Please see below selected recent middle market-related change, covering entrepreneurship, family businesses and startups.
- The Financial Times reported that more than 250,000 small businesses are at risk of collapse without further financial help from the government, according to a survey by the sector’s trade body that reveals the continuing damage on companies from almost a year under coronavirus restrictions. Just under 5 per cent of 1,400 companies surveyed for the Federation of Small Businesses quarterly index said they would shut their doors for good this year, a record level in the report’s 10-year history and more than double the comparable figure a year ago. Some 5.9m small companies operate across the UK, according to the government.
- The Baltic states have the best ecosystem for start-ups to thrive, according to a global ranking by venture capital firm Index Ventures. Latvia, Estonia and Lithuania were deemed the most “start-up friendly” because of their favourable stock option policies, which allows young companies to attract talent and compete with larger firms offering higher pay. France, the UK, Portugal and Poland also made the top 10. European start-ups raised a record $41bn (€37.9bn) of venture capital in 2020.
- Many startups are building their own globe-spanning networks of nanosatellites, enabling a new kind of everywhere, all-the-time connectivity for people, animals and assets on Earth. Scientists who track the health of penguins in Antarctica are managing their cameras from thousands of miles away - via tiny satellites orbiting above our heads. Energy companies are exploring using the same technology for monitoring hard-to-reach wind farms; logistics companies for tracking shipping containers; and agribusiness companies for minding cattle. It even helped National Geographic track a discarded plastic bottle from Bangladesh to the Indian Ocean, noted the Wall Street Journal.
- Research has found that the UK is on the verge of a 'lost generation' of entrepreneurs. A research study into people running businesses that were on track to scale-up and become major firms - people critical to the UK's economic recovery - has found that they are experiencing burnout and many are ready to quit entrepreneurship together.
- In venture capital, the strength of a start-up’s founder and leadership team is considered the most important factor when deciding whether or not to back it. A study, however, cast doubt on how much the founder actually matters - at least in the early stages. In a survey of 470 start-up founders and CEOs, Harvard Business School professor Tom Eisenmann found that personal attributes including age, education, and personality traits had no significant connection to the valuations of early-stage companies.This is in opposition to previous research and the common thinking among venture capitalists, who often frame their investment strategy as backing the jockey over the horse.
- Quartz reported that hundreds of startup founders in Silicon Valley are reorganising their lives around the idea of “decarbonise everything.” A small but passionate group of founders and engineers are leaving companies like Tesla, or skipping the tech giants entirely, to take aim at what they call the biggest opportunity of a generation: climate tech.
- More than half of Europe’s small and medium firms, which employ two-thirds of Europeans, doubt they’ll survive the next 12 months. A McKinsey survey of 2,200 companies in France, Germany, Italy, Spain and the UK found 55% anticipate shuttering by September 2021 with one in 10 expected to file for bankruptcy within six months. The survey was conducted before the second wave triggered tough lockdowns. A predicted 5.4% growth in the EU economy in 2021 may not be enough to halt insolvencies, and the International Monetary Fund has urged governments to double down on state support.
- A new one-stop-shop climate action platform aims to help small and medium-sized enterprises curb carbon emissions, build business resilience, and gain competitive advantage. Ericsson, IKEA, Telia, BT Group, and Unilever have committed to support the new SME Climate Hub through a "1.5°C Supply Chain Leaders" group.
- Alex Lazarow, a Bay Area-based venture capitalist, academic, and author. In his book Out-Innovate, Lazarow argues that this refresh is already underway, largely in emerging markets. There are 480 startup hubs worldwide, he points out, and 10% of unicorns are located outside Silicon Valley. In the era of coronavirus-fuelled uncertainty, he says startups should not strive to be like Silicon Valley unicorns, but instead like camels: capitalising on opportunity while focusing on sustainability and long-term growth - i.e. surviving droughts and pandemics from the get-go.
- Venture capital firms are collaborating to keep Nigerian startups alive. Abuja, Nigeria-based early-stage fund, Ventures Platform, is collaborating with New York impact investor Acumen and LoftyInc, a Lagos-based investment firm to create a startup relief program to disburse emergency grants of up to $20,000 to early, high-growth stage startups that may require cash support. The non-equity grants could be a key lifeline for young startups during the pandemic, noted Quartz.
