Britain’s growth strategy must start with backing first-time founders

Britain has ambitions to become the best place in the world to start a business, but those ambitions will fail if people aren’t able to take those first steps to becoming a founder.

There has been a lot of talk recently of scaleups and we have an enduring fascination with unicorns. But long before a business reaches that stage, someone has to take the initial risk – leaving secure employment, investing savings, and backing themselves to turn an idea into a viable business.

If we’re serious about delivering sustainable economic growth, we have to start by backing the people brave enough to launch a business for the first time, helping them to turn ideas into something that flies.

Small businesses are not a side story in the UK economy. They make up 99.8% of all businesses in the country. They create jobs, bring life back to high streets, power innovation in emerging sectors, keep local supply chains moving, and contribute enormously to the UK economy. Yet much of the policy conversation still focuses on scaleups and venture capital. Important as that is, long term economic strength depends on an entrepreneurial pipeline of new startups that work to strengthen the backbone of the UK economy

Over the past 13 years, Virgin StartUp has been a national partner for the British Business Bank and distributed more than £100 million in Start Up Loan funding to 7,000 founders across the UK. Those businesses have generated £550 million in value for the economy, proof that relatively modest injections of capital can deliver significant economic returns. For every £1 invested, £5.50 has been created for the UK economy.

But the most telling figure is not the total sum, it’s that 69% of the startup businesses we’ve supported are still trading after five years, compared with 43% nationally. That gap shows that it’s not just funding that counts. Founders also need structured support, mentoring and guidance alongside early-stage finance if they are going to survive those crucial early years.

The reality is that too many aspiring founders struggle to access even modest amounts of capital and even fewer have networks they can lean into for support. Too many first-time founders end up bootstrapping for longer, relying on personal savings, or leaning on friends and family. Traditional lenders remain risk adverse whilst equity funding typically concentrates on high growth sectors, with a strong regional bias, and limited to those with established networks. For founders outside major cities or from underrepresented backgrounds – including female founders, Black, Asian and Ethnic Minority founders, disabled founders, and neurodiverse founders – the barriers can be high and even insurmountable.

The boost many small businesses need is much smaller than you think. Often it is the first £10,000 to £25,000 that enables founders to secure premises, invest in equipment, build a website, hire a first employee, or manage cashflow through the early months. When combined with mentoring and tailored business advice, that early injection of capital can accelerate revenue growth and strengthen the path to profitability. In many cases, it is the difference between simply surviving and thriving.

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At a time of rising costs and fragile economic confidence, the risk is not that Britain suddenly loses its entrepreneurial spirit, it’s that fewer people are backed at the moments that matter and supported to take the leap.

This year, through our partnership with The British Business Bank, Virgin StartUp has over £20 million in Start Up Loan funding to distribute to founders across the UK, which is its largest annual allocation to date. We’re committed to supporting founders from every corner of the UK, because every aspiring entrepreneur should have a chance to turn their idea into a successful business and have access to the funding and support to make it happen.

Everyone understands the value of businesses that scale. But in times of economic uncertainty, recent experience suggests support for those looking to start up is often the first thing to be withdrawn. While we all have a vested interest in seeing businesses grow and scale in the UK, it’s important to remember a simple truth: you can’t scale businesses that never start. If Britain wants a dynamic and resilient economy, it must start by strengthening its entrepreneurial pipeline and supporting those willing to build tomorrow’s businesses – both big and small – from the ground up.