FT 1000 – the view from British business

| Beauhurst

The annual FT 1000 has just been released. This list features Europe’s fastest-growing companies, measured by the increase in their turnover during the 2013 – 2016 accounting periods. As the paper notes, this period has seen the continent enter a period of sustained prosperity following the 2008 recession. 

How has Britain shaped up? Since last year’s list was published, the UK’s position has slipped from a neck and neck jostle with Germany for the top place (with 235 companies on the list vs Germany’s 236) to third place, with just 157 companies on the list. (Germany now has 266, whilst France has 197). Both of these countries have strengthened their position on the list, at the UK’s expense.

With that being said, London has retained its position as a corporate hub. With 74 of Europe’s fastest-growing growing companies it is home to more than any other European city. Paris is the runner up, with 62, followed by Milan with 24. It’s also worth noting that the company which topped this year’s list (and by a 10-fold margin) has its HQ in London: Deliveroo.

2017 Companies 2018 Companies

However, the UK’s capital has seen its position weaken slightly, down from 78 featured companies in the previous list. Paris, meanwhile, is on the rise, lowering the gap with London from 33 in last year’s list to just 12 this year.

The FT believes London’s status as Europe’s high-growth capital is threatened by Brexit, though it’s probably too soon to tell from just two accounting periods. It will be fascinating to see whether this trend continues. As Brexit proceeds, it could well be that Britain’s most ambitious businesses see their growth plateau.

This list also reveals the London-centric skew of the UK economy. 46% of 2017’s companies are based in London, up from 33% the year before. The next closest domestic competitors are Watford (on the tube line), Birmingham and Manchester, with just three apiece. Oxford and Cambridge have four between them. Whilst disappointing, this is roughly in line with Beauhurst’s analysis of investment in 2017, which saw London take an increasingly unequal share of Britain’s equity investment.

Interestingly, of the 157 British companies featured on the list, 54 (34%) raised equity since 2011 to help achieve growth. 30 of those were based in London. In this regard, we are able to assess some of the effects of London’s economic hegemony. Of the £2.2 billion of funding raised by these 54 companies, £1.8b has gone to London-headquartered firms. The rest, just £400m, has been shared between the regions. What’s more, of that sum, £112m went to firms with HQs in the South-East, highlighting the feedback loop of the North-South divide.

A large proportion (11%) of the UK’s 157 companies had been accelerated by Future Fifty, the late-stage tech accelerator established by David Cameron and George Osborne in 2010. Three more have been accelerated by ELITE, which gears private companies up to start trading on the London Stock Exchange.

This is unsurprising, considering these accelerators only cater to the elite of Britain’s high-growth ecosystem. Of more interest are the incubators which nurtured these startups before they were successful. Touchnote, the app which lets you send customised postcards, was accelerated by Growth Builder in 2016. GoCardless meanwhile, which has raised over £30m in equity, went through Oxygen Accelerator’s 13-week mentor-led bootcamp during seed stage. 

Transferwise, Britain’s leading fintech unicorn, benefited from early access to Seedcamp’s network of European advisors, entrepreneurs and founders. Interestingly Seedcamp, which invested in Transferwise at seed stage, owned around 2% of the company’s equity in early 2017. This corresponds to about £23m in paper value. What’s more, they recently sold a small part of their stake in Transferwise, which reportedly saw 80% of its second fund returned to investors. Seedcamp, so to speak, are in the money.  

We know that fast-growing businesses need significant funding to fuel their growth. It’s interesting to see, therefore, that 12 of the 20 fastest-growing companies on this list have used equity funding to help them expand in the last seven years. It will be interesting to see how the UK’s equity funding landscape develops over the coming years in terms of both appetite to risk and availability of cash for these sorts of businesses. Perhaps the Government’s Industrial Strategy and, more prudently, the Patient Capital Review, will play a significant part in further improving the landscape.