- Quartz reported on emerging entrepreneurial hotspots:
- Bengaluru houses the third-highest number of tech startups globally and has secured 57% of India’s startup funding. The Garden City in the southern state of Karnataka is also India’s millennial billionaire capital, having produced 10 out of 17 self-made entrepreneurs under the age of 40.
- Shenzhen, home to Tencent and Huawei, among other tech giants, has the country’s largest consumer electronics market - Huaqiangbei - and is home base for China’s aspiring entrepreneurs and hackers.
- A Lagos neighbourhood is the centre of Nigeria’s $2 billion tech ecosystem. Several startups, including the Chan Zuckerberg-backed Andela, first set up shop in the Lagos suburb of Yaba, which is best known for being home to tech founders and colonial-era architecture.
- As African countries began instituting lockdown measures in response to local coronavirus outbreaks, the pervasive fear across tech ecosystems was a sharp drop in dealmaking. Yet, in defiance of economic uncertainty as a result of the pandemic, African startups are increasingly notching multi-million dollar exits, Quartz explained.
- A global survey from ACCA highlighted international trade concerns among SMEs worldwide, and how they can maximise growth prospects.
- KPMG US launched KPMG Spark, a technology-enabled solution for tax accounting for small and mid-sized businesses. The tool enables clients to comply with domestic tax reform legislation by using innovative technology, intelligent automation, and personalised services.
- The solution will provide accounting assistance to clients from the pre-revenue stage to upward of US$50 million annually. It leverages the technology platform KPMG acquired from Bookly. The solution responds to new regulations required under 2017’s Tax Cuts and Jobs Act (TCJA) and expands Bookly’s previous offering, which solely provided cash-basis accounting assistance to small companies.
- In The Top 20 Reasons Startups Fail, CB Insights broke down the top 20 reasons for failure by analysing 101 startup failure post-mortems.
- In The Top 100 Venture Capitalists, CB Insights worked with The New York Times to develop a data-driven ranking of the world's best venture capital partners.
- Meanwhile, in Game Changing Startups 2019, CB Insights highlighted the year's emerging trends to watch and high-momentum startups with world-changing potential.
- In 2018, funding to Venture Capital (VC)-backed US companies hit a new high of $99.5B, despite a slump in deals. Deals last year fell to 5,536, down 5% from 2017, though later-stage mega-deals (worth $100M+) pushed annual funding up 30%, to hit its highest level since 2000. Read more in the CBI-PwC MoneyTree Report.
- However, asking who needs venture capital anyway, Quartz noted that startups, increasingly seeing VC money as a “dangerous” path to an accelerated demise, are seeking alternate methods of funding.
- Fintech is giving small businesses access to finance. Cut off from finance by big lenders, financial technology platforms are coming to the rescue for cash-starved small businesses, noted Raconteur.
- Robotic process automation (RPA) software is streamlining workplace functions at large banks, including data entry, document review, transaction processing, and more. CB Insights mapped out 90+ startups using AI and machine learning to automate banking operations, from fraud detection to customer identity verification.
- In Start-Ups Aren't Cool Anymore, The Atlantic argued that a lack of personal savings, competition from abroad, and the threat of another economic downturn make it harder for millennials to thrive as entrepreneurs. Quartz added that millennials, saddled with debt and scarred by the financial crisis, have become jaded with the romance of entrepreneurship.
- The state of the European startup ecosystem was released by Atomico. European VC funding hit $23bn in 2018, up from $5bn in 2012 (globally VC funding was $177bn in 2017, so Europe is still underweight on a GDP basis). Nearly half of women entrepreneurs say they experienced discrimination, and 93% of funds went to all-male teams. Founders are sanguine about the role of government and of the GDPR, claimed Exponential VIew.
- The rise of consumer AI startups examined how Chinese apps like TikTok & Soul are a new breed of consumer AI product. "TikTok, for example, never presents a list of recommendations to the user, and never asks the user to explicitly express intent - the platform infers and decides entirely what the user should watch" while Soul, a dating app, uses "AI [to help] restore trust in anonymous chats".
