Here's a view (from the point of view of an 'economist')
It is not a popular view but it makes rational sense.
- Startups are not where we should focus our efforts. Investing in start-ups is like betting on a horse race without getting a look at what the horses can actually do. (Clue: most do not win)
- Real job growth is found in fast growth businesses (50% of all jobs in a 10 year period) - the top 4% of businesses (see Prof Storey)*. Investing in fast growth businesses is like betting on horses after they have gone over the final jump!! If I could bet at ant time that's when I would do it!!!
- The trouble is that 100% of businesses vote so focusing exclusively on high growth businesses is politically unacceptable!!!
- There is also precious little evidence to support a start-up programme 'ology' that works (aside from exclusive high growth incubator-type activity).
- Successful businesses appear to succeed despite what might be on offer. This suggests that start-up programmes add little real value apart from helping to create life-style businesses.
- The trouble with life-style businesses is that they tend to replace each other (unless they are exporting or selling into an expanding/new market). With a fixed demand for a product then an increase in supply of companies inevitably does little macro good... (moving the deckchairs on the Titanic?)
- So it seems that one 'should' invest in fast-growth (to use public funds effectively in the short and medium term)... and to boost the economy.
- Invest in start-ups if you want to be politically popular
- Invest in "high growth" start-ups with potential (and experience) to increase the chance of seeing a return on your investment; ignore the rest.
Clearly we need start-ups to 'feed the funnel'... so that some businesses can become the stars of tomorrow. The reality is that most won't; so recognise that life-style businesses in their own right are a good thing but they are not the engine of growth that politicians suggest they are.
* This is confirmed by NESTA showing that the 6pc of all UK businesses with the highest growth rates generated 54pc of the net new jobs created.