Evidence to impact – a scaleup success story

The breadth of work carried out by the North East LEP’s Business Growth team over the last decade has been exceptional. From the creation of the North East Growth Hub through to engagement with our Business Board and partners, we’ve made huge strides towards levelling up by increasing the business start-up rate, business productivity, and the number of companies scaling up. While hard to choose, it’s our scaleup achievements that stand out most to me in terms of overall impact. By Colin Bell, Business Growth Director

Roll back the clock to 2016 and here at the North East LEP we were underway with a refresh of the Strategic Economic Plan (SEP). This needed updating to reflect a changed economic environment and renewed focus on our target of 100,000 more and better jobs by 2024. 

Most of our European funding had been committed so our Business Growth mission was to figure out how to get the biggest bang for our buck in terms of making a difference. As ever, we started with the data.

At the time, wider UK evidence pointed to scaleup businesses having a disproportionate impact on productivity and job creation. Unfortunately, analysis showed that the number of scaleup businesses in the North East was lower than most other regions.

It made our work very clear. The goal had to be to increase scaleup business density by 50%, which would bring an estimated £260m GDP and create around 6000 further jobs in the region. Supporting a fairly small number of companies would deliver a big impact.

Research into the region’s scaleups to understand their journey over a three-year period was eye opening. We discovered that just a handful had scaled to £3m. The majority reached around £1m and then stopped. Also, only a few of these fast growing businesses were in the sectors of strategic importance identified within the SEP, which meant our intervention would have to be sector agnostic. 

Our target became companies with scaleup potential, moving as many as possible from £1m to £3m, working with partners who had experience to do this. Part funded by European and Local Growth funding, RTC North was appointed as our delivery partner for Scaleup North East, who we worked with to recruit a team of Scaleup Partners all of whom had experience of scaling their own businesses. 

We secured investment from Government and expanded the team to deliver a mentoring programme designed to connect those with Scaleup Potential with business owners who has broken the next phase of growth. These people weren’t previously in place within the business ecosystem so it took a lot of work to identify them and recruit them. 

Next, we developed a Scaleup Leaders Academy with the Entrepreneurs’ Forum, primarily to tap into its membership base of directors with the potential to build a scaleup business. 

Getting the narrative around scaleup and explaining what a scalable business model looked like was crucial. We encouraged awards organisers to introduce a scale up award bringing the concept into the mainstream. 

A breakthrough moment came when the Scaleup Institute ran a course educating those in regional economic development about the importance of scaleup businesses to the economy. 

All of a sudden there was a movement within the North East, with partners creating a more aligned provision and the introduction of events such as the North East Scaleup Summit. The thinking and the research carried out led to the development and launch of our High Potential Startup accelerator programme, creating a pipeline of the future.

Today’s evidence shows that this activity enabled the North East to really turn a corner. We are now one of the regions with a growing scaleup base whereas we have in the past been either stagnant or declining. The North East’s progress has been recognised nationally by the Scaleup Institute highlighting the region as a national exemplar.  

The North East Growth Hub has also had a significant impact, starting with business turnover. Companies interacting with the Growth Hub have seen an average increase of £378k (22%) after a year, compared with £81k (6%) for those without support.

In terms of productivity, businesses have reported an average increase of £8.8k per employee 12 months after receiving support, compared with £0.3k for non-supported businesses. 

As responsibility moves across to the new North East Combined Authority, this legacy feels good. It opens the door to a new ambition for the future: to scale up the scale up activity. Watch this space.