Wednesday January 1st 2020
Grants, Listing, Co-Founders + Tax Advisers | Angel Q&A | Inventor -> Entrepreneur | Business Collaboration | M&A: Energy and AI | French Trip for UK Entrepreneurs | Oxford Enterprise Initiatives | AI, Blockchain & IoT | Investment Post Brexit | Legaltech | Francis Crick Institute | Plants & Drugs
Digest of news and trends in the GRID marketplace in October 2017.
GRANTS, LISTING, CO-FOUNDERS + TAX ADVISERS
Sunday Times series of articles:
Teach yourself to . . . GET A GRANT FROM INNOVATE UK |Peter Evans, The Sunday Times. October 29 2017, 12:01am,
… there are government funds available through organisations such as INNOVATE UK, which was set up to improve productivity by supporting science and technology companies. In the past 10 years, the government agency has invested £1.8bn in 8,000 businesses. Grants range between £25,000 and £10m and are open to UK-based companies.
For a company operating in a favoured sector such as life sciences, infrastructure or manufacturing, a grant from Innovate UK can help kick-start growth. And it is free. Applications can be made online or by post. Decisions are made by independent experts.
Adrian Griffiths, chief executive of Swindon-based RECYCLING TECHNOLOGIES, has received £1m from Innovate for his waste plastic business. Success, he said, depended upon demonstrating relevance in the real world. Griffiths said securing the Innovate grant had helped attract commercial partners: “One strengthens the other”.
Teach yourself to . . . LIST ON THE JUNIOR STOCK MARKET | Peter Evans, The Sunday Times. October 15 2017
….in recent years listing has fallen out of fashion. The number of companies registered on AIM, London’s junior stock market, has fallen every year since 2007, and stood at 959 at the end of September. At its 2007 peak, AIM was home to 1,694 small and medium-sized companies. Experts point to several reasons for the decline. Whereas a listing used to be one of a small number of ways for companies to raise finance, now there is a multitude. In particular, the rise of crowdfunding and peer-to-peer lending has delayed the float plans of a number of private companies. Last year, companies on AIM raised £4.8bn, compared with £16.2bn 10 years ago. Another explanation is the return to the market of private equity cash after the financial crash.
There are still many benefits to going public, including access to capital through a wider range of investors and an increased profile. To list, a company needs to issue a pre-application announcement, appoint a nominated adviser and prepare an admission document. It’s not cheap, with the total bill often exceeding £300,000. An additional application fee is often payable upon listing.
“There are clear advantages to having a public price for your shares,” said Patrick Birley, chief executive of NEX EXCHANGE, a rival to AIM, which counts ARSENAL football club and brewer SHEPHERD NEAME among its constituents. “It’s easier to incentivise management. It makes an exit process much more straightforward.”
Teach yourself to . . . find the right CO-FOUNDER | Peter Evans, The Sunday Times. October 8, 2017
Many early-stage investors prefer to back founding teams rather than individuals. Indeed, more than half of start-ups that have raised at least $10m (£7.6m) have two or more co-founders, according to a survey of 7,348 companies published last year by tech website CRUNCHBASE.
Wendy Tan White, a partner at BGF VENTURES, which runs a £200m fund investing in early-stage companies …prefers to invest in pairs of founders because “more than two founders can get tricky”.
Finding the perfect co-founder can be tough. Websites such as FOUNDERS NATION, FOUNDER2BE and COFOUNDERS LAB offer matchmaking services. Programmes such as Tech City UK’s FUTURE FIFTY and other networking events offer opportunities to meet potential business partners.
Teach yourself to . . . Get a free TAX ADVISER | Peter Evans, The Sunday Times. October 1 2017.
For many owners of small and medium-sized enterprises, the only way to get the best out of the taxman is to employ a specialist. These are not cheap — until now. Two weeks ago, the government quietly slipped out an announcement about a new GROWTH SUPPORT SERVICE. It is designed to help companies “understand tax issues they may face and incentives or reliefs they may be able to claim” with the help of a dedicated tax consultant.
The qualification criteria are surprisingly inclusive, meaning that if a business is growing and has a UK turnover of more than £10m, it is almost certainly eligible for a specialist adviser. And better still, HMRC foots the bill.
To qualify, a business must be experiencing a certain type of growth. These include a significant increase in turnover, the introduction of new capital and preparation for a stock market listing — as well as any “other significant business growth”.
