Why The UK Needs to Back Its Entrepreneurs Now More Than Ever

The UK has long prided itself on being a nation of innovators. From the Industrial Revolution to the fintech boom, British entrepreneurs have a track record of turning big ideas into global businesses. But today, the UK’s start-up ecosystem is facing a pivotal moment.

Rising employment costs, economic uncertainty, and global competition are making it harder than ever for founders to scale. Meanwhile, the US and Europe are ramping up incentives to attract top talent and capital. If the UK wants to remain a powerhouse for entrepreneurship, it must act swiftly. That means implementing smarter policies, increasing investment, and building better infrastructure to ensure the next generation of high-growth businesses can thrive.

Building a business has never been easy, but right now, founders are up against more headwinds than ever.

• The cost of hiring is rising. From April 2025, employer National Insurance Contributions (NICs) increased, adding extra pressure to start-ups trying to scale teams.
• The talent crunch is real. Post-Brexit visa restrictions and global competition for skilled workers mean it’s becoming harder to attract top-tier talent.
• Infrastructure is lagging. While cities like London, Manchester, and Edinburgh are thriving, regional start-ups often struggle with funding access, transport links, and digital connectivity.

It’s no surprise that many founders are looking abroad, with the US and Europe offering more competitive tax incentives, grants, and investor-friendly policies. If the UK fails to raise its game, we risk losing our best and brightest to more entrepreneur-friendly markets.

What needs to change? Here are three critical areas where the UK can and must do better:

1. Smarter Policies for Growth

Government initiatives like SEIS and EIS have played a significant role in making early-stage investment attractive, but more needs to be done to support scaling businesses.

• Rethinking employer NICs. The rise in National Insurance is a direct hit to hiring plans for small business. The government should consider exemptions or reliefs for high-growth businesses.
• Simplifying R&D tax credits. The UK’s R&D tax credit scheme has been a game-changer for innovation, but recent changes have made it harder for start-ups and scale-ups to claim. A clearer, more founder-friendly system is needed.
• Expanding access to growth capital. The British Business Bank has made a significant impact, but broadening its mandate to support businesses in the scaling phase, rather than focusing solely on early-stage start-ups, could open up valuable new funding opportunities.

2. A More Competitive Investment Landscape

Capital fuels innovation. While UK venture capital remains strong, the overall funding ecosystem still lags behind the US. We need more ambitious moves to encourage investment.

• Supercharging pension fund investment. Unlocking even a small fraction of UK pension funds for venture capital could inject billions into the start-up ecosystem.
• Attracting international investors. The UK needs tax and regulatory incentives that make it easier for global investors to back British small businesses.
• Strengthening public-private partnerships. Governments and corporations should work more closely with VCs and private equity firms to co-invest in breakthrough innovation.

3. Better Infrastructure for Scaling

Start-ups don’t just need funding, they need the right environment to grow. That means better digital and physical infrastructure, stronger regional support, and access to top talent.

• Expanding start-up hubs beyond London. While London dominates, cities like Birmingham, Leeds, and Manchester have huge potential. Targeted regional funding could unlock new opportunities.
• Faster visa routes for skilled talent. The UK needs a start-up-friendly visa process that makes it easier for founders and employees to relocate and stay.
• More investment in AI, deep tech, and climate tech. The US and EU are pouring billions into emerging tech. If the UK wants to lead, it needs to match that ambition.

At YFM Equity Partners, we’re committed to supporting ambitious entrepreneurs as they scale and grow. For more entrepreneur news, take a look at our other articles and videos, and subscribe to our newsletter. Watch The Entrepreneur Experience Video Series for more advice and perspectives from leading UK entrepreneurs and thought leaders in the business ecosystem.