Financing and Scaling UK Science and Technology Response

Innovation is one of the key pillars of the UK economy, making it a cornerstone of any industrial strategy. The UK's innovation and entrepreneurship landscape is complex, and instead of seeing growth, we are seeing a decreasing number of companies seeking investment for growth. Unclear pathways and a lack of multi-sector support exacerbates financial and communicational disconnects, further hindering growth. While incubators, accelerators, government schemes, and regional initiatives can provide crucial support, more is needed to streamline the process of bringing innovative ideas to market and supporting them through their journey.

Access to resources, including investment remains a key challenge to small and medium enterprises (SMEs) progressing their ideas. Supporting the most promising SME’s can ensure the scaling up of more startups especially due to their potential to grow the economy. Providing more SMEs with the opportunities and ecosystem to grow into scaleups could present a huge boost for the UK economy, with a sustained positive impact on jobs, local economies and skills development. Launching more SMEs on the path to scaleup will create a knock-on positive effect for smaller companies striking out on the entrepreneurial journey.

The IET’s recommendations:

• Investment: Government should take a pragmatic approach that allows for high-risk investment while being particularly conscious of additional funding if the original cost does not include additional overhead costs or incidentals. In order to improve this, funding should have greater oversight, with clear metrics for success.
• Incentives to avoid “brain drain”: Government should incentivise those who leave the UK, including UK residents, international students in STEM and investors to return. There are a number of levers to do this, including tax relief to make the UK more attractive to those who may leave, or who are expatriates.
• Scaleup pathways: Government, Innovate UK and venture capitalists (VCs) should develop pathways for scaleup that are suitable for a variety of sized businesses to support the entrepreneurial journey.
• Collaboration: Academia, industry, and government entities must have more joined up collaboration in order to provide entrepreneurs with access to cutting-edge research, technological advancements, and a highly skilled workforce. It is important to build a cohesive infrastructure that enables SMEs to overcome the barriers of scaling up.
• Taxation: Government should consider the tax regime for SMEs to avoid challenges faced by other countries, who have high levels of entrepreneurship, but whose tax laws run the risk of losing those innovators and VCs