Wales educates tens of thousands of talented students and graduates every year, yet only a tiny fraction ever start a business.
UK StartUp Awards.
Over the past three weeks the UK StartUp Awards has staged 10 events celebrating more than 900 new businesses from every nation and region of the UK.
The final event for Wales, held in Cardiff on Thursday evening, was a reminder of the quality of entrepreneurs we have here in Wales.
From digital businesses and green innovators to food producers, social enterprises and young founders taking their first steps, the energy in the room was impossible to ignore.
It would be easy to come away from an evening like that feeling entirely optimistic about the future of Welsh enterprise, and, in many respects, we should.
The businesses on that stage were creative, ambitious and resilient and yet that is precisely why the wider picture is so frustrating.
Wales does not lack entrepreneurial talent, ideas or ambition, but it lacks a healthy economy that should be constantly renewing itself as new firms emerge to test ideas, create jobs, and, occasionally, grow into scale-ups and mid-sized companies that become the backbone of a stronger economy.
The official statistics show that on this most basic measure, Wales has roughly a quarter fewer businesses per 10,000 people than the UK as a whole, and that gap is one of the clearest explanations for why our economy continues to under perform.
If Wales simply matched the UK rate, we would have something in the order of 31,000 additional firms in the economy and that matters because fewer start-ups mean fewer businesses that can innovate, export and grow into the larger Welsh-owned companies we so badly need.
It would be one thing if this gap were closing, but that isn’t the case – Welsh business births are down more than 27% from a 2021 post-Covid peak, more than double the UK decline of around 13% and they are now below even their 2020 level.
The stock of active enterprises in Wales has also shrunk since 2021, meaning we are not simply starting fewer businesses than the rest of the UK, but our business base is contracting while others stabilise, which directly impacts the economy.
Matching the UK’s rate of business formation would mean roughly 4,500 more new businesses created in Wales every year, which is close to half as many again as we manage now. Simply put, if we do not have enough firms, particularly enough new and ambitious firms, then every other policy objective becomes harder to achieve.
So what can be done?
The good news is that this is not a problem that requires a decade-long commission, and there are steps Wales could take immediately.
The first is to treat our universities and colleges as engines of new firm formation rather than as bystanders in the enterprise economy.
Wales educates tens of thousands of talented students and graduates every year, yet only a tiny fraction ever start a business.
That is not because they lack imagination or ambition, but because the system rarely presents entrepreneurship as a credible route after education and a serious, properly funded national graduate and student enterprise programme could change that quickly.
The second is to make the journey from idea to investment far clearer, as too many first-time founders in Wales find the support landscape difficult to navigate.
We need accelerators, founder networks and stronger connections between new entrepreneurs and those a few years ahead of them.
Indeed, a founder who has just hired their tenth employee or raised their first investment round can often be more useful to a new entrepreneur than many business advisers.
The third is to create more first- customer opportunities as start-ups grow because people buy from them. Public bodies, large companies, universities and anchor institutions should open up more procurement opportunities to young Welsh firms.
That does not mean lowering standards, but it means making contracts accessible, breaking large opportunities into smaller lots, and actively using procurement as a tool for economic development.
The fourth is to create more physical spaces where people can take their first steps as founders and begin to believe they can start a business.
That is one of the reasons we are developing a private-sector-led entrepreneurship hub at Bodlondeb in Conwy, creating a practical place where new founders in north Wales can take the first serious steps towards starting a business.
Wales needs more of these spaces, rooted in their local communities yet connected to a wider national network of founders, investors and opportunities.
The fifth is to start much earlier, and if we want more people to start businesses in their twenties and thirties, it should be visible in schools as a normal and attainable ambition.
Young people should meet founders, work on real business challenges, understand money, markets and customers, and see entrepreneurship as one of the career routes available to them.
Finally, we need to celebrate Welsh start-ups far more loudly, as people are more likely to start businesses when they see others like them doing so.
Certainly, our event in Cardiff showed what already exists in Wales, namely brilliant founders building serious businesses, often without enough recognition – we just need to make those stories visible throughout the year.
None of this is beyond us, and it doesn’t require Wales to copy Silicon Valley or pretend to be somewhere it is not but requires us to recognise that our economic future will be largely built by the people already here, starting firms, solving problems, employing others and creating value in their own communities.
That is why the StartUp Awards this week mattered, as they were not just a celebration of individual start-ups, but a glimpse of what Wales could become if we took enterprise formation seriously.
The entrepreneurs, the ideas and the ambition is there, but the question is whether Wales is prepared to build the support system they need around them.
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