Most recently, the Chancellor announced brand new initiatives in his Autumn Statement, which aim to better connect UK finance to high-innovation, high-potential UK businesses, and support university research spinning out into commercial companies.

There are thousands of could-be startup founders who, at this very moment, are developing exciting products to bring to market, many of which could genuinely change lives. And many others who have already embarked on their startup journey.

But the conversion of world-class innovation into new, world-class companies, has been a long standing issue in the UK. While measures to encourage innovation are much welcomed, they barely scratch the surface of fully supporting early stage startups. The UK does not have the same abundance of startups or unicorns as other countries, particularly the US, and it’s clear that the UK government needs to look to these countries in order to do better for ours. The UK’s startups need more support at an early stage or innovations that have the potential to hugely benefit society simply might never make it out of the lab.

Early stage challenges

On the journey from starting a business to receiving sustainable income, startups and their founders will inevitably face many challenges. And while each individual business will face its own unique hardships, there are common themes that tend to emerge.

The first is access to capital. It can be extremely difficult for founders to find funding when their business is in its nascent stage as VCs typically see early stage businesses as too risky. And if founders are able to find funding, there can often be huge pressure to make financial returns quickly or give over a large equity stake, which can ultimately lead to the wrong commercial decisions being made for the business. Getting the right division of equity stake is critical when it comes to encouraging founders with highly innovative ideas – with real potential to benefit the UK economy and society – to start a business. This is why we need a radical change in the way early stage startups are funded and supported. We need founders to be liberated from their shackles, so that they can make long-term strategic plans that will help them develop into thriving businesses, rather than focusing on short-term gain to keep the funders happy. How do we do this? By ensuring that we do not take large chunks of equity from founders, by keeping them invested into their own idea and encouraging them to think of long-term success.

Funding and equity are not the only qualifiers for success, an excellent support network is just as critical. Many founders are inexperienced when it comes to the world of business – particularly those bright minds that come straight out of university or government science labs so they need to build an ecosystem of people around them that can help them make the best decisions for the business and feel supported along the way. Smart investors work alongside the founders they invest in to connect them to the networks and resources they need, setting them up for success long-term. While capital can be front of mind when securing funding, founders should consider whether the funding will come with a support network too – as this is truly worth its weight in gold.

Diversity of thought

Innovation happens when you have diversity of thought. So it’s unbelievable that female and black, asian and ethnically diverse founders struggle the most to get funding, often because investors don’t want to take a punt on someone who hasn’t been there and done it before. And that’s even when studies have shown that female and diverse founders are disproportionately more successful than their counterparts. Prioritising diverse founder funding is something that urgently needs to change if the UK is to become an innovation nation, otherwise we risk high-potential ideas, and potential unicorn companies, never leaving the lab.

Advice for early stage founders

There are several steps I recommend the founders I work with to take to make sure they stand the best possible chance of success in today’s UK startup landscape:

1. Be clear on your pitch – fundamentally your pitch should be able to articulate the problem you’re aiming to solve, and why anybody cares, in five minutes - or even 30 seconds. Once you’ve built a pitch that can communicate your value potential not only to investors, but customers and future talent and board members, that will be the foundation for everything else going forward.

2. Work out who you want as your allies – build yourself a dream team who can mentor, guide and support you on your journey. Figure out who within your network you might want on your dream team, or will help you reach your dream team. Business can be a very lonely place, so I always recommend making those connections before you start your business journey. But it’s important to remember that your dream team might change over time as requirements change – the team that starts your business with you might be very different two or three years in.

3. Engage with as many customers as you can early on – talk to as many customers as you can to understand their perspective on the problem you’re solving with your business. If you can truly get under the bonnet of the issue, and understand it, you will know how to fix it. Investors will be keen for you to prove that it’s not only a problem that needs solving, but one that people will pay to fix. But ultimately, you won’t get off the ground with your customers unless you can explain with integrity what their needs are.

4. Think about whether you’re the best CEO for your business – you might start your business as the CEO, but you might not be the best CEO for the business a few years into its journey, as startups have very different requirements at different stages. I have found the most refreshing founders are the ones that can set ego aside, and understand the right role for themselves at the right time, and understand when others might have skillsets more suited to the CEO role.

5. Be kind to yourself – running a business from its very beginnings is a marathon, not a sprint. It can be tempting to throw absolutely everything in to grow your business as quickly as possible. But you need to be kind to yourself in order to sustainably drive your business to success and avoid burnout a few years in.

Presymptom Health

An excellent example of a startup I work with at Ploughshare that has excelled in its early stages is Presymptom Health. Following 10-years of work conducted at UK's Defence Science and Technology Laboratory (Dstl), they created a technology that can detect Sepsis three days before symptoms show. The first thing we did when they span out as a business was to identify the problem they’re trying to solve. When Covid-19 first began, there were many people going into hospital that lost their lives due to sepsis brought on by Covid. Suddenly there was an urgent problem that needed solving, and Presymptom Health had the solution – a solution that would make clinicians jobs easier, as well as saving lives. Identifying the problem and the solution by talking to the end user was what got the business off the ground. That was achieved even before we got capital in place. After that, we began building the dream leadership team, crucially prioritising diversity of thought while building out the board. Since, Presymptom has had two successful funding rounds, and has nearly completed its clinical trials which are taking place in 11 hospitals across the UK – but this would not have happened had the fundamentals not been in place.

Unlocking the potential of our early stage startups

I am constantly in awe of the raw talent of inventors and founders in this country. There is so much potential to truly deliver on the UK’s science superpower ambitions, boost  the UK PLC and economy, and benefit society. But that will only happen if the government and VCs continue to prioritise early stage funding. This is something we’re fighting for at Ploughshare, where we recognise, support, and spin out startups from innovations with origins in government labs. We’re passionate about getting true innovation into the hands of those who need it, and guiding founders through the process. But we’re just one cog in a large machine of the UK R&D landscape. We need a groundswell of support for our most exciting, early stage startups if we’re to achieve real change on a national level.