The mid-market is Britain’s growth engine. So why is it ignored?

“It’s definitely the most exciting place to be,” says Martin Byrne, managing director of luxury handbag manufacturer Strathberry. He’s not – necessarily – talking about Strathberry’s head office in a Georgian townhouse in Edinburgh’s West End, but about running a fast-growing company in the UK’s often overlooked mid-market sector.

While the public’s attention is often drawn to large listed household-name companies and exciting and innovative start-ups, Byrne believes mid-market companies (MMCs) – loosely defined by Business Leader as those with annual revenue of between £3m and £100m – are “the best place to be and the real heart of the economy”.

“Being medium-sized means you’re big and secure enough to do big, exciting things and you can still be entrepreneurial,” says Byrne, who joined Strathberry as managing director alongside co-founders Guy and Leeanne Hundleby in August 2024.

“As a business gets really big, roles change and narrow, and you’re more concentrated on one specific thing rather than being involved in everything. Start-ups are risky, but medium-sized businesses give you the best of both worlds. You’ve got a business that has proved itself and is more safely established but still has flexibility and opportunity for people to make a big impact.”

That combination of stability and nimbleness also makes MMCs well-placed for rapid growth. Strathberry, which has celebrities including Lady Gaga, Margot Robbie, Pamela Anderson and members of the Royal Family among its customers, grew its revenue by 35 per cent between 2024 and 2025, from £26.9m to £36.4m.

Going up against the multibillion-pound luxury fashion houses of Milan and Paris brings its challenges. Even so, Byrne is confident the company, which was only founded in 2013, will soon hit a £100m annual revenue target that would see it graduate from the mid-market to the large company sector.

Strathberry’s experience is increasingly representative of businesses at the centre of the UK economy – but rarely at the centre of the national conversation. MMCs account for 30 per cent of economic gross value added despite making up just 0.5 per cent of the nation’s 2.8 million registered companies, according to research by NatWest.

Prime Minister Sir Keir Starmer and Chancellor Rachel Reeves have repeatedly said that “kick-starting economic growth is the number one mission” of this government. Yet much of the policy focus remains split between nurturing early-stage start-ups and supporting already dominant large corporates.

Could the answer be simpler than focusing on large companies and start-ups, and lie in better supporting the proven success of the mid-market?

While not being as well-known as large, listed companies or perhaps as exciting as start-ups, MMCs have on average grown their productivity at twice the rate of both. Growing this section of the economy by just 1 per cent could add £35bn in GVA to the UK economy and £115bn in combined turnover by 2030, according to NatWest’s The Critical Middle report.

It would also lead to a jump in employment, particularly outside London and the South East. MMCs employ 7.3 million people – or 26 per cent of all people in work today – and those jobs are predominantly in the regions.

Paul Thwaite, NatWest’s chief executive, calls the mid-market the true “critical backbone of our economy” and an “essential engine of growth that deserves our focused attention and support”.

“They punch well above their weight; they account for more than a quarter of national turnover and more than seven million jobs nationwide,” Thwaite says. “Yet these firms do not receive the recognition they deserve. They operate in a twilight zone between exciting start-ups and big corporates, with an equally big platform.

“They are brimming with the potential to drive up national prosperity, but they are too often passed over by policymakers and financial institutions. Make no mistake though: these businesses possess transformational power.”

It was this gap between economic importance and political attention that led to the creation of the Mid-Market Growth Council (MMGC). Thwaite helped to create the council, which aims to provide MMCs with tailored support to unlock their growth potential and, importantly, give them a collective voice and better public recognition.

Andrew Richardson, founder and chief executive of energy consultancy Troo, says the creation of the MMGC, which is supported by the Treasury and the Department for Business and Trade, was long overdue.

“The UK is a good place to start a business as there is a lot of creator support. But when you are up and running, you’re doing it by yourself,” he says. “It’s a bit like a parent saying ‘Well, you’re 18!’ They throw you out and tell you to cope by yourself.”

Richardson argues that successive governments have focused too heavily on start-ups and small businesses. This comes even though many of them won’t survive, he says, while “we [MMCs] have much greater growth potential”.

Richardson, who co-founded Troo in 2016, says he hopes the growth council will give medium-sized companies more of a collective voice. Troo has an annual turnover of about £10m and employs roughly 120 people, according to Richardson.

“I think we are kind of forgotten about, as we are not big enough to shout and cause them [the government] problems and not seen as special cases in our infancy needing specialised help,” he says.

