10 facts about Creative Industries growth potential

New research, published today, shows the Creative Industries account for almost a tenth of UK firms the study classifies as having ‘high-growth potential’, higher than 5.1% and 2.4% respectively for Life Sciences and Advanced Manufacturing. The importance of the report, ‘High-Growth Potential Firms in the UK’s Creative Industries’, was highlighted by Ian Murray, Minister of State for Media, Tourism and Creative Industries. This piece at gov.uk stresses the huge investment opportunity represented by the Creative Industries.

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Report co-author and Creative PEC Director Hasan Bakhshi has pulled out the ten key findings from the report that you need to know:

There are currently just under 6,000 High-Growth Potential Firms (HGPFs) operating across the Creative Industries, accounting for almost a tenth of the UK’s total HGPF population. This compares with 5.1% and 2.4% respectively in Life Sciences and Advanced Manufacturing.
Creative Industries HGPFs support over 169k jobs and have a combined turnover of £20.9b (smaller than the other two sectors reflecting the relatively larger number of smaller companies).
Over two-thirds (3,981) of Creative Industries HGPFs operate in Application Software. But that is far from the whole HGPF story: 1,054 Creative Industries HGPFs have Marketing, Branding and Advertising operations; 549 work in Films and TV; 394 work in Video Content (including pre- and post-production), and 353 work in Video Games.
A crucial point is that these sub-sector groups within the HGPF population are not mutually exclusive: 30% of Creative Industries HGPFs in Application Software also have operations in other creative sub-sectors like Graphic Design and Video Games. Adding these firms to Application Software HGPFs tagged only to Software-as-a-Service (SaaS) is one approach to identifying ‘createch’ companies, according to which account for 44.2% of all Creative Industries HGPFs. Likewise, 17.6% of creative HGPFs in Marketing, Branding and Advertising and 9.2% of creative HGPFs in Films and TV work in other creative sub-sectors too. Marketing, Branding and Advertising, Video Games and Films and TV correspond to three of the four “frontier industries” within the Creative Industries identified in the Industrial Strategy as having particularly high growth potential.
To date, 60.2% (3,607) of the sector’s HGPFs have secured equity funding, a proportionally higher number than both Life Sciences (59.5%) and Advanced Manufacturing (40.1%). However, HGPFs whose activities include Application Software again account for the majority of these (81.5%). Significant numbers of HGPFs in receipt of equity investment are found working in Marketing, Branding, and Advertising (458), Film & TV (245) and Video Games (211) too.
Mirroring what is known for Creative Industries firms more generally, Creative Industries HGPFs are disproportionately concentrated in London and England’s core cities compared with Life Sciences and Advanced Manufacturing. Specifically, London accounts for half of the Creative Industries HGPF population (2,942). However, regions such as the North West (378), South West (362) and East (354) also host important creative HGPF communities. Scotland hosts a smaller, but significant concentration (277) of Creative Industries HGPFs. Given the UK’s creative HGPF geography, it is not surprising therefore that London (with 75% of total equity investment in the UK since 2011) alongside Manchester attracts a vast amount of equity investment in Creative Industries HGPFs too.
Although a large share of Creative Industries HGPFs have attracted equity investment, in common with the other sectors relatively few Creative Industries HGPFs receive equity investment at maturity: between 2015 and 2024, only 355 Creative Industries HGPFs at the Established stage secured equity compared with 5,004 companies at the Seed stage.
The sector is also not immune to structural challenges facing the wider high-growth landscape. This is especially apparent in relation to investment trends, where the number of equity deals for Creative Industries HGPFs fell by 16.5% between 2021 and 2024 (6.0% for Life Sciences, 14.0% for Advanced Manufacturing HGPFs and 30.6% for the economy as a whole). This helps explain why previous estimates published by the Creative PEC suggest there is a significant shortfall in funding in the Creative Industries – an equity gap – of as much as £1.4bn in potentially unmet demand.
Debt financing is another area where Creative Industries HGPFs face structural challenges. Creative Industries firms more generally are more likely to have asset bases that are made up of intellectual property, brands and other forms of intangible capital which banks and lenders are less likely to accept as collateral. Consistent with this, only 4% of Creative Industries HGPFs have secured debt finance compared with 6.1% and 6.2% of Life Sciences and Advanced Manufacturing HGPFs respectively.
As many as 29.9% of Creative Industries HGPFs have participated in an accelerator programme, compared with 24.9% for Life Sciences and 19.0% for Advanced Manufacturing, and 17.8% have been featured on a ‘high-growth list’, suggesting they are embedded within the system of innovation support. However, notwithstanding the strategic importance of investments from the likes of AHRC and Innovate UK, they are proportionately far less likely to have received large innovation grants (defined as a grant of at least £100,000 for a specific innovation project from an awarding body) than the other two sectors.

Taken together, these findings serve as an evidence base for policymakers to develop targeted measures to further increase investment in the Creative Industries, as trailed in the UK’s Industrial Strategy and regional initiatives such as The Great North: Creative.