CAN/001a
Show me the Money – 18 February 2009 Summary of talks and discussion
Dr Norman Apsley, Northern Ireland Science Park
This workshop will present three different approaches to crossing the ‘valley of death’
between physics research and a sufficiently risk-free product: funding from private
capital, government support and philanthropic investment. The biggest need of any
young entrepreneur is cash, and it doesn’t come with the same ease as research grants. The value proposition and sense of risk are both quite different.
Ashley Evans, Director, Electronics KTN
? Great innovations can come out of the toughest times: in the 1930s, 3 million
new homes were built, the automotive industry increased output by 50%,
manufacturing output grew by 11% and the first holiday camps appeared.
? The UK Government’s Knowledge Transfer Programme is vast and includes
Knowledge Transfer Partnerships, Knowledge Transfer Networks, Industrial
CASE awards, Doctoral Training Centres, Collaborative Research
Programmes and Innovation Platforms
? Four actors are needed in the innovation cycle: broker, inventor, financier,
transformer
? Research shows that developed nations spend ~$1270 per capita per year to
1boost R&D and KT; however returns have been minimal in the UK due to a
need for improved ‘broker’ and ‘transformer’ links between inventors and
financiers. National employment, power and wealth depend more on the
deployment of innovations than on the invention itself.
? The KTN’s tool, ‘Fundmap’ guides start-ups through the most relevant 10% or
2so of the ~3000 funding sources available. Maps across four broad funding
categories: research, commercialisation, product development and company
growth, with filter options by region, market, type of funding and company
development stage. See www.fundmap.co.uk
1 http://www.forrester.com/rb/research 2 http://www.conservatives.com/pdf/document-richardreport-2008.pdf
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? The UK has strengths for high tech firms: a strong academic base for ideas
generation; good capital markets; flexible labour laws (with a positive impact
on retraining); good intellectual property protection.
David McMeekin, London Technology Fund
? the equity gap is increasing because young high tech companies are very
high risk investments – funders move up the ladder because the returns are
better, and risk and reward are out of balance
? Bank lending – not appropriate for loss-making tech start-ups with no means
to service or repay debt and little security
? many government support schemes have appeared in the past 10-20 years
but there remains a shortage of early stage tech equity funds
? the current climate means that many SMEs are suffering from loans which
they cannot repay – what is often needed is equity, hence new government
schemes
? Business angels may still invest but are wary of getting involved with capital
intensive high tech proposals
? The North East/North West of England and Scotland have regional tech funds
as an example of this type of public support for new businesses – London’s
LTF is active but very small
? The LTF was established to fill the gap in London. Must co-invest. LTF acts
as a catalyst – already attracted over ?18m funding to high tech companies in
London.LTF can help in strengthening management teams, identifying
marketing strategies/routes to market, provide introductions to major tech
corporates, and identifying suitable premises
? Funds such as LTF are a proven way for UK to improve its science-based
entrepreneurial environment
? Company must be seed/start-up/loss-making early stage tech SME with head
office and senior management in London in order to be eligible.
? the LTF 2009 competition opens for applications today, and closes 30 May.
Prizes include ?100,000 of free workshops, a share of up to ?1m of
investment and speed-dating with global technology companies. Other dates,
rules, etc., available at: www.londontechnologyfund.com
Show me the Money – 18 Feb 2009 Page 2 of 3
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Dr Andrew Mackintosh, Royal Society Enterprise Fund
? some founders/CEOs have been working with start-ups 3-9 months, unpaid,
to try and acquire funding
? the Royal Society has a role to play in highlighting the importance of the
commercial/societal application of excellent science among the academic
community
? Historically, since its founding, Fellows of the Royal Society have been
involved in commercial applications of science as well as blue-skies research;
the Society is uniquely placed to encourage cultural change and has
extensive networks and relationships
? The Enterprise Fund aims to support science start-ups and to make money;
the initial emphasis is on physics- and engineering-based companies; and it
also aims to attract additional investment activity into the areatimescales for
support are open-ended as the fund is ‘evergreen’
? the way profits are recycled into further support for start-ups appeals to the
scientific community
? grants are awarded on the basis of the entire business case, not on a
matched funding basis or so on
? Around 100 applications already received, applications can be made at any
time
Q&A
? TSB funds have been criticised as ‘more interested in HEIs than in real
business’ ? Very high returns (approximately 10x) are required for those successful LTF
investments, to compensate for the large number of failures. Typical return
from VC investment between 2000-2006 was -0.6%
? Large corporates do not really have a role to play in supporting high-tech
SMEs, but government procurement does. Some cultural change is required
here in order to maximise opportunities for new technologies and companies ? HEI spin-out managers and KT officers have an improving profile within HEIs,
although sometimes still add an extra unnecessary layer; can sometimes lack
clarity on their objectives (whether to make money for the HEI, or to
disseminate the academic work)
Show me the Money – 18 Feb 2009 Page 3 of 3
Summary of talks and discussion – updated 2 Mar 09