Today is World Entrepreneurs Day – a timely moment to reflect on the vital role entrepreneurialism plays in driving the country’s growth. Entrepreneurs are the ones who take the leap, build businesses from the ground up, and create the opportunities that allow investors like us to do what we love: backing brilliant companies.
Yet, at a macro level, the UK’s entrepreneurial landscape is facing real challenges. Last year saw a record low in new business creation, while business closures continued at pace. Given that early-stage business formation is the lifeblood of the entire investment ecosystem and those being founded today could be the ECI portfolio stars of tomorrow, we all have a keen interest in the UK reigniting its entrepreneurial spirit.
1. Expand access to capital
UK pension funds currently allocate only 4.4% of their assets to UK equities, which is approximately 30% lower than most markets, except for Canada, Denmark, and the Netherlands, according to New Financial. Reallocating even a small fraction of the UK’s £3 trillion pension assets into venture and growth funds could inject tens of billions into British startups. This is a key objective of the Mansion House Reforms with the Accord announced in May stating that half of pension funds’ defined contribution to private markets should be into UK companies. However, it is important to note that this initiative is voluntary and not legally binding.
To further support entrepreneurs, the UK could bridge the gap between startups and scale-ups by introducing investment incentives for later-stage businesses. Expanding seed investment incentives like SEIS/EIS to support later growth stages could help more entrepreneurs navigate the challenging growth phase and achieve success.
2. Skills and talent
Many founders we speak to trace their entrepreneurial spark back to their upbringing – often inspired by a family member or someone they knew who ran a small business. Yet, few recall entrepreneurship being encouraged, or even mentioned, as part of their formal education. Embedding it more visibly in the curriculum could help shift perceptions – making entrepreneurship feel both positive and accessible. Just as importantly, it would promote valuable skills such as teamwork, problem-solving, resilience, and financial literacy – traits that benefit any career path.
This shift could also help broaden the diversity of the UK’s entrepreneurial landscape. For example, women currently account for just 18% of new company founders in the UK. That points to a vast pool of untapped entrepreneurial potential – and with it, untapped economic growth. Targeted support programmes for female and minority entrepreneurs could help unlock this potential. At the same time, attracting global talent remains vital. Expanding initiatives like the Global Talent Visa to welcome more entrepreneurs, scientists, and engineers could help more innovators put down roots in the UK.
3. Support innovation
The UK has long been a leader in commercialising research, but its performance has declined compared to a decade ago. One contributing factor is that UK universities typically take around a 16% equity stake in spinouts – more than double the average in the US and EU. This higher stake can deter founders and investors alike.
More universities could also benefit from fostering industry and start-up ecosystems similar to Cambridge’s Silicon Fen, where close collaboration between academia and enterprise drives innovation. This is especially critical in fast-moving fields like AI, where connecting researchers with industry partners is essential to accelerate development and deployment. For example, ECI partnered with Manchester Business School to explore new models to support its proprietary AI platform, Amplifind™.
The UK’s ambition to raise R&D investment to 2.4% of GDP reflects a recognition that every pound invested in research can yield significant returns in the form of new products, businesses, and economic growth.
4. Streamline policies
Entrepreneurs should not feel constrained by red tape, complex incentives, or burdensome taxes. A stable and supportive tax and regulatory environment is essential to reward those willing to take risks. However, current fiscal trends suggest that contributions are more likely to rise than fall. For instance, recent changes to Business Asset Disposal Relief (formerly Entrepreneurs’ Relief) have resulted in higher tax rates.
Some have suggested introducing a ‘rollover relief’, allowing an entrepreneur who sells one venture to reinvest the proceeds into a new start up without an immediate tax hit. This would create a flywheel where success breeds more startups.
Regulation should also be streamlined and proportionate and take into account the cumulative cost of compliance for businesses. Exempting early-stage businesses from the most onerous requirements could help them focus on growth and innovation during their most vulnerable phase.
5. Create the right culture
The UK has much to be proud of when it comes to innovation – but the celebration of entrepreneurial success often feels muted. Unlike in the US, where hustle is admired and being a CEO is seen as aspirational, the UK can sometimes take a more sceptical view. Success is met with caution, and ambition is too often seen as exhausting rather than inspiring.
To shift this narrative, we need to do more to spotlight the vital role entrepreneurs and business owners play in building a thriving economy. Sharing their journeys – both the wins and the setbacks – can help normalise risk-taking and make entrepreneurship feel more attainable. At ECI, we’ve had the privilege of backing businesses that have scaled impressively, such as MiQ and Wireless Logic. The stories of their founders, Gurman Hundal and Oliver Tucker, offer powerful examples of what’s possible and serve as inspiration for future CEOs to envision their own business becoming European unicorns. If we want more people to start businesses, we must collectively work to provide the inspiration and visibility that makes them believe they can.