Richardson says MMCs face unique challenges including attracting talent, juggling red tape, dealing with legacy infrastructure and securing the right funding. Almost every executive we spoke to identified the same roadblocks. Andy Gray, managing director of commercial mid-markets at NatWest, says the same themes recur across its client base.

Difficulty attracting and retaining talent is one of five often-repeated “growing pain problems” that NatWest hears. The others are the burden of regulation, dealing with antiquated infrastructure, a lack of data and having little sense of collective identity. Given these common problems, identifying solutions should be straightforward.

Hiring and retaining staff is the biggest headache for Philip Trant, managing director of Southampton-based Trant Engineering. “Engineering is a huge talent, but the resource pool is very tight and it’s a very competitive market,” he says. “There are not enough people studying engineering at university, which means there are ultimately not enough people to deliver all the work.”

Trant has taken it upon himself to go into schools to promote STEM (science, technology, engineering and mathematics) subjects and the benefits of a university education. “We have to try and make them [STEM subjects] become attractive. A lot of work goes into that, because if not, we won’t have the people for future growth.”

For Byrne, the biggest obstacle to Strathberry’s growth is recruiting enough talented staff to keep pace with demand. That’s an issue Gray hears about a lot. He says mid-market companies can struggle to secure the skilled employees they need against competition from multinationals. Plus, “they fear that if they build their own, they risk them being poached by bigger organisations that are willing and able to pay more”.

Regulation presents a similar structural challenge. Richardson is among many criticising the increase in employers’ national insurance contributions, which he believes “disincentivise employers from hiring and growing, which is what grows the overall economy”.

While regulations are well-intentioned, Richardson says those designed with large companies in mind can create “real headaches” for MMCs. “Often mid-market businesses are subject to the same rules as big business but we don’t have the experience and the teams to deal with it,” he says. “Companies are trying to reinvest and grow, but a lot of funds and resources are distracted by regulatory burden.”

Richardson fears that some companies may intentionally stay smaller in order to avoid growing to the size where regulations are “switched on”. For example, the Modern Slavery Act and payment practices reporting kick in when companies’ revenue exceeds £36m.

The former requires businesses to prepare annual statements detailing the steps they are taking to ensure no slavery and human trafficking occurs in their business or supply chain. Payment practices reporting requires companies to provide statistics on how quickly they pay invoices.

Similarly, the Equality Act 2010 requires companies with more than 250 employees to prepare and disclose their gender pay gap. Plus, the Energy Savings Opportunity Scheme (ESOS) requires companies with a turnover of more than £44m or more than 250 employees to assess their premises for potential energy savings.

Richardson, and others, suggest that a “stepped system” of reporting that starts more loosely and tightens as companies grow could help smaller firms adjust more gradually to necessary requirements.

Trant agrees that the compliance demands can seem excessive. “We are expected to report to the same degree as large multinationals, but we’ve only got a finite amount of resources,” he says. “But for us to be attractive to customers looking for infrastructure partners, we have to be of a certain size so we meet all the criteria.”

Hugh Chappell, who founded TrustedReviews and sold it to Time Warner/IPC Media,

argues that mid-market growth is about far more than revenue. “It’s about improving productivity, expanding into export markets, investing in technology and innovation, and building stronger leadership and management capability. These are the companies that can scale sustainably if they get the right support.”

The UK has underinvested in mid-market support compared with Germany and the US, Chappell believes: “If we get this right, scaling the mid-market could transform regional economies, strengthen local supply chains, create higher-quality jobs, lift productivity and investment, and make the UK economy more resilient and competitive in the long term.”

To do that, the mid-market needs access to capital and funding. This is one of the big challenges cited by founders and CEOs, but investors both big and small are increasingly looking to the mid-market for growth opportunities. Since its creation in the wake of the financial crisis, equity investor BGF has focused on addressing the “longstanding funding gap for ambitious scale-ups that were historically underserved by the market”.

Sofia Paci, a BGF investor, believes the mid-market is the sweetest spot to invest in. “These companies are often deeply embedded in their local economies, anchoring employment, supply chains and skills development across the regions,” she says.

“In our experience, they are also remarkably resilient and capable of adapting to uncertainty. By reinvesting, innovating and growing steadily, they play a critical role in strengthening regional economic ecosystems and supporting balanced national growth.”