- The past decade or so has seen the dramatic growth of startup ecosystems around the world, from Shanghai and Beijing, to Mumbai and Bangalore, to London, Berlin, Stockholm, Toronto and Tel Aviv. A number of U.S. cities continue to dominate the global landscape, including the San Francisco Bay Area, New York, Boston, and Los Angeles, but the rest of the world is gaining ground rapidly, noted Harvard Business Review.
- Of the 18 $1B+ acquisitions of tech startups in the last three years, a majority were by non-tech corporates like Walmart, Unilever, Allstate, and Roche, according to CB Insights.
- Further reading:
- Further reading:
- 48% of public believe auditors ‘could prevent company failures’ - thewonk.eu
- Big Four circle the legal profession - FT
- Big Four investigate their clients’ software use - FT
- Big Four warn against breaking up UK audit firms - FT
- China’s Belt and Road hits problems but is still popular - FT
- KPMG acts to avert ‘conflicts of interest’ of consulting - FT
- KPMG to drop non-audit services for its FTSE 350 clients | Business | The Guardian
- Middle-sized companies are key to UK’s prosperity - FT
- Women’s health start-ups bloom with no blushes - FT
- EY noted that the increasing pace of disruption, shifting regulatory environments and constant changes in the global economy make this an exciting yet challenging time for businesses. EY believes family businesses often have an advantage, especially those whose strong family roots have already helped deliver generations of success.
- Too many SMEs fail to plan more than a year ahead How vision and strategy helps small businesses succeed is the latest in a global research programme supporting small business growth from ACCA. This report outlines the governance needs of SMEs, where simple but effective practice over vision, strategy and human capital can provide them with greater flexibility, adaptability and resilience as they grow - read report.
- PwC and CB Insights' Q3 2018 MoneyTree report highlighted the latest trends in venture capital funding globally. Dollars were up 17% in Q3 2018 as $27.5bn was invested across 1,229 deals. Deal activity declined for the first time since Q4 2017.
- Further reading:
- A smart approach to taxation for young entrepreneurs - EY
- A successful start-up pitch is in the hands of the entrepreneur - FT
- Audit market loses only female leader after Grant Thornton CEO quits - FT
- Belt and Road - World Gold Council
- Do not blame accounting rules for the financial crisis - FT
- Giving poor people cash is a good idea. Giving entrepreneurs cash might be a great one - Quartz
- How to boost early stage deal flow in Africa - FT I
- CO portfolio is down by 66% in the first half of 2018, according to EY study
- IPO Market Has Never Been This Forgiving to Money-Losing Firms - WSJ
- Private equity deals fail to keep up pre-crisis success - FT
- PwC chairman rejects calls to break up Big Four - FT
- Scale-Ups: converting vision into strategy and governance
- Spain’s start-up scene begins to lift off - FT
- The Venture Capital & Private Equity Country Attractiveness Index
- To raise audit standards, you must change accounting standards - FT
- UK watchdog launches investigation into audit market - FT
- What's behind the IPO comeback? - Barclays Investment Bank
- The FT believes big companies are bending themselves out of shape to behave like smaller enterprises. They are encouraging individual teams to take more decisions closer to the frontline. Agile management is all the rage. Head offices are either disappearing altogether or morphing into shared working spaces.
- However,, the FT also noted that many millennials end up at big companies. A 2016 survey by the US think-tank the Economic Innovation Group and EY found nearly two-thirds of American millennials had considered starting their own business, but only just over a fifth believed entrepreneurship was the best way to advance their career. In fact, 44% thought staying with one company and working their way up the ladder - like their parents may have done - was the preferable route.
- Telia Company and Capgemini launched Coach Your Business (CYB), a mentor program for startups. Startups accepted to the program will, under a period of 6-12 months, get access to a range of experts in a range of fields; including first hand help, guidance and mentoring in investment, development, logistics, sales, technology and design.
- Stripe is now among the world’s most valuable private startups. The payments firm recently closed a $245 million funding round(paywall) that values it at $20 billion. Stripe helps companies set up online billing and payment systems, and now counts Google and Uber among its customers.