Once approved, a company’s state-funded business expert will advise on tax returns, incentives and governance risks. Access to other HMRC specialists also comes gratis. It sounds almost too good to be true. The consultant will, however, stop short of offering advice on non-tax related business decisions, or giving guidance on tax avoidance.
“It’s a positive step, but no detail has been given on how HMRC will deal with the potential demand for this service,” said Tim Stovold, a tax partner at accountancy firm KINGSTON SMITH. “The idea appears to have been launched without any consultation with SMEs about what they want and, unusually, there are no details about what the cost to the Treasury of providing this service will be.”
Sunday Times series: “Every week we talk to a business angel, one of the early-stage investors who collectively inject £1.5bn a year into British start-ups”
David Ford | Peter Evans, The Sunday Times. October 29, 2017
DAVID FORD, 43, spent two decades as a fund manager in the City and on the west coast of the US. He began angel investing three years ago and focuses on life science companies. He has 12 current investments, including CAPITAL CELL, a crowdfunding platform for early-stage drug developers.
- There are extremely high failure rates and you have to diversify to stand a chance — even if that’s into different sectors within the same industry.
- I look for founders I can back over multiple funding rounds or even multiple start-ups. Unless I have a level of personal engagement with a team or individual, I’m very unlikely to invest.
- Wish I saw more . . .Genuine long-term ambition to build a sustainable business. I see a lot [of company owners] try to build up quickly and then sell. That smacks of a lack of ambition.
- Wish I saw fewer . . .Copycats. There tend to be themes — a couple of years ago it was dating apps. I’m not sure the world needs any more dating apps. Now it’s food delivery start-ups. There is no space in the market.
- Hold your nerve. We should be looking to build longer-term businesses.
- Next disrupted industry. Very early-stage drug discovery. It’s very costly and inefficient. With big data and artificial intelligence, we’re just scratching the surface of what might be possible.
Andy Preston | Peter Evans, The Sunday Times. October 22, 2017
ANDY PRESTON, 51, was a hedge fund manager before moving back to his native Middlesbrough 10 years ago, where he set up GREEN LANE CAPITAL. His first investment was £250,000 in a technology business, ONYX, which was sold last year for a reported £65m.
- I love simple concepts that everyone can understand. Many of the tech-related projects I see fit this bill — such as PROCENERGY, a Middlesbrough-based company into which I invested £100k with a friend. It’s an online hub where people in industry can source and buy training courses.
- I’m only interested in entrepreneurs who have a special blend of traits: they’re motivated by profit, they’re interested in detail and are also bold, big-picture people.
- Wish I saw more…Basic skills in sales and marketing.There is an appalling lack of savvy that lets down the individuals and the UK. For some reason, the Americans seem to be much sharper at marketing and selling. Wish I saw fewer…Long rambling pitches and meetings. I meet too many clever people with great ideas who fail because they cannot explain what it is they do and what the opportunity is that they are offering. Most people switch off after more than 60 seconds of waffle — my limit’s about 30 seconds.
- Next disrupted industry - Further and higher education. Most courses can be delivered more cheaply and rapidly. I believe that we will see a new kind of university emerge within the coming years with a strong online element — doing a better job for less money.
Pip Wilson | Peter Evans, The Sunday Times. October 15, 2017
PIP WILSON, 42, set up her consultancy BLUEFIN in London in her late twenties, selling it for $66m two years ago. She then started AMICABLE, which helps couples divorce without involving lawyers. Her investments include mental health start-up SANCTUS and Mindmate, a brain training app.
- I only invest directly. At first I worked with a syndicate, but I couldn’t get the right connection with the founder. I can make the biggest difference when I invest directly.
- Pitch essentials. A clear financial model with growth potential, diverse founding teams and a clear social purpose.
- No charity. I like start-ups with a social purpose as well as a business purpose, but I don’t want a charity. Sometimes it takes a commercial solution to get something done.
- Level the playing field. There’s evidence that businesses with a woman on the founding team deliver better returns. We are missing so many opportunities. If I and other angels can help even things out, then that makes sense to me.
- Wish I saw fewer . . .People passionate only about running a start-up rather than solving a particular problem. There are too many businesses aimed at Millennials because they think it’s cool.
