Trading places: entrepreneurs and international markets

As ways of doing business evolve, the UK’s entrepreneurial creativity and innovation continue to be in international demand, according to a report by Barclays and Beauhurst. Katherine Morgan shares why high-growth British companies are looking to Europe and North America as they search for new markets, talent and investment.

Despite the challenges created by the pandemic, more people are considering entrepreneurship than ever before. According to The Interdepartmental Business Register, the first quarter of 2021 saw 137,000 new businesses recorded – the highest figure since 2017, when the records began. “There is an attractiveness to being able to take an idea to market which seems a lot more possible with new technologies available,” says Katherine Morgan, Barclays’ Head of High Growth and Entrepreneurs.

Startups are crucial to the UK’s financial landscape: “Innovation as a whole drives economic growth,” explains Morgan. “It drives more disruption in the marketplace and, while the ecosystem shifts to new ways of doing business, the innovation that we're seeing is yielding new employment as we go.”

So how can budding entrepreneurs make the most of opportunities and resources in the UK and beyond? For founders, investment funding is increasingly inbound from overseas, with £19bn of capital raised by high-growth companies in international deals in the last three years. At the same time, 55% of companies are looking to hire employees from Europe, 35% are looking to the US, and 26% to Asia.

Barclays, in collaboration with Beauhurst, a database of the UK’s high-growth companies, explore this in a new report, Trading Places: Global Opportunities For UK Entrepreneurship. Combining Beauhurst data with a survey of 112 executives at high-growth British businesses, the research shows the importance of international markets.

“While people still look to the UK for a lot of their investment and recruitment,” Morgan explains, “international markets continue to be critical in attracting new founders into the UK ecosystem, in attracting investment, and as new places where entrepreneurs want to take their products and propositions. There are a lot of flowing ideas, concepts and assets around the globe.”

Around 17% of the country’s high-growth companies are founded by non-UK citizens, over half of whom are from the EU – and the country’s ecosystem, regulatory framework and access to markets bridging Europe and North America are often motivators for founders choosing to operate in the UK, Morgan says. “The UK is still seen as a very interesting space for creativity and innovation, with a number of startups beginning their journey in the UK, and then growing to scale securing record levels of inward investment.”

She adds that the UK is also considered a great place to both bank, and seek domestic and international investment: “The ability to list on the London Stock Exchange, the expertise that you can find from other like-minded innovative businesses that you can bounce your ideas off – these things really appeal,” she says. 

From the kitchen table to the stock market

Investments – as well as marketplaces – are increasingly international. The Trading Places report points to an increase in the US-inspired trend for IPOs, including listings of UK firms on international exchanges. US acquirers also account for 40% of the top 20 acquisitions with a known valuation over the last 10 years.

Technology and tech-enabled companies feature heavily in the enterprises attracting inbound investment, and the US is seen as an attractive option by the nearly four in five businesses that want to break into that market. “This is interesting not only as a growth opportunity for the business in question, but also to help them raise future funding because they’ll be more visible in international markets,” says Morgan.

In this climate, timely support for businesses is important, she adds. “One of things we do for high growth and entrepreneurial companies is help hook them into wider ecosystems and give them support while they’re looking for investments. And we’ll put that support around them early, which enables them to grow.”

She explains that Barclays looks at growth sectors – from fintech to agritech to life sciences – and how companies can benefit from shared experiences. “We try to support businesses by putting those in a similar field together, offering specific mentorship that matches their sector. And businesses on the same trajectories can learn from each other and from specific mentors.”

Crucially, Barclays can tailor support to any stage of a business’s development. “We’re able to deal with kitchen table entrepreneurs all the way up to businesses listing on the stock market, offering the right services at the right time all the way through the journey. We've got great international connections and specialist support available at the right time. Our network of coworking spaces, Eagle Labs, offers a lot of support on that funding journey and our Corporate Bank means that as you grow, we can make sure that we are putting the right solution in front of companies – from importing and payments to risk management to investment bank services.”

Finding opportunities the world over

The increasing value of grants provided by Innovate UK – a government body that works with companies to support innovation – has seen the significance of EU grant money diminish, the report suggests. While the 997 equity deals over the last decade involving EU-headquartered investors totals a “not insignificant” £10.1bn, there have been 1,240 transactions and £20.4bn worth of equity investment emanating from deals involving US investors.

To achieve that value – and access the markets and the talent that lead to growth – entrepreneurial companies need to continue to think internationally, concludes Morgan: “The high-growth companies that underpin the data in this report are exemplars of how to take advantage of opportunities in a dynamic environment, whether the opportunities are in the Asia-Pacific, North America or a little closer to home.”