The UK needs to swot up if it wants to keep its science startups
The UK has leading science talent, but it needs more industry savvy investors to stop startups leaving, writes Stuart Grant
Science-based startups risk being suffocated of their immense promise by the UK’s innovation investment infrastructure. Board members of these companies often tell me you would be crazy to consider London as the future place to list, particularly as a tech or biotech company. They love the UK’s cutting-edge life science research, but feel it lags behind the US in terms of investment and scale-up savvy.
The UK has a growing venture capital community for early-stage projects, but many of its potential unicorn companies make their way across the Atlantic for larger, institutional funds that can give better support for their next stage of their growth, such as clinical trials. Informed risk appetite coupled with capital is everything.
In the UK, we have been producing world class innovation and research for centuries, but our broader ecosystems are still catching up. Oxford and Cambridge are home to two of the world’s finest universities, with best-in-class talent and accelerating numbers of supercharged spinouts. The UK also has an established cluster ecosystem – which helps to concentrate and accelerate innovation. Places like Harwell Campus, where I am fortunate enough to be CEO, are punching well above their weight internationally.
But, while most would agree the UK has many of the same ingredients as our American cousins, it remains a harder place to do business at scale – a lack of specialised lab space, clunky commercialisation processes and complex listing rules mean we are less attractive to founders wanting to take their businesses to that next level.
Additionally, our finance ecosystem has a ‘literacy problem’. Homegrown life sciences and biotech-based companies in particular only have access to a small number of later-stage investors with the specialist understanding and background knowledge to be able to question and interrogate the scientific evidence put forward by those companies to make important investment decisions. As much was acknowledged in the Autumn Statement when a £3m fellowship scheme was created to fund up to 20 places to train a generation of science and technology venture capital investors. Many would contend that this initiative merely scratches the surface of what’s required.
There are more and more fabulous investors operating in the science and technology ecosystem, but the UK remains behind the US curve. This inhibits the UK’s ability to deliver an ambitious science and technology agenda. The literacy issue is part of this great bottleneck that stymies the full realisation of a scaleup’s potential.
These differences reproduce themselves in academia. At MIT, it is widely accepted that professors must have a startup alongside their research if they want to make a serious impact. However in the UK, it would traditionally be asserted that if you’ve got a startup you are unlikely to be devoting yourself to research.
Tech Transfer Offices (TTOs) in the US and the UK are another marker of difference. In the UK, they spend a lot of time mentoring and supporting students as they become founders seeking to commercialise their innovations. UK TTOs are forced to do much of the leg work here because the ecosystem around the founder isn’t mature enough to carry them on its own. In the US, we can see the flywheel effect of a high-functioning ecosystem that can deliver much of this additional support. Culture is ‘the way we do things around here’, and we need to ensure such an ethos embeds itself here too.
In the UK we have done good work at the source of the river, with excellent programs and schemes to support early-stage ventures, such as the SEIS scheme, generous tax credits and the Science and Technology framework among others. The Mansion House reforms and the promise of channelling billions of pounds of funding from pension funds could be transformative. But this ecosystem literacy piece must also be addressed if we want to see real change.
Stuart Grant is the CEO of ARC