The good growth blog: Cornwall, connectivity and the power of our regional economies
In this new monthly series, BGF’s executive chairman Stephen Welton unpacks the idea of ‘good growth’, and considers the opportunities and challenges facing businesses in a rapidly changing landscape.
It’s the time of year when holidaymakers wend their way to Cornwall to enjoy the county’s beautiful coastline and hospitality. Given the continued restrictions on foreign travel, there will no doubt be more Brits than ever jostling for space on the beaches of Bude or Perranporth. I hope to be one of them when I take my summer break shortly, though the wooded estuaries of the South will be our vantage point.
Cornwall has been in the spotlight for other reasons than tourism lately as it was the location for this year’s G7 summit. You may have seen the official “family portrait” of the G7 leaders – socially distanced, of course – posing by Carbis Bay. Agreements from the summit include a commitment to donate another 870 million doses of Covid-19 vaccine to poorer nations. A big number, but is it enough?
I was tempted to use this blog post to discuss the summit; however, on reflection, I have decided to talk instead about the location, Cornwall, and why it’s important that it was chosen.
Put it this way: it’s an interesting contrast that the setting for this meeting of world leaders, representing some of the most powerful and wealthy countries on the planet, is one of the least affluent in the country. Indeed, Cornwall has received millions in funding from the European Union over the years in recognition of it being one of the poorer regions of Europe.
As someone who has been fortunate enough to spend a good deal of time in Cornwall, I can attest that this relative deprivation is not due to lack of initiative or creativity among the people who live there. The explosion of the local food scene is but one example of how Cornwall is upping its game. A better explanation of Cornwall’s economic fortunes are structural trends such as the decline of its traditional mining, fishing and quarrying industries, and, starkly, a long-term lack of investment. Tourism is a crucial, and profitable source of income, but it is an industry that only operates for less than half the year. Tourism alone cannot sustain the region, and while a beautiful location is a plus of course, on its own it is not enough.
Given that I oversee a firm that was set up to spread investment across every region of the UK and Ireland, I am drawn to this problem – of which there are many other examples – and the opportunity it presents. I believe there is every possibility that Cornwall, like so many other parts of the UK, can and should be “levelled up” to achieve its full potential. The question is, how to do it?
Obviously, investing more would be a good start. BGF is proud to be an investor in Seasalt, a Falmouth-based clothing brand that is one of the largest private employers in the county with a nationwide network of shops. The £11.5 million we invested in 2018, and the follow-on of £2 million in 2020, originally helped the business increase its headcount, open more shops and push ahead with international expansion, and more latterly to accelerate its e-commerce drive. We are excited about the future growth of Seasalt, which remains a significant employer in its home county, providing jobs, training and opportunities. However, there must be more to the Cornwall of tomorrow than leisure, retail and hospitality. There are some world-leading attractions, of course, with the Queen evidently enjoying herself at the Eden Project. But what else?
There are a number of interesting and emerging investment opportunities in Cornwall which point the way, such as Wave Hub, an undersea “socket” located off Hayle in Cornwall, designed to transfer electricity from wave energy producers to the National Grid and tapping into the renewable energy push where the UK is fast emerging as a serious global player. Perhaps the most intriguing of which concern the potential renaissance of mining. While copper and tin were the sources of Cornwall’s wealth in generations gone by, it is now lithium – an essential ingredient in batteries – that is generating most excitement. Modern technology can extract substances such as lithium from the earth in a far more sustainable way than in previous eras, especially in places, such as Cornwall, where lithium is found in geothermal waters, rather than in underground reservoirs or in hard rock mines. If we really want to drive the electric vehicle revolution, why not start at Land’s End?
But why stop at mining? One of the powerful and positive legacies of the Covid-19 pandemic is more remote working, especially in fast-growing sectors such as technology and digital services. Vin Murria, the renowned UK tech entrepreneur, made the point when she spoke at Scaleup Week, our recent series of virtual policy webinars. With the right technology, she said, “You can be a business, based in Cornwall, with a platform that enables you to be everywhere.”
Cornwall is a desirable place to live for a variety of reasons, chiefly its geography and climate. Why can’t the next crop of innovative technology start-ups be based there? What’s to stop Truro becoming the next San Francisco, if the connectivity, digital and physical, becomes a real magnet? Is this why there are now more property searches in Cornwall than Central London, according to Rightmove? It seems the smart money is already on the move.
Connectivity is clearly a key ingredient. World-class digital businesses can’t operate without world-class digital infrastructure, which means full-fibre broadband roll-out must be a priority in Cornwall, but equally in other parts of the country. The other ingredients are the more nebulous ones that help to determine why business clusters succeed in one location but not in others. They include, for example, the presence of higher education facilities, the perceived quality of life, and the ability and appetite of investors to provide capital to growing companies. Applying this to Cornwall, the University of Exeter has opened a Falmouth campus; the quality of life at Carbis Bay and beyond is stunning; so, what about the money?
BGF and other investors can and should help with that last part, by ensuring that we are actively engaged in the local area, getting to know company founders, and making capital available for the companies that need it. We would like to help build local ecosystems across the country, being open and accessible, and having the risk capital and support to work alongside entrepreneurs with others. A more vibrant local economy has a real multiplier effect.
What then does the future of Cornwall look like? I can’t claim any special knowledge, but I like the idea that, should the G7 return to Cornwall in ten years’ time, they would find a county that is not known primarily for beaches and tourism, but for the environmentally friendly production of lithium, a supportive start-up ecosystem, and a dynamic cluster of technology-enabled businesses. The global companies of the future will be led by those that can protect the planet. If the Eden Project is the seed, then why can’t we see a real breakthrough on the road to net zero? It will be partly paved with lithium.
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