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Scott White, CEO of Pragmatic Semiconductor, said:
pragmatic
There is nothing politicians love more than mantras. A mantra can be repeated over and over again until the thought becomes a reality.
And one of the latest mantras tripping the tongues of British government ministers is ‘science superpower’. It’s been around for a while. In 2021, former Prime Minister Boris Johnson said his government’s aim was to restore Britain’s status as a scientific superpower. told MPs his goal was to help Britain compete with Silicon Valley. This year, the prime minister reorganized the government structure and created the Ministry of Science and Technology. Unsurprisingly, startups and scale-ups are expected to play a key role in the flowering of commercially viable science.
So how skeptical should we be? At a time when the economy as a whole doesn’t look particularly healthy, it’s tempting to think of the scientific superpower agenda as a kind of government fig.
That would be too cynical. For one thing, the UK tech sector is performing very well. It continues to attract domestic and foreign VC cash at a high level. In the first half of 2022, £14.7 billion of VC capital has flowed into the UK. And while investment has fallen sharply to £8bn between July and December, the UK tech sector is still attracting capital. Perhaps more importantly, it is economically important to ensure that the UK is not left behind in the commercial development of critical technologies. Therefore, no one should challenge its ambition.
But as Science Minister George Freeman admitted, Britain is not yet a scientific superpower, but rather a “scientific powerhouse” in his words. Achieving the former status means becoming an “innovation nation”. Essentially what he meant was to create an environment in which scientific research could be successfully industrialized.
How can it be achieved? I spoke with two of her scale-up CEOs at the heart of the tech sector to get their input on the steps needed to support the industry.
Scott White is the CEO of Pragmatic. semiconductorThe company was founded 12 years ago to develop silicon-free microchip technology. Today, we manufacture low-cost, flexible chips that can be used in multiple contexts. The company’s business model revolves around manufacturing, with facilities located in the North East of England, but also plans to offer compact manufacturing facilities to its customers. In addition, he designs his own RFID chip for tracking goods in transit.
Pragmatic just commissioned a study of 250 technology business leaders. When the government asked if he would be able to achieve his goal of becoming a scientific superpower by 2030, 68% said yes, but believed sufficient government support was being provided. Only he was 40%.
unbalanced investment
As White sees it, the UK’s cash-rich ecosystem remains imbalanced, with much of the money going to early-stage businesses rather than scaling up. Most are from overseas. “We did a Series C for him in 2021 and 2022, which he did for $125 million. 80% of his investment came from outside the UK,” he said. increase.
In that regard, as technology companies grow, they need capital that can remain in the UK, both in terms of location and management.
But what can governments really do? One way forward is to make it easier for institutional investors to invest. White welcomes changes in insurance industry regulation, particularly allowing pension funds to allocate money to technology.
he also British Business Bank and its venture division, British Patient CapitalIn addition to investing alongside VCs, the organization has created Future Fund: Breakthrough, allocating £375m to deep tech ventures. “It’s good, but it needs to be scaled up,” he says.
Mostafa ElSayed, CEO and co-founder of Automata
automaton
Mostafa Elsayed agrees.he is CEO and co-founder automatonis a company that provides automation technology primarily to life science laboratories. The company’s products are designed to reduce human error while speeding up processes such as diagnostics and clinical trials. He argued that some sectors would do better than others if the capital was allocated by VCs, and deep tech has certain problems. “We all talk about the importance of deep tech, but funding in the deep tech sector is difficult.”
And the UK may be lagging behind its European competitors. “The biggest supporters of deep tech are BPIFrance (sovereign wealth funds), then Germany, then Scandinavia,” says ElSayed.
ElSayed says change can happen. He cites comments from the new head of the British Business Bank, who recently floated the idea of creating a sovereign growth fund to support innovation.
Even relatively small changes can yield benefits. White cites existing programs such as the Enterprise Investment Scheme (EIS) and Venture Capital Trusts. By offering tax breaks to those backing eligible companies, these vehicles encouraged investors to back startups. However, once a company reaches a certain size, the tax incentives disappear. In other words, the scheme does not benefit scaling up.
Growing demand
Money isn’t everything. “We also need to support domestic demand,” says White. “For example, we can use government procurement to drive adoption.”
In fact, in some sectors governments have enormous power to make things happen. ElSayed uses examples from clinical trials. The UK has very important resources in the form of the National Health Service, which can serve more or less the entire population and collect data accordingly. It will be one of the best countries in the world. However, even though it is a nationwide service, much of the decision-making is at the level of local health trusts. “We need a national strategy,” says Elsayed. The UK already has precedent for having a national strategy for genomics research.
Another important piece of the jigsaw puzzle is visa policy. ElSayed emphasizes the need for a system that allows science-based companies to rapidly recruit talent. “With companies moving at our pace, we will 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 needs clarity on what that means in practice. Not all the jigsaw pieces come together when it comes to government support.