Everyone wants to be supportive of new companies and a tax-incentive scheme is a good way to encourage investment. This insight is perhaps something that policy-makers might want to consider. “It’s produced many more successful start-ups because many more started, but it’s a 98% (failure rate) of a bigger number.”
“It hasn’t to my knowledge yet produced more successful start-ups per pound employed,” he says. “It was destined to work, because the UK (has always been) a country with a lot of innovation potential but not much risk capital.” EIS marks 25 years since launch this year.īut more importantly, perhaps, he says that the EIS scheme was always going to produce more start-ups – and hence more successes – but it would do nothing about the failure rate.Ĭertainly, there is more money available – helping some companies that “really have legs” – and what the money really does is simply create more start-ups. It also gives him a great perspective on the whole EIS scene which, he says, “was always destined to do two things,” and it’s not what the government might have thought. The EIS scheme was always going to produce more start-ups – and hence more successes – but it would do nothing about the failure rate In this new venture, Bailye says he is again an “outsider looking in” with all the freedom that gives, when necessary, to “call a baby ugly”. That report suggested that fewer than one in ten start-up businesses reached a fourth-round of investment compared to a figure of more than twice that for the US. The fund picks up on a theme that runs through the UK government’s recent Patient Capital Review which identified the building up of large-scale businesses as an area where the UK could do more.
He has launched the Side by Side Partnership’s new SBS Later Stage Enterprise Investment Scheme (EIS) fund designed to identify companies at the aforementioned transformational stage, providing not just investment but also “high touch” support and advice. There is a “background of expectation” around how a company will grow and this has particular resonance with his new venture where Bailye’s attention is now turned to the UK. But it’s very much easier in the States, as an entrepreneur it’s in the air.” In the States, as an entrepreneur, it’s in the air “In my view it’s not because the US is smarter or because there’s more capital,” he says. Pointing to the difficult process of companies transitioning from the start-up and scale-up phase through to large-scale revenue commercialisation, he says that in the US 75% fail at this stage whereas in the UK that figure stands at 98%. He set up in New Jersey – “that’s where the US pharma industry is” – and ended up forming the New Jersey Technology Council which now numbers over 1,500 entrepreneurs as members. One person who should know is John Bailye, a naturally driven Australian entrepreneur who shifted himself and his family to the US in the mid-1980s in order to launch what would become a billion-dollar Nasdaq-listed pharma supplier Dendrite International. Is it that there are greater levels of venture capital support? Is there simply more money available? Does it come down a greater tolerance for risk and less fear of failure?
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