Navigating the Barriers to Growth "Employer NICs, pension contributions, and payroll compliance create a tax burden that hits start-ups hardest, often forcing founders to choose between growth and survival."

Every entrepreneur knows that growth comes with its fair share of hurdles. But for Lauren Murphy, co-founder and CEO of Friday Initiatives (FI), a London based data transformation and strategy consulting firm, those obstacles are more than just part of the journey - they're a call to action. A former data lawyer turned innovator, Murphy is tackling the challenges head-on with her data strategy startup based in London. And her vision for removing barriers to growth could be a game-changer for the UK's startup ecosystem.

R&D Tax Credits: A Missed Opportunity for Startups
One of the most pressing issues Murphy sees is the way the UK's R&D tax system operates. While it's designed to support innovation, she argues that it doesn't work for early-stage startups the way it should.

"Making the R&D tax credit transferable would enable start-up companies to access essential funding by collaborating with larger partners who can absorb the tax credit, unlocking a flow of resources, shared expertise, and faster project launches that benefit both sides and strengthen the UK's innovation ecosystem."

Murphy's solution is simple yet powerful: If the R&D tax credit could be transferred between businesses, smaller startups could tap into the resources and expertise of larger companies, accelerating their growth. Instead, the current system primarily benefits established businesses by reducing their tax liabilities based on eligible R&D expenditures. But for bootstrapped startups, that's often not enough to move the needle.

The Price of Growth: Employer Costs Stifling Startups
But that's not the only cost holding startups back. Murphy points to another major burden: the high price of employment in the UK. With the added pressures of employer NICs, pension contributions, and payroll compliance, the tax burden disproportionately impacts young businesses.

"Another major barrier for early-stage UK businesses like ours is the disproportionate cost of employing people. Employer NICs, pension contributions, and payroll compliance create a tax burden that hits start-ups hardest, often forcing founders to choose between growth and survival."

Murphy isn't exaggerating—without relief mechanisms, especially for first hires or part-time specialists, startups are stuck at a bottleneck before they even have a chance to scale. The decision becomes a constant juggle between surviving and expanding, leaving many small businesses without the resources to grow.

VC Funding: The Gatekeeping Issue
A theme that continues to emerge in conversations about startup funding is the dominance of venture capital (VC) and its connection to a more exclusive, tech-bro culture. Murphy believes that this focus on VC-backed companies—especially those working on AI products—leaves out countless innovative companies with potential.

"In our experience, government and public sector funding for start-ups has focused primarily on VC-backed businesses, or companies that are building AI products. This leans into the gate-keeping tech bro culture. VC funding models disproportionately help men, and are only one piece of the technology start-up ecosystem, although a flashy and outspoken one."

She's not just calling out the bias, though—Murphy is advocating for a shift in focus. Instead of just backing large, high-profile enterprises or AI-heavy firms, she wants to see more attention given to small businesses using data and AI to solve everyday problems. These smaller businesses may not grab the headlines, but their potential impact is far-reaching.

"We'd like to see the government support small businesses to use data and AI in practical ways instead of just focusing on flashy, enterprise-scale platforms. This means backing smaller companies applying technology to solve real problems for SMEs and everyday users. It might be less headline-grabbing, but with SMEs making up 60% of UK businesses, the potential impact is far greater."

Murphy's call to action is clear: It's time to shift the focus to the unsung heroes of the startup world -the small companies making real changes with data and AI. By supporting these businesses, the government can help unlock a wave of innovation that benefits the wider economy, not just the tech elite.

The Future: A More Inclusive and Supportive Ecosystem
With her finger on the pulse of the startup landscape, Lauren Murphy's insights are more than just words - they're a blueprint for a stronger, more inclusive innovation ecosystem. By breaking down barriers like the R&D tax credit and addressing the disproportionate employment costs, she believes the UK can become a fertile ground for more sustainable, diverse startups.

As the founder of Friday Initiatives, Murphy's drive is clear: to enable early-stage companies to not just survive, but thrive. With bold ideas and a deep understanding of the challenges facing new businesses, she's leading the charge for a more equitable startup landscape in the UK.