Review of the SE High-Growth Start-Up Unit: final report

The High-Growth Start-Up Unit was established as an integral part of Scottish Enterprise (SE) in 2002 with the aim of supporting the creation and development of new businesses which would grow at a significant rate. The review aimed to establish the economic impact achieved by the businesses supported by the Unit over the last five years and assess the contribution that the Unit’s activities make to the achievement of SE’s goals under Smart, Successful Scotland.

The review drew on three main sources of information: details on supported businesses collected by the Unit itself; consultations with staff in SE and partner organisations in public and private sectors; and a survey of assisted businesses. The survey consisted of interviews with 25 companies, which represents a sample of 36 per cent of the total companies the Unit worked with. The review also drew on a parallel piece of research which aimed to establish valuations of a small sample of the businesses.

The Unit has supported 74 businesses and 52 are currently trading. It has increased the rate of formation of high growth start-ups by 13% per annum, which could rise to 28% by 2010. The positive ratio of net GVA to total public sector costs so far is 2:1, and the ratio by 2010 could be between 16:1 and 32:1. There is no evidence that the private sector would provide the support that these businesses have received either in a financial or a developmental sense. The review concludes that the Unit is held in very high regard among its clients, the private sector professionals it works with, and colleagues within SE. It has addressed market failure and has made a contribution to the achievement of the aims of Smart Successful Scotland. There is much in the Unit’s capacity to engage with the private sector and to present an entrepreneurial face to its clients which deserves wider application. The value for money of the Unit, taking account of the other public sector costs, has been reasonable so far and will be very good by 2010. Overall the conclusion is that the Unit has been very effective indeed.

The review recommends that the Unit should continue in existence, as a national resource, for at least three more years. It suggests that stronger links should be developed with higher education institutions to maintain the flow of spinouts coming to the Unit from this source. There should be a strategy for longer-term support to some companies and clearer principles relating to ‘handover’ of businesses from the Unit’s services to others. Lessons from how the Unit is able to engage the private sector in working with businesses, as well as the entrepreneurial approach which it has developed, should be considered for the rest of the SE Network.