The UK: Creating a Climate for Innovation

1. The UK: Creating a Climate for Innovation SEPTEMBER 2003 Tom Blount Interim InvoRed Manager, Warwick Ventures

2. Innovation in the UK • The University SectorOxford, Cambridge, Warwick… • Public Research Institutes PERA (Production Engineering Research Association) • The Private SectorEntrepreneurs to multinationals

3. Promoting Innovation in Universities Universities already innovate… … the difficulty is transferring that knowledge from an academic science base to a commercial proposition.

4. Minister with responsibility for the Office of Science and Technology, Research Councils and space matters Lord Sainsbury of Turville ‘In a world of global change, we have a major opportunity to use our scientific and technological skills to create wealth and competitive advantage in world markets.’

5. Four Main Sources of Funding for Innovation • GovernmentThe Department for Trade and Industry (DTI) • The RegionsRegional Development Agencies • Europe The European Regional Development Fund • The Private and Charitable SectorsEstablished companies also have a stake in a buoyant regional and national economy.

6. From University to the Marketplace • Universities have commercial needs • Technology Transfer Offices (Warwick Ventures) • Licensing (32 currently active) • Spin-outs (17 currently active)

7. Creating a Climate for Innovation in the University of Warwick ‘… to promote and develop enterprise and entrepreneurship in Higher Education.’

8. Creating a Climate for Innovation in the University of Warwick Most UK HE research funded by HEFCE (Higher Education Funding Council for England) In 2000 the UK government established HEIF (Higher Education Innovation Fund) to maximise economic benefit from University Research

9. Funding University Spin Outs • Proof of Concept and Protecting IP Seed Funding • Start-ups First Stage Funding • Successful Spin-outs Second and Third Stage Funding

10. Challenge: The Equity Gap  Universities fund research, not business • Universities Spin-offs face the same problems as all SMEs with added problems • If revenue and sales are a long way off, how can you cover operating costs?

11. Supporting Start-ups  University Initiatives • Regional and National Initiatives

12. Seed and Start-up Funding • University Start-ups… • Cannot attract private equity or institutional investment • Cannot be fully subsidised by the university They need to… • Prove their concept (clinical trials) • Develop their product • Take their product to market

13. Government Grants • Grant for a Research Project (SMART) up to £75k + match funding (40%) • Grant for Micro/ Development Project (SMART) £2.5k - £20k + match funding (50%) £20k – £200k + match funding (35%)

14. Funding Start-ups University Challenge Seed Funds £3m Fund giving up to £250k to spin out a company

15. Making Spin-outs Successful • Spin-outs must be able to survive independently • Compete in the marketplace • Short period of opportunity to bring their product to market – high growth essential

16. Private Equity: VCs and Business Angels • Venture Capital HousesDon’t like risk: tend to invest in later stage companies (£5m+) • Business AngelsSmaller investments (£10k+) but can be difficult to find. • Institutional and Corporate Investors Oftenspecialised, difficult to find

17. Private Equity: Regional Initiatives • Regional Development AgenciesPromoting an innovation agenda • Regional Venture Capital FirmsInvest in regional business • Business Angel NetworksAdvantage Business Angels

18. The Future of Innovation? • The current climateRecovery from Dot com bust Successful government initiatives • The ChallengeGovernment funds come to an end Private equity situation in flux • The Need Sustainability within the sector

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