What do Britain’s scaleups want from the “science superpower” agenda?

There’s nothing a politician likes more than a mantra – a phrase that can be repeated over and over again until, possibly, the thought becomes reality.

And one of the latest mantras to come out of the mouths of UK government ministers is “science superpower”. It’s been a while. In 2021, former Prime Minister Boris Johnson said his government’s aim was to restore Britain’s place as a scientific superpower. More recently – in late 2023, to be precise – Chancellor of the Exchequer Jeremy Hunt told MPs that his aim was to ensure the UK could rival Silicon Valley. This year, the Prime Minister reorganized the government machinery and created a Ministry of Science, Innovation and Technology. Naturally, startups and scaleups are expected to play a vital role in commercially exploitable science flourishing.

So how skeptical should we be? It’s tempting to think of the scientific superpower agenda as a kind of fig leaf for a government at a time when the broader economy doesn’t look particularly healthy.

That would be overly cynical. On the one hand, the UK tech sector is performing very well. It continues to attract high levels of foreign and domestic VC cash. In the first half of 2022, £14.7.7 billion of venture capital flowed into Britain. And although investment dropped sharply to £8 billion between July and December, the UK’s tech sector is still a magnet for capital. Perhaps more importantly, it is economically important for the UK to ensure that it is not left behind in the commercial development of key technologies. Therefore, no one should argue with ambition.

But, as Science Minister George Freeman acknowledged, Britain is not yet a scientific superpower, but rather – in his words – a “scientific powerhouse”. Achieving the first status would involve becoming an “innovative nation”. Essentially, what he meant was to create an environment in which scientific research could be successfully industrialized.

How can this be achieved? I spoke with two scale-up CEOs in the heart of the science and technology industry to get their thoughts on the steps needed to support their industries.

Scott White is CEO of Pragmatic Semiconductor. Founded twelve years ago, it has developed microchip technology that does not require silicon. Today, it produces flexible, low-cost chips that can be used in a variety of contexts. Its business model revolves around manufacturing – with a facility in North East England – but it also plans to offer customers compact manufacturing equipment. Furthermore, he designs his own RFID chips to track goods in transit.

Pragmatic has just commissioned a survey of 250 technology business leaders. When asked if the government could achieve its goal of being a scientific superpower by 2030, 68% could, but only 40% thought there was enough government support.

unbalanced investment

In White’s view, the UK’s rich ecosystem remains unbalanced, with much of the funding going to early-stage companies rather than scaleups. Most of the capital that is invested in later stages comes from abroad. “We did a Series C in 2021, 2022 – that cost $125 million. Eighty per cent of the investment came from outside the UK,” he says.

So in that regard, there is a need for capital that allows tech companies to stay in the UK in terms of location and control as they grow.

But what can the government really do? Well, one way forward is to make it easier for institutions to invest. White welcomes changes to insurance industry regulation that will allow pension funds, in particular, to allocate money to technology.

It also recognizes the progress made in providing public funding through the British Business Bank and its venture arm, British Patient Capital. As well as investing alongside VCs, the organization has created the Future Fund: Breakthrough, with £375m earmarked for deep tech ventures. “That’s good, but the scale needs to be much bigger,” says White.

Mostafa ElSayed agrees. He is CEO and co-founder of Automata, a company that provides automation technology for laboratories, primarily in the life sciences sector. The company’s products are designed to accelerate processes such as diagnostics and clinical trials while reducing human error. He argues that some sectors are better served than others when capital is allocated by VCs, with deep technology having a particular problem. “We all talk about the importance of deep tech, but accessing finance in the deep tech sector is difficult.”

And the UK may be lagging behind its European competitors. “The biggest deep tech financier is BPIFRance (a sovereign wealth fund), then Germany, then Scandinavia,” says ElSayed.

ElSayed says change could be coming. He cites comments from the new head of the British Business Bank, which recently floated the idea of ​​creating a sovereign growth fund to support innovation.

Relatively small changes can also bring benefits. White points to existing programs such as the Enterprise Investment Scheme (EIS) and Venture Capital Trusts. By offering tax breaks to those who back eligible companies, these outlets have encouraged investors to support startups. However, once companies reach a certain size, tax breaks disappear, meaning the schemes do not benefit scaleups.

Driving demand

It’s not all about the money. “You also need to support domestic demand,” says White. “For example, you can use government procurement to drive adoption.”

Indeed, in some sectors, the government has enormous power to make things happen. ElSayed uses the example of clinical trials. The UK has an extremely important resource in the form of a National Health Service that more or less serves the entire population and can collect data accordingly. Potentially, this makes Britain one of the best countries in the world to conduct clinical trials. However, although it is a national service, much of the decision-making is carried out by local health funds. “There needs to be a national strategy,” says ElSayed. There is precedent that Britain already has a national strategy for genomics research.

Another important piece of the puzzle is visa policy. ElSayed emphasizes the need for a regime that allows science-based companies to recruit quickly. “When a company keeps pace with us, you struggle to find people who are entitled to work in the UK,” he says.

Scott White says Britain has the potential to become a scientific superpower, but clarity is needed on what that really means. In terms of government support, the pieces of the puzzle are not all in place.

Leave a Comment