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Exploiting the UK's science and technology base

In this report by TTP Ventures, David Connell asks what is the key ingredient for big time success on the global technology stage? And what is it that leads to so many strong new technology companies being created in the US and so few in the UK and the rest of Europe? Is it the larger US market, more experienced CEOs, greater availability of investment, better VCs, or maybe all of them?

The last hundred years have seen a huge increase in the wealth of this country as well as in the quality of life experienced by the British people. In order to maintain and improve this life style, Britain needs to remain competitive in world markets and to develop world class companies.

Although we are acknowledged to be amongst the world’s best in intellectual creativity we often fail to capitalise on our ideas and ingenuity. We have had great success in recent years in small companies, which have thrived on intellectual capital. However, small firms often fail to become large firms and do not achieve their true potential in wealth creation. This is a wasted opportunity and one which we cannot ignore.

This paper examines the business strategies that have been adopted by successful UK technology companies and highlights the important role played by customer funding during the early, exploratory stages of commercialisation. It shows how these ‘soft’ strategies have been used to build critical mass teams which are then able to grow their businesses rapidly to exploit world markets. US Government agencies have long played a significant role in funding technology development, particularly by placing R&D contracts with small companies that can help them achieve agency goals. The paper discusses how this process works and contrasts it with experience in the UK.

Through this analysis the paper offers a means by which Government can assist our small firms to grow. The proposal is that a small fixed proportion of all Government expenditure on Research and Development should be used to fund innovative technology developments in small businesses – not through grants or subsidies, but by tapping into Departments’ future requirements for new technology as informed customers. The approach proposed is to run regular competitions for companies to carry out research and technical feasibility studies, and supply prototype solutions. It is similar to a scheme that has been operated successfully by the US Federal Government for over 20 years.

This paper should be read by everyone who wishes to understand better the business models for industrial growth and the ways in which Government can help stimulate and nurture our industrial base.

The information in this paper will be valuable to policy makers in understanding the case for change. It will be useful to others who want to use many of the interesting examples to illustrate why we should change. I hope it will stimulate a much-needed debate on the means of assisting small businesses to grow and will be heeded by all those with an interest in the healthy economic future of the UK.

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David Connell founded TTP Ventures in 1998 to invest in early stage UK and continental European science and technology companies. It is part of TTP Group plc (originally The Technology Partnership), one of Europe's most successful technology companies. Based near Cambridge in the UK, TTP had already grown businesses in areas as diverse as wireless communications and drug discovery technology before setting up TTP Ventures to invest in third party (i.e. non TTP) companies. The combined revenues of these businesses now total over £100m, and provide a valuable resource on which TTP Ventures can draw in identifying and evaluating investment opportunities, as well as in helping them grow. TTP Ventures mainly invests in spin offs, including from Toshiba, Aventis, Qinetiq and Oxford Instruments.

David Connell continues to be an adviser to TTP Ventures. He has written and lectured about a wide range of technology policy and management issues throughout his career in the technology sector. He has degrees in Physics, Operational Research and Economics. See http://www.ttpventures.com for further information.