Small firms are revving Britain's economic engine

LAST week I found myself at a dinner with some leading businessmen, and a few journalists. It was held under Chatham House rules, so I&rsquo;ll have to keep their identities to myself. <br /><br />There was, of course, the usual gloom over Gordon Brown, and a lack of confidence in his policies for the economy. On a more upbeat note, I suggested that the next wave of economic growth would be led by entrepreneurs. As soon as the comment had left my mouth, a titan of industry said: &ldquo;You can't really believe that.&rdquo; He looked horrified. <br /><strong><br />ANAMERICAN IN THE UK</strong><br />It&rsquo;s fascinating that what seems blindly obvious to me is not so clear to others. It could be because I come from California, the world&rsquo;s seventh largest economy. Its success was built on the back of high-growth firms which &ndash; in many instances &ndash; didn&rsquo;t exist 10 years ago. Now they are defining entire industries. <br /><br />I recently had a conversation with Jonathan Kestenbaum, chief executive of Nesta, a former senior executive at Apax Partners, and a director of the UK&rsquo;s innovation agency, the Technology Strategy Board.<br /><br />Nesta&rsquo;s research shows that a vital six per cent of UK companies generate the vast majority of jobs, having a disproportionately positive effect on their local communities and industries. <br /><br />In 2008, there were some 11,500 firms in the UK that could be classified as &ldquo;high growth companies&rdquo;. They created more than 54 per cent of new jobs. And it&rsquo;s not just about businesses in the South East, or technology firms. According to Nesta, high growth firms can be found across Britain &ndash; and in every sector. <br /><br />And new industries &ndash; whether they be mobile banking, social gaming or digital music &ndash; are always driven by high growth firms. It is their innovation that makes them grow quickly. <br /><br /><strong>MAKING THECASEFORSTART UPS</strong><br />So why is the case for entrepreneurialism so hard for some to accept? Those entrepreneurs that care about recreating Great Britain often arouse suspicion, with people assuming that we&rsquo;re up to no good because we&rsquo;re self-interested and make too much money. Can&rsquo;t the big companies just take care of the next wave of new stuff, they ask. <br /><br />But, as the Nesta research shows, by focusing on building more high-growth firms, we are not creating a small group of winners, but revving up the engine that runs the UK. We are trying to build a legacy for the country. <br /><br />So, the next time you hear some snide comment about start-ups being child&rsquo;s play, or a jealous rant about venture capital-backed firms only profiting their founders, don&rsquo;t let it go. Small becomes big, and start ups have changed, and will change the world. We will all benefit &ndash; so we should all be proud. <br /><br />Julie Meyer is chief executive of Ariadne capital.