Not only are they key to economic growth, but they can also make investors money. Many of BGF’s bets on mid-market companies have paid off, including a £175m return from multiple rounds of investment in OrganOx, an Oxford University medical technology spinout that was acquired by a Japanese company for £1.1bn last year.

Celine Spencer, investment manager at private equity investor August Equity, says her firm targets the lower mid-market because “we believe in the power of founder-managed business”. Spencer says mid-market companies are exciting and rewarding to invest in because “they are often at an inflexion point in their journey where they are looking for a partner to provide insight, networks and capital to strategically support their journey”.

Family-owned Trant turns over roughly £130m annually and is targeting £150m by 2027. The company, which works on a range of water and energy infrastructure projects, employs more than 1,000 people.

Philip Trant is managing director at the company, which was founded by another Philip Trant in 1958. He works alongside five other members of his family and says his number one piece of advice to smaller companies graduating into the mid-market is to “immediately institute proper structures and processes”.

“When a company is smaller it may be possible to wing it, but as soon as you start getting larger, you need structures, processes and procedures around professional standards, remuneration and corporate culture. It’s important for consistency and fairness and will allow you to retain people.”

For other founders, the mid-market sits between freedom and pressure. Asif Ghafoor has experienced this firsthand. At his previous company, he had access to “an expert in everything that you could think of” at his fingertips.

“If I needed help with something, human resources, technical, tax, anything, there was someone to ask – or someone who could take over and do it much better than I could,” Ghafoor says of engineering and infrastructure giant Amey, where he worked as managing director of investments.

However, since co-founding Manchester-based electric vehicle charging point infrastructure company Be.EV in 2019, Ghafoor had to get used to doing a lot more on his own. That includes everything from figuring out regulation and compliance to dealing with employees’ medical and social needs, right down to kitchen chores.

But being smaller allows Ghafoor and Be.EV, which operates 2,500 charging points across the country, to be nimbler and take more risks than larger competitors. “We operate a ‘fast-fail model’ in which we test something to see if it will work and don’t worry too much if it doesn’t,” he says. “It has helped propel our growth.”

Matthew Pack is group chief executive of Holiday Extras, which provides ancillary travel services, such as airport parking, airport hotels, overseas transfers and travel insurance. It bought three mid-market companies last year and is “actively looking at four more now”. Turnover has doubled roughly every five years and this year’s target is just shy of £600m, according to Pack.

“But we won’t buy anything that’s not run clearly and diligently,” he says. “We spent £250,000 lifting the hood of one [company] in 2024 but walked away because the foundations weren’t strong enough – too many surprises, weak financial governance, and systems that were still very much in their entrepreneurial phase.”

Certainty, stability and predictability are Pack’s buzzwords. These were instilled in him by his father – and the company’s founder – Gerry Pack. “He went to a meeting with Luton airport executives 20 years ago and they said, ‘We’re not going to work with you on parking anymore.’

“So, he checked into a hotel and did not leave the airport until he’d found a piece of land to buy and build a car park on,” Pack says. “That’s what I’m talking about when I’m talking about certainty. If you haven’t got certainty of supply for your customers, you have to do something else to take that risk away.”

If the opportunity is clear and the barriers well understood, the question becomes what can unlock mid-market growth at scale. Across interviews with founders, investors and lenders, four practical solutions emerge.

First, smarter regulation. Rather than binary thresholds that switch on full compliance overnight, business leaders consistently argue for stepped regulation that tightens as companies grow.

Second, talent pathways that recognise mid-market realities. This includes earlier STEM education, but also more flexible approaches to equity participation, skills portability and in-work training that allow mid-sized firms to compete for scarce expertise.

Third, patient growth capital. Investors such as BGF and August Equity argue that the mid-market needs funding models that sit between venture capital and large-cap finance, backing sustainable expansion rather than short-term acceleration.

Fourth, collective identity. Whether through the MMGC or similar mechanisms, executives argue that mid-market firms need a clearer, louder voice – not to ask for special treatment, but to ensure policy is shaped around how growth really happens.

None of these solutions requires inventing new institutions or rewriting the economic rulebook. They require recognising where growth is already trying to happen and removing the friction in its way.

Across founders, bankers and investors, the conclusion is strikingly aligned. The mid-market already underpins the economy. It drives regional employment, productivity and resilience. It contains thousands of companies capable of scaling further – if the conditions are right.

The question is no longer whether the mid-market matters, but whether policy, finance and skills systems will move fast enough to unlock what is already there. For an economy searching for growth, the answer may not lie at the extremes – but firmly in the middle.