Yet there is a systemic problem rarely discussed that means this policy is becoming less likely to succeed by the day. In Britain, we appear to be running low on folk willing to take the leap to be entrepreneurs.

This might sound counterintuitive because entrepreneurs are everywhere – feted as heroes by politicians, fronting TV shows and launching podcasts. However, despite the pervasiveness of entrepreneurship – and its growing acceptance as a career path –  policy initiatives designed to support founders and improve access to capital are proving insufficient to sustain, let alone, increase the formation of scalable businesses.

Figures from the Seed Enterprise Investment Scheme (SEIS) and Enterprise Investment Scheme (EIS) shows that the number of startups raising capital for the first time has been in decline since 2017. More widely, of the 325,811 businesses registered in 2020, only 47% survived to 2023, and of these, only 2% managed to achieve the milestone of £1 million turnover after three years. This highlights a critical retention and scaling problem within the UK’s startup ecosystem.

Why the disconnect between rhetoric and reality? One prominent reason is a reduction in risk appetite among experienced working professionals who might previously have left corporate jobs to start a business. The median age of a founder in the UK is between 38-40, and there is little doubt this demographic is becoming more risk-averse – and understandably so.

Inflation and interest rates also remain high, making it even more difficult for those thinking of making the leap to leave behind a dependable salary to start a business. Meanwhile rising business taxes further disincentivise professionals from leaving stable employment to pursue high-risk, high-reward ventures.

Perhaps most importantly, the removal of Entrepreneurs’ Relief tax break in favour of the far less generous Business Asset Disposal Relief means the reward for putting it all on the line is significantly less than it once was. Add into that growing uncertainty over inheritance tax the reduced ability to pass on the fruits of success and many proto-entrepreneurs might well ask: Why would I take the risk?

For those with fewer commitments, you might think it would be different, but fresh graduates who are eager to launch businesses tend to lack the professional networks and funding necessary to translate their innovative ideas from the lab into viable companies. This creates a demographic gap where the most experienced individuals are hesitant to take risks, while the most ambitious lack the resources to succeed.

How to incentivise more risk taking entrepreneurs? The answer is not as straightforward as injecting more cash into the system.

The great thinker and economist J M Keynes used the phrase “animal spirits” to describe the willingness of some to make bold choices and take on personal risk in the hope of entrepreneurial success. He recognised it as more than simply a rational calculation of risk versus return, and it appears this is the element that has slid in the UK of late.

A top priority to help spur things forwards should be to ensure we are not deterring ambitious founders from making the UK their base by streamlining visa access for high-performing workers. A report from the Entrepreneur’s Network found that 39% of the UK’s fastest-growing startups have at least one founder from outside of Britain and in Silicon Valley the number is perhaps nearer 50% for those born outside the US. Reforms to policies such as the High Potential Individual (HPI) visa, expanding the Youth Mobility Scheme or offering certainty on the Global Talent Visa will reduce the barriers to talented individuals seeking to contribute to the UK economy.

Another way to incentivise high growth ambition is to provide a clear end customer. Unlike the US or many Asian markets, UK end customers such as government departments or multinational companies, tend to be more risk-averse in adopting new technologies. The government must look to stimulate demand and provide a reliable customer base by reforming its and private businesses’ procurement processes. This could involve setting clear targets for procurement from startups or establishing pilot programmes to test and validate new technologies.

Another under-tapped resource and potential source of inspiration is the UK’s angel investors. These individuals who back early-stage companies are more than just a source of capital, many have been or are experienced and successful entrepreneurs who serve as mentors with deep industry knowledge and extensive networks. Their involvement with startups can be a catalyst for growth, helping founders navigate the first stage of business development. Encouraging more people to become angel investors and providing support for their networks can also help give talented founders the boost they need in a way often overlooked by traditional venture capital firms.

The UK possesses the fundamental ingredients to nurture the next generation of world-leading startups. However, the Government must move beyond focusing solely on capital to solve the problem. The path to a thriving ecosystem relies on a shift towards nurturing talent, encouraging risk, and implementing policies that address the systemic issues of market access and financial incentives. We need to revive the “animal spirits”.

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