- Further reading:
- A shake-up of audit’s oligopoly is long overdue - FT
- From corporate to start-up: my career epiphany - Financial Times
- How a city of conflict became a tech hotspot - BBC
- How family businesses leverage change - EY
- How to Reverse the Decline of Startups- Gallup
- Private equity investors shun bulk of emerging world - FT
- The great debate over passive investing and its economic impact - FT
- A partner at a $630 million fund reveals his firm’s secret to scouting billion dollar companies – and says that the rest of venture capital is 20 years behind
- AI in Startups - Forbes
- An illusion of choice: the conflicts that mire the audit world - FT
- Capgemini backs Startupbootcamp Australia fintech programme - CRN
- How Women-Startup Founders Are Building Better Cities - Futurism
- IPOs are too expensive and cumbersome - FT
- Private equity fees and returns face scrutiny - FT
- Private equity spending pace slows to 10-year low - FT
- UK accountancy watchdog ‘too close’ to Big Four, say critics - FT
- The Boston Consulting Group created the DICE framework to help senior leaders predict whether an organisational change effort will succeed or fail.
- Deals and dollars to private tech companies in Latin America hit a new high last year with 379 deals worth a combined $1.35B. Investments into the area have nearly tripled since 2012. CB Insights took a close look at Latin America's tech ecosystem and at which countries have piqued investor interest the most.
- CB Insights analysed which investors have backed the most billion-dollar fintech startups and which ones have the most to gain if their portfolio companies pull off exits that match their valuations.
- PwC and CB Insights' new Venture Capital Funding Report highlighted the 3x increase in quarterly mega-deals of over $100M+ since late 2016 and the massive run-up in dollars to AI startups.
- Africa-based tech startups raised $169 million in the first half of 2018, more than they raised in all of 2017, reported GZEROMedia. Kenya and Nigeria, both of which have large English-speaking populations and burgeoning financial centres, were the top destinations for venture capital investment on the continent.
- With over $8 billion in funding among them, WeWork, Opendoor, and Compass are operating on a different scale than any of their real estate predecessors, according to AngelList.
- Worldwide announced Mid-Market M&A deals valued up to $500 million totalled US$963.9 billion for 2017, a 2.8% increase year-on-year, according to Thomson Reuters. According to estimates, global fees generated from completed Mid-Market M&A activity reached around US$17.4 billion for 2017.
- See also:
- A Conversation About Succession Management - Gallup
- An Algorithm for a Successful 21st-Century CEO - BCG
- Beauty of Disruption - BCG
- Culture Wins by Attracting the Top 20% of Candidates - Gallup
- Decoding Global Talent 2018 - BCG
- Focus on Outcomes to Maximise Your Time & Talent Resources - Gallup
- Middle managers need emotional intelligence to succeed - Raconteur
- Progress on gender diversity stalls at biggest companies - FT
- State of Innovation 2018 - CB Insights
- The agile manager - McKinsey & Company
- The Biggest Mistakes New CEOs Make and How Not to Make Them - Gallup
- The foundations of strategy - McKinsey & Company
- Unleashing the power of agile teams - McKinsey & Company
- What's the impact of people who don't fit in at work? | World Economic Forum
- Entrepreneurs aged between 20 and 35 had on average already set up twice as many businesses as those over 50, a 2015 report from BNP Paribas found. Having a string of start-ups to your name before the age of 35 does not necessarily mean those businesses survive, however, noted the FT.
- Even the most creative thinkers don't come up with ideas in a vacuum, claimed Inc., which asked founders who run some of the most disruptive companies to name the books that inspired them to think big in the first place.
- GDPR will kill the innovation economy, warned Quartz, arguing that users are more keen to accept new privacy agreements from behemoths like Facebook than smaller companies, which could force more humble startups into extinction.
- The number of new unicorns per quarter decreased over the past year, but Q417 and Q118 produced 16 each — more than most quarters since 2013. And the numbers are even higher when companies that raised funding through cryptoassets or token financing are included. CB Insights looked at why the crypto unicorn should — or should not — be included in the coveted $1B valuation club.