Wales has a strong pipeline of scale-up businesses with the potential to become much larger companies, according to Giles Thorley, chief executive of the Development Bank of Wales.
Writing in an opinion piece, Thorley said that across Wales, business owners are taking ideas, building teams around them and creating successful companies that generate jobs and economic wealth, and that Wales needs more of these.
He noted that starting a business is extremely difficult and keeping one going is harder still, but there comes a point when the challenge changes again: when they need to decide whether to keep growing or be content with what they have.
Scaling Requires New Skills and Mindset
Thorley said scaling a company into a substantial medium-sized business requires a different skillset and mentality to the entrepreneurial drive that got it started. The management team may need to change, new markets and customers must be found, and governance becomes more important. Systems that worked for 20 employees may struggle with 100.
This matters because Wales needs more businesses to successfully make that leap. The Welsh Government has said it wants to increase the number of medium-sized businesses in Wales, and Adam Price, Cabinet Minister for Enterprise, Connectivity and Energy, has set an ambition for Wales to develop 500 high-growth firms over the next decade.
Thorley said the precise numbers matter less than the underlying ambition, and that Wales needs to create an environment in which more ambitious businesses can start here, scale here and, crucially, stay here.
Identifying Barriers to Growth
The most recent Wales ScaleUp Index identified 1,200 scale-up businesses and a further 610 in the scaling pipeline. Together they generated £19.6bn in turnover and employed more than 121,000 people.
Research among Welsh scale-up leaders identified access to finance, markets and talent as the three biggest barriers to further growth. Thorley said there isn't one solution when it comes to scaling a business, and the challenges can be multifaceted and complex.
For one company, the missing ingredient might be capital to invest in new machinery or technology. Another might have the finance but lack the leadership experience needed for its next stage. For others, the constraint could be finding skilled people, entering an export market, strengthening the board or improving productivity.
New Pilot to Support Scaling Businesses
This thinking has partly led to the launch of Sbardun, a new pilot being delivered by the Development Bank of Wales and Welsh Government. Over 24 months, an initial cohort of 20 existing development bank customers with significant growth potential will receive coordinated support, combining access to active capital with exposure to experienced business leaders, leadership development, specialist expertise, networks and peer learning.
Thorley said starting with 20 businesses offers a real focus for the initiative, to test the approach, understand what works and what does not, and learn how to become better at identifying and removing the individual barriers preventing ambitious Welsh businesses from scaling up.
He also highlighted events such as ScaleUp Britain coming to Cardiff this month, which the Development Bank supported, with programme manager Leanne Davies joining business leaders and advisers to discuss practical challenges involved in scaling.
Thorley said a successful scale-up doesn't simply create a larger company, it can create skilled jobs and opportunities for people to build careers without leaving their communities. It can mean more spend with local supply chains, more investment in innovation, more exports into new markets, while also developing the next generation of managers and entrepreneurs.
He said if a Welsh company has reached £3m, £5m or £10m of turnover, the question should be what is stopping it getting to £10m, £20m, £50m or beyond. Sometimes the answer will be finance, sometimes it won't. The job is to recognise the difference and have the appropriate support available.
Thorley concluded that Wales already has ambitious businesses with the potential to become much larger companies, and if the conditions can be created in which more of them have the confidence, capital and capability to take that next step, Wales will build a stronger base of Welsh-owned and Welsh-headquartered businesses capable of generating jobs, increasing productivity and creating wealth that remains in Wales for the long-term.
