Build companies not ecosystems, by Richard Lennox, CodeBase COO and author of 'Framing Scotland's Entrepreneurial Economy' report

In my last column here I suggested Scotland's entrepreneurial economy should be judged by the companies it builds, not the programmes it funds. That statement read very differently depending on whether one's income depends on the companies or on the support programmes around them. Feedback clearly reflected that.

Over the last couple of weeks CodeBase has published my own detailed answer on how we can ensure the publicly funded support we offer businesses will actually deliver. The report, "Framing Scotland's Entrepreneurial Economy", sets out a simple framework whose central claim is simple: align the support we have to founders’ needs, not new programmes.

A thriving startup ecosystem is what you get when business succeeds and companies scale. Those companies hire, pay tax, and recycle talent, capital & ambition into those that follow. Skyscanner did exactly that, seeding founders, operators and investors. Build the companies and ultimately the ecosystem follows. Forget them and the money pays for scaffolding instead of the building. 

Scotland is in danger of the former. We have invested heavily, and it has worked in part: more businesses are forming than ever. Our scaleups however are only 0.52 per cent of Scottish SMEs and improving that could be worth 138,000 jobs and £22 billion a year. Additional funding and more programmes will not fix that. A shared model that makes every pound committed directly traceable to serving a founder's need will have more impact.

The proposed framework has two parts. First, honesty about destination: a thriving small business, a growth-stage employer and a globally significant scaleup are all legitimate. The support these businesses need different layers of support and a system that doesn’t recognise this keeps misallocating resources. 

Second, a simple matrix: the three things founders actually need - capital, customers, and operators who have made the journey before - relevant to one of four stages of business growth.

Held against that grid, the whole portfolio of support activity becomes visible and a real assessment can be made as to the value of each intervention. As we do that, it will become clear that the stage that matters most, the valley of death where viable  companies stall and wither, stays critically underserved. We must stop mistaking activity for outcomes and redirect to where scale up failure is highest and the prize largest.

For founders and operators, this changes everything. Today they face a fragmented, opaque maze of more than 100 organisations, each with its own self-justifying logic. The framework replaces that with clarity and real choice over the support available, where they need it. 

This framework belongs to no single provider, CodeBase included. Codebase may deliver Techscaler but it lacks the contractual agency to sufficiently adapt it to meet the needs of Scotland’s startups and scaleups. This is why we are advocating for change. The Scottish Government must commission and evaluate entrepreneurial support against a framework that does that.