This year's UK Innovation and Growth Summit in London had a buzz to it. Early-stage companies mixed with venture capitalists (VCs) and various advisors, mixing ideas and looking to swap cash for progress.
For some, it was about bringing products to market. Most companies were past that stage, looking for capital to take already successful products abroad. But old problems still hold back innovation — UK capital won't fund UK technology to the degree required to compete effectively on a global basis.
British companies are severely disadvantaged. The word at the summit was that US VCs invest five or six times more cash in early-stage companies than their UK counterparts.
So while it's good news that the government has promised a£100m windfall for high-tech companies turning blueprints to saleable prototypes, this does not go far enough. Lord Sainsbury contends that this will keep the UK at the forefront of the world's economy, but it's too dogmatic and too small. For a start, the money will target eight very niche areas which, while worthy of investment, are not areas that will really help build the UK technology industry. Second, this money is about creating prototypes, not about helping UK companies launch on to the world stage. UK VCs consistently underfund marketing and expansion, thinking that good ideas will sell themselves. They do not.
If the UK is to remain at the forefront of the world economy, the government needs to do substantially more for the technology industry. It needs to invest in ICT companies that are doing something truly different. It is not enough to foster only those companies who are working in areas that fit in with vague notions of tackling, for instance, global warming — and they are vague, given the UK's lack of direct action in this respect. It needs to show leadership in promoting long-term, market-savvy investment. And it needs to say clearly that we cannot win by spending eighty percent less than our competitors.
If the UK is to remain at the forefront of the world economy, the government needs to do more than provide capital allowances on ICT equipment and tax credits for research and development; it needs to put its money where its mouth is. Saying we need more investment is a cliché: spending the money is a must.