Scotland's National Strategy for Economic Transformation

2. Entrepreneurial People and Culture

Entrepreneurs and an entrepreneurial mindset are vital at a time of change. It is people who make the difference. We will create a culture in which entrepreneurship is encouraged, supported and celebrated, and where Scotland is recognised as one of the best countries in the world to start and grow business.

2.1 Our Aim

To establish Scotland as a world-class entrepreneurial nation founded on a culture that encourages, promotes and celebrates entrepreneurial activity in every sector of our economy.

2.2 The Opportunity

Entrepreneurs and an entrepreneurial mindset are vital at a time of change. It is people who make the difference. It takes ingenuity, creativity and determination to spot and take advantage of the opportunities that uncertainty creates.

High growth start-ups and scale-ups can create skilled jobs, pay higher wages, drive increased productivity and radiate innovation across the wider economy. Entrepreneurial thinking in the public and third sectors can improve services, increase efficiency and result in the commissioning of new products and services that can then be exported across the world or help to address societal challenges. This requires us to create a culture in which entrepreneurship is encouraged, supported and celebrated, and where Scotland is recognised as one of the best countries in the world to start and grow a business.

Perhaps more than any other domain of the economy, it is in the creation of new companies, and the scaling up of successful companies, where data shows the greatest gap between current performance and Scotland's potential.

Scotland has had a number of high-profile scale-ups such as Skyscanner, FreeAgent, Rockstar North and, most recently, Current Health. Nevertheless, Scotland currently lags most OECD countries in indicators of entrepreneurial dynamism, with a total rate of early-stage Entrepreneurial Activity (TEA) of 7.3% in 2019, compared with 10.5% in England, and 12.4% in Ireland. Scotland would need another 60,000 businesses to match the equivalent rate for England. Scotland like other countries also suffers from a gender gap with regards to business start-up rates with the TEA for women, at 5.3%, consistently below that of men, which was 9.3% in 2020. The TEA for ethnic minorities, at 12.3%, is significantly higher than that of the general population, showing the value of diversity to the Scottish economy.

Our approach is therefore threefold. First, we will seek to dramatically increase the total number of new businesses created in Scotland – of all sizes and across all sectors. Second, we will seek to achieve a step change in the percentage of Scottish start-ups and existing mid-sized businesses that grow to scale. Third, we will seek to build entrepreneurial mindsets right across the economy – in start-ups, scale-ups, SMEs, large corporates and government.

2.3 The Foundations of Success

Scotland already has many of the essential ingredients of a successful entrepreneurial nation – world-class colleges and universities producing exceptional people and cutting edge research, an active investment market and respected initiatives and organisations such as CivTech, Converge Challenge, Scottish Edge, Young Enterprise Scotland and Scotland CAN DO. We also have a business start-up rate amongst 18-24 years olds double that of the population as a whole.

We have also already begun to take action to drive increased entrepreneurship by recognising the ethical and economic imperative of tapping into a more diverse talent pool to drive the creation and growth of new businesses through, for example, the commitment of £50 million over the lifetime of this Parliament to support more women into entrepreneurship.

Scotland has taken the first steps towards the creation of a network of tech-scalers, as recommended in the Scottish Technologies Ecosystem Report.^[6] These tech-scalers will form a national network of institutions dedicated to the intensive schooling of tech entrepreneurs in the best available leadership, commercial and scaling techniques and will, for the first time, provide our best tech start-ups with a truly world-class developmental environment (see Box B for definitions).

These programmes are positive foundations. We will now go further by working to embed an entrepreneurial culture and by engaging more people in entrepreneurship right across society, particularly those groups where there is real potential, including women, ethnic minority communities, and young people. We will foster entrepreneurship from an early age, recognising that today's young people are our entrepreneurs of the future.

We will seek to build entrepreneurial mindsets across all enterprises and organisations, including in the public sector. In doing so we must overcome current social and economic barriers to starting a business and make entrepreneurship an attractive and accessible road to social mobility and economic fairness.

