The Entrepreneurs Network

The prosaic world British regulatory reform has caught the attention of the US under the stunning headline (which deserves to be written out in full): Shock UK Regulatory Coup Gives Government Sweeping Control Over US Tech: London's digital markets, competition and consumers act gives regulators the power to stop any acquisition, anywhere, for basically any reason they want. Ashley Rindsberg is dissecting the Digital Markets, Competition and Consumers (DMCC) Act which is coming into force and gives the Competition and Markets Authority (CMA) significant new powers. Despite the headline, this isn’t clickbait – Rindsberg has a point. More precisely, he has lots of points, but I want to focus on the one that really matters to entrepreneurs that I talk with. As Rindsberg writes, “the DMCC gives the CMA broad new powers to intervene with mergers that target what it calls ‘killer acquisitions.’ While the language makes it sound as if only massively disruptive technologies fall into the category, the letter of the law reveals the opposite to be true. Instead, under the killer acquisition provision, the UK now has the ability to intervene in ‘no-increment’ mergers – i.e. deals that don’t increase the market share of either party, which can be manifestly non-competitive with each other.” Back in 2021, we joined forces with the International Centre for Law and Economics to write a sober assessment paper on the risks of the DMU. Central to the argument in Conflicting Missions is that startups depend on acquisitions. While some don’t want to admit it, being bought is the main way entrepreneurs and venture capital investors are paid for their hard work and investment. The harder it is to sell your company, the harder it is to make a return. The paper cites empirical evidence that venture capital activity grows when countries enact pro-takeover laws, and declines when anti-takeover laws are introduced. As our paper and Rindsberg’s article make clear – there is a huge amount of uncertainty about how this will play out. Entrepreneurs and investors are already burdened with enough of that.

It's great to have Blick Rothenberg on board. We will draw on the expertise of Mallinath (Malli) Kini and his colleagues on areas like tax to support our ongoing efforts to make the UK the best place in the world to start and grow a business

A huge congratulations to Hannah Bernard OBE and Debbie Wosskow, OBE for today's announcement – the creation of one of the world’s largest investment pools of £250m for female-led and mixed businesses

Have you attended an event with us at The Entrepreneurs Network? If not, we have a meetup Fragomen on the 3rd December that you may want to attend. If so, it would be great to see you at this one too! These meetups provide an opportunity for our supporters and guests to meet and chat with us about how we can help make the UK a better place to start and grow a business. RSVP here: https://lu.ma/p1swbfxf

We all know that entrepreneurs are the engine of economic growth. But they’re only human. Over the past decade at The Entrepreneurs Network, I’ve seen firsthand how the incredible role entrepreneurs play in society can come at a cost. Running a business puts unique – and sometimes profound – pressures on people. That’s why I penned the foreword to Christina Richardson’s robust new report on the topic of founder resilience. Christina is an Adviser to the network, the Founder of Foundology and an Associate Professor in Entrepreneurship at UCL School of Management. Founder Resilience Research 2024 draws on insights from hundreds of entrepreneurs, providing a comprehensive view of the obstacles founders face. As I write in my foreword: “That 93% of founders report signs of mental health strain, with stress and anxiety levels five times higher than the UK national average, should be a wake-up call for us all. Despite 92% of founders expressing passion for their work, only a small fraction feel adequately supported. Just 43% feel they have a strong support system, especially as their ventures grow, and 76% report feelings of loneliness – a figure 50% higher than CEOs more generally. The personal cost of entrepreneurship is undeniable.” But it’s not all doom and gloom. The report also outlines some of the solutions and sets out what founders with high resilience do. Whatever lens you see it through – resilience, mental health, coping skills, self-care, mindfulness, wellness – clearly this stuff matters on a personal level to many of you reading this. But it also matters to our ecosystem as a whole. I wholeheartedly recommend the report for anyone who cares about this – feed your mind.

Founder Resilience Research 2024 by Christina Richardson draws on insights from hundreds of entrepreneurs, providing a comprehensive view of the obstacles founders face. As I write in my foreword: “That 93% of founders report signs of mental health strain, with stress and anxiety levels five times higher than the UK national average, should be a wake-up call for us all. Despite 92% of founders expressing passion for their work, only a small fraction feel adequately supported. Just 43% feel they have a strong support system, especially as their ventures grow, and 76% report feelings of loneliness – a figure 50% higher than CEOs more generally. The personal cost of entrepreneurship is undeniable.” But it’s not all doom and gloom. The report also outlines some of the solutions and sets out what founders with high resilience do. https://lnkd.in/e_5jtU_A

When governments do the right thing, we should take a moment to congratulate them. It can't all be doom and gloom. That's why – alongside Startup Coalition, BioIndustry Association (BIA), techUK, UK Business Angels Association, Founders Forum Group, Tech Nation & UK Day One Project – we're broadly supportive of the decision to merge council pensions into mega funds. (One note of caution – while the scale will allow these funds to employ the expertise to invest more broadly, it's critical that the investment decisions are driven by the best interests of pensioners – not politicians. In other words, these funds should be about making money – not fulfilling other policy goals.)

When Caleb Watney tweets “This is the best paper written so far about the impact of AI on scientific discovery”, it’s time to stop scrolling and start reading. Artificial Intelligence, Scientific Discovery, and Product Innovation, by Aidan Toner-Rodgers finds that AI-assisted researchers discovered 44% more materials, leading to a 39% increase in patent filings and a 17% rise in product innovations. Critically, the use of AI seems to present an opportunity for more radical innovation, with the paper finding increased novelty in all stages of R&D. As the paper states: “These effects are large. To put the rise in materials discovery in perspective, the lab’s research output per scientist declined by 4% over the preceding five years. This was despite the introduction of several computational tools designed to aid scientists. AI therefore appears to be a different class of technology, with impacts that are orders of magnitude greater than previous methods.” While being mindful of these caveats, this could point the way to a new era of human progress. It also presents a challenge to individual scientists. Top-performing scientists benefited disproportionately, which would make many scientists redundant. And while it automates tedious tasks, the paper suggests AI may also reduce creativity and job satisfaction for scientists – or at least for the sort of people who currently become scientists. Whatever the future holds for scientists, ultimately we shouldn’t forget one of Adam Smith’s great insights: “Consumption is the sole end and purpose of all production.” And on that front, things are looking bright.

🚧 Two wrongs don't make a right, especially when it comes mercantalist trade policy. For my contribution to The Entrepreneurs Network's ninth edition of Three Big Ideas, I take a look at a new study of American tariffs and business productivity between 1870 and 1909, which suggests the former had a negative impact on the latter. https://lnkd.in/etw6CU6z

✍ I took over The Entrepreneurs Network newsletter this week, focusing on what the result of the US election might mean for British businesses, and how policymakers this side of the Atlantic ought to respond. TL;DR: we shouldn't always rely on the kindness of strangers, or even close allies. And while it'd be wrong to become economically insular, it's more imperative than ever to concentrate on fixing the foundations. We've got a few ideas for how to do that, and will be publishing research specifically on making the Special Relationship even more special in the coming weeks. https://lnkd.in/e4vwAqfS