Andy Fishburn is a Managing Director at Virgin Start-up, Virgin’s non-profit incubator.
Today is a better working day. A day when campaigners call on the government to recognize the Better Business Act.
Virgin Start-up’s Andy Fishburn is calling on the government to amend the Companies Act
It is a campaign that aims to change business for good by ensuring that every company, large or small, aligns the interests of their shareholders with those of wider society and the environment.
Last year, 774,420 new businesses registered in the UK, a 3.5 per cent increase from 2021.
The entrepreneurial spirit in Britain is alive and well and many would argue that the UK is still one of the best places in the world to start a business.
But the broader landscape of skyrocketing costs of living, broad levels of inequality and the climate crisis make it a tough environment for new business founders and are issues that require urgent action.
The problem solvers
Startups can play a vital role in finding solutions to some of these big problems.
With the right support to innovate and invest from the start, there is huge potential for these founders to make a difference, both collectively and in scaling sustainably.
After all, the small businesses of today are the big businesses of tomorrow.
Over the past decade, Virgin Start-up, as a delivery partner of the Start Up Loans Company, has supported tens of thousands of early-stage founders and provided access to over £70 million to help launch more than 5,000 new founders.
In that time we have seen an encouraging increase in the number of targeted companies.
Organizations such as Change Please, a social enterprise that uses coffee as a means to support homeless people by providing them with training and employment; Dash Water that reduces food waste by turning unwanted fruit into fruit-infused water; OddBox, which ‘rescues’ fruits and vegetables that would otherwise be thrown away and delivers them directly to customers’ homes, or UpCircle, which takes discarded ingredients and upcycles them into a range of sustainable skin care products.
From humble beginnings – and with the backing of a seed loan – these incredible companies are now having a very positive impact on a large scale.
Many investors are still driven by the need to generate quick returns, prioritizing rapid short-term gains over long-term sustainable growth.
There are many benefits to establishing and running a responsible, purpose-driven business.
Research shows that mission-driven companies are more confident about their future growth and have a higher level of innovation.
About 43 percent of B Corp SMEs have applied for or received R&D tax credits in the past three years, compared to 6 percent of the broader SMB population.
They have also been more successful in obtaining equity financing: 70 percent of B Corps seeking equity financing secured the full amount required, compared to 56 percent of the broader SMB population.
However, a recent survey by the British Business Bank also found that 85% of UK SME intermediaries believe current economic conditions are preventing SMEs from becoming more environmentally sustainable.
So how do we make goal-oriented approach the rule rather than the exception, and what is currently holding back founders?
Updating the mindset of investors
In our experience, while there is a lot of buzz about purposeful companies and social impact, the reality is that many investors are still driven by the need to generate returns quickly, prioritizing short-term quick wins over long-term gains. , Sustainable Growth.
Without incentives from the investor community, startups are encouraged to operate with the same short-term goals, profit only, making it more challenging to manage and scale a successful startup that is purposeful.
The willingness of companies to go against the grain and act as a force for good is there. But to get these founders through the early hurdles of corporate ownership and then leverage it at scale, we also need a change in the law to ensure that all businesses, large and small, create long-term value.
As the law shifts, this would in turn force a change in investor mindsets.
The Better Business Act is calling for change
The Better Business Act is a campaign supported by nearly 2,000 companies that seeks to amend Section 172 of the Companies Act to fundamentally change the way businesses are run so that every business aligns the interests of people and the planet with profit .
At Virgin Start-up, we have been supporting the campaign since 2021 as we believe it is a critical step in unlocking the potential of the targeted UK start-up market by providing them with a strong foundation to thrive in the long term.
We’re excited to see how much the coalition of supporting companies has grown in that time, and we look forward to welcoming more, larger companies.
It’s a tough world out there for new business founders, but as someone who speaks to passionate new business founders on a daily basis, I also see a bright future ahead.
Now more than ever we need to support Britain’s determined entrepreneurs and nurture their ideas for radical change.
Only then will we have a vibrant start-up landscape supporting the innovative, solutions-driven companies we need to solve the UK’s biggest problems.
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