It is important to be clear that our focus on boosting entrepreneurial activity is not about a false stereotype of creating a small number of successful individuals; it is much broader. Entrepreneurship across the wider business base can drive social mobility, create fulfilling jobs and deliver the economic prosperity necessary to sustain thriving local, and rural communities and positively disrupt traditional sectors that might ordinarily be considered as less productive. In particular alternative business models such as cooperatives, social enterprises and community-owned businesses can deliver strong outcomes on fair work and benefits to local communities.

Box B: Definitions of Scalers, Incubators and Accelerators

Term / Definition

Tech-scaler

World-class incubation and developmental environments for high-growth internet economy start-ups. Tech-scalers will provide a mix of commercial education, physical co-location, peer learning, networking and the capacity for full virtual access to high-growth businesses all over Scotland.

Start-up scaler

An extension of the tech-scaler concept. Over time, the focus of the tech-scaler network will be shifted from software-based start-ups to all high-growth start-ups, irrespective of sector.

Pre-scaler

Highly supportive entry pathways into starting and scaling new businesses. Pre-scalers will provide new environments in local communities where prospective entrepreneurs and very early stage businesses can receive first-rate support and advice to develop products, access funding and adopt sound commercial strategies. They will be closely linked to the start-up scalers and will have access to the support services provided by them.

Incubator

Incubators provide start-ups and early stage businesses with resources young companies find difficult to access. They are generally medium to large in size, with long-term time horizons, offering co-location working facilities, and enabling market square activities and networking opportunities. Generally, incubators do not provide business education.

Accelerator

Accelerators support start-ups and early stage businesses through short-term mentoring and training. They are typically small in size, and offer co-location working spaces, market square activities and businesses education. The tenure for start-ups admitted to accelerators typically ranges from a few weeks to a few months.

2.4 Our Programme of Action

Project 1: Embed First Rate Entrepreneurial Learning Across the Education and Skills Systems

Who / We will

Government, Public Sector, Business and Partners

Promote the best available project-based entrepreneurial learning across the school and post-16 education curricula. Build a new partnership between business and our education system, offering every school, college and university a network of relationships with high-quality start-ups and entrepreneurs providing inspirational role models and mentors who can show young people what can be achieved and develop a culture that celebrates entrepreneurship. This will focus initially on schools in areas of multiple deprivation.

Government, Public Sector, Business and Partners

Embed entrepreneurship in the Young Person's Guarantee to cultivate the business leaders of tomorrow by exposing them to first-rate start-up techniques and experiences and presenting business start-up as an aspirational, realistic and deeply fulfilling career choice.

Government and Public Sector

Adapt and review Scotland's apprenticeship system so that it is available for start-ups and early scale-ups to use, focusing in particular on providing opportunities for women and other under-represented groups and on specific skills, such as digital.

Government and Public Sector

Develop an entrepreneurial campus infrastructure, working with the college and university sector to establish campuses as hotbeds of start-up creation. This will include, for example, incubation spaces, seed funding, central banks of technical expertise to help budding entrepreneurs develop minimum viable products. and summer schools targeted at generating new business ideas.

Business and Partners

Develop innovative, industry-led pathways to redirect the best entrepreneurial talent into building new companies. This could, for example, include working with industry to create corporate venture studios – programmes focused on building new start-ups from the innovation needs of large corporate industries such as financial services, aerospace and telecoms.

Project 2: Create a World Class Entrepreneurial Infrastructure of Institutions and Programmes Providing a High Intensity Pathway for High Growth Companies

Who / We will

Government and Public Sector

Expand the scope of the current tech-scaler programme, shifting its focus over time from software-based technology businesses to become "start-up scalers" – world-class incubation and developmental environments for all high growth start-ups irrespective of their sectoral domain or ownership model.

Government and Public Sector

Create a national system of "pre-scaler hubs" that will stimulate the very earliest stages of high growth commercial and social entrepreneurship and provide the expanding scaler network with a steady supply of promising new businesses. This will widen access to entrepreneurship by providing a clear entry point for very early stage founders, including those leaving formal education, supporting them to conceive new ideas, start companies, design and develop products and support early tests of market traction.

