments in UK and Sweden are willing to join forces to build a better scale-up ecosystem. Working closely together should result in European support for this mission, the exchange of best practices and in strengthening the national ecosystems by connecting them. Option: add France.

Set up a European working group on scale-ups, where other ambitious European countries can join

Take the lead in bringing key persons of these countries together and start as soon as possible to experiment.

WHY

WHAT

HOW

#11 Make use of the knowledge and network activated by this study

Worldwide experts on scale-ups are triggered and interested to contribute to the ambition of the ministry

Involve a selection of the interviewees in executing these recommendations

• Researchers Brown, Mason, Isenberg and Stam are motivated to cooperate with the ministry in researching and advising on the execution of the scale-up ambition

• Endeavour (Rhett Morris), Nesta (Chris Haley) & TechCity UK (Stephan Kuester) are experts on this topic and willing to share their expertise

• Simon Devonshire is willing to share his experiences as entrepreneur in residence• Tillväxtverket is already linked to the Ministry concerning Digilift

WHY

WHAT

HOW

#12 TechCity UK / TechNation can serve as an inspirational model for the organisation of the Dutch ecosystem

TechCity UK is a strong, well funded, hands-on organisation running a full range of inspiring programs and is very effective in communicating their results. They have an annual budget of approximately £4mln and 45+ people in London only

Invest in combining forces and allocating budget to a strong organisation based on the TechCity UK model

Interact with TechCity UK, especially now they are moving towards a national organisation. Learn from their best practices and publications, like their annual Tech Nation report (https://technation.techcityuk.com/)

WHY

WHAT

HOW

Summary• Scale-ups are a major source of job growth• NL has good chances to become a leading Scale-up Nation, but only if we act now• A shift is needed from generic startup support to dedicated scale-up support• Make use of the political momentum to get support for a dedicated scale-up plan that

targets high-potential, ambitious firms (whether they have a startup or SME background is irrelevant)

• Invest in combining forces and allocating budget to this mission• Take the lead in Europe together with the UK and Sweden

BIG THANK YOU!

Documents

EMPA Master Thesis Pieter Guldemond · develop startup ecosystems the past decades. There is an ongoing competition between countries to become Europe’s leading startup hub. Startup