Business and Partners

Develop and align private sector incubators within our national entrepreneurial infrastructure and leverage external networks to identify potential talent and build Scotland's international reputation as a start-up nation.

Government and Public Sector

Attract the world's best private sector accelerators to Scotland and support high potential Scottish start-ups to participate in relevant accelerator programmes elsewhere in the world and bring their learning, contacts and experiences back into the Scottish economy.

Business and Partners

Set targets and focus on providing access to support programmes from amongst the most under-represented groups, particularly women, those on low incomes and those without qualifications at further or higher education, including the six priority groups at greatest risk of child poverty. This would include the offer of financial support for those who are unable to afford time out from a full-time job or caring responsibilities to develop ideas. An early priority will be to deliver our commitment to review how we support more women into entrepreneurship.

Government and Public Sector

Appoint a Chief Entrepreneurship Officer in the Scottish Government to work in partnership with industry and investors to drive forward our ambitions on entrepreneurship, including support for businesses with alternative ownership models, and working across the wider skills system.

Project 3: Attract and Retain the Very Best Entrepreneurial Talent from at Home and Abroad

Who / We will

Government, Public Sector, Business and Partners

Attract international entrepreneurs to Scotland by rolling out an international marketing and engagement platform for Scotland's start up scene with a coherent branding strategy and through engaging in initiatives such as Wayra and expanding the CivTech Alliance Programme.

Government, Public Sector, Business and Partners

Attract entrepreneurial students from around the world by supporting Scotland's universities to provide post education pathways that help retain their expertise in our country.

Government, Public Sector, Business and Partners

Enhance Scotland's profile at key international set pieces such as international conferences and make use of Scotland's strong international networks and diaspora that can help can attract talent and investment.

Business and Partners

Build strategic partnerships with key entrepreneurial ecosystems in other countries to create company exchange programmes, new commercial partnerships and international trade opportunities for Scottish businesses.

Project 4: Build an Entrepreneurial Mindset in Every Sector of our Economy

Who / We will

Government, Public Sector, Business and Partners

Expand the application of entrepreneurial thinking and approaches to public service reform and ensure staff at every level working in the public and third sectors are exposed to entrepreneurial training as part of ongoing professional development. Implement metrics to reward entrepreneurial approaches and activity within public sector bodies.

Government and Public Sector

Make the use of the CivTech programme a mandatory part of the way in which the big change programmes of government are delivered and launch a new National Challenge Competition for Economic Transformation (see Box C) that brings innovators and communities together to develop better solutions to the challenges that matter most to people in Scotland.

Government and Public Sector

Build on the success of CivTech, leveraging public procurement to stimulate more business start-ups and support Scottish scale-ups delivering products and services that can be proven in Scotland and exported to other governments wrestling with similar challenges.

Government and Public Sector

Proactively promote business start-up opportunities to those at risk of redundancy through the Partnership Action for Continuing Employment (PACE) programme.

Box C: National Challenge Competition on Economic Transformation

We want to encourage pioneers and entrepreneurs to help reshape the Scottish economy. To do this, our new National Challenge Competition for Economic Transformation will further the strategy's principles and complement the mission-led work of the Scottish National Investment Bank.

This competition will provide funding of up to £50 million to the project or projects with greatest potential to transform Scotland's economy. It will set challenges and seek to attract the widest possible range of ideas and expertise.

The challenges will reflect the fairer and greener economy issues that matter most to Scottish communities and provide the greatest potential in delivering our vision of a wellbeing economy. Successful projects will be cross-cutting, impactful, and boost the delivery of this strategy's programmes of action.

We will work with CivTech and its international partners, social innovators and the new Chief Entrepreneurship Officer to deliver this National Challenge Competition. Everybody in Scotland will be welcome to apply and offer solutions and we will take steps to ensure that we address potential barriers to participation.