- Next disrupted industry. Services, especially the legal industry. People now expect to be able to book appointments wherever they are and receive the service the same day.
Meganne Houghton-Berry | Peter Evans, The Sunday Times. October 1, 2017
MEGANNE HOUGHTON-BERRY, 57, backs early-stage companies in Britain and America. One of her recent investments, healthcare start-up CIEL MEDICAL, was sold to a US rival earlier this year. She has also backed education platform THIRD SPACE LEARNING.
- Lessons. In the early days I focused very much on the idea, but the entrepreneur is more important. The investments that haven’t worked have all been down to the entrepreneur, not the idea.
- My deals often come through angel networks. If it comes through a group, and they are all convinced, it’s a good indicator that a company will be able to raise further finance down the line. Ultimately, I make my own investment decisions.
- Wish I saw more . . .Social impact investing. There are opportunities for companies applying innovative technology to solve social issues with a good business model.
- Wish I saw less . . .Rejection. The UK market is not huge, so unless yours is better than existing ideas, you won’t get investment.
- US v UK . . .My colleagues in the US are jealous of EIS [Enterprise Investment Scheme] tax benefits. However, the amount of money you can raise at a fairly early stage in America is a lot bigger.
- Next disrupted industries. Healthcare and agriculture.
INVENTOR -> ENTREPRENEUR
The difference between innovators and entrepreneurs | Jonathan Moules, FT. October 26, 2017
Matt Johnson …. is chief executive of BARE CONDUCTIVE, a business formed around his product employing 10 people in a studio in Shoreditch, the east London tech start-up hub. The company has generated revenue of over £2.5m in six years of trading, selling its paint in kits through hobbyist websites and retail chains such as RadioShack in the US. Johnson is in discussions with several FTSE 100 companies about taking operations to a much larger scale.
Many inventors like Johnson try to turn their innovations into businesses, but few reach a large scale. More often it is companies led by entrepreneurs, rather than inventors, that change society with their products. Having moved from inventor to entrepreneur, Johnson says he has developed a respect for those whose skill is to create companies rather than make technological breakthroughs. “I now understand that creativity isn’t only the realm of those creating objects,” he says. “Creating a company, to me, that is total magic.”
The stumbling block for many inventors is moving from being a small-scale operation to a large business, says Simon Bond, innovation director at SETSQUARED, an incubator programme set up 15 years ago by five UK universities to turn academic breakthroughs into large companies. Thousands of inventors approach SETsquared for support. The incubator identifies those that truly have an entrepreneurial bent by insisting that everyone goes on a two-day introduction course that outlines how someone takes an idea from the back of a napkin to a commercial venture.
Bond: Those who do stay with SETsquared are those who are able to share the vision often finding a mentor during the introductory course who later becomes the company’s chief executive. He cites the example of SETsquared alumnus SYMETRICA, a security systems supplier. It was based on a discovery in gamma ray technology by David Ramsden during research at the University of Southampton. Ramsden had come to SETsquared imagining that his discovery would be of most use detecting low-level radiation in satellites, but after meeting mentor Heddwyn Davies, later Symetrica’s chief executive, he was convinced that there was a business opportunity in the technology’s potential to detect dirty bombs at security checkpoints at ports, for example. The company, which has raised $4.7m to date from private equity, is now a supplier to homeland security operations in the US.
“Successful businesses are more than great ideas,” Bond says. “Expanding the business consistently in a way that engages more than a top tier of customers takes more than a single invention.”
ENTREPRENEUR FIRST is a London-based accelerator programme that helps technology graduates and those already working in tech start-ups to discover their inner founder. In the six years since it was launched it has enabled the creation of 150 companies, valued collectively at about $1bn. None of these founders would describe themselves as inventors, even though most have an engineering background, notes Matt Clifford, Entrepreneur First’s chief executive. “The invention itself is rarely the key to the whole thing at least with technology companies,” he says. “We look for people with a bigger vision, who can think in an unconstrained way, not limited by the original idea for their product.”
It’s time for the City to scale up support | City A.M. - David Sproul, senior partner and chief executive of Deloitte North West Europe - October 27 2017
More than 80 per cent of scaleups – early stage, high potential businesses – say they have already expanded, or intend to do so in the next three years, with the US, the EU and China identified as the most attractive markets. …Yet our report finds one potential stumbling block to these businesses fulfilling this promise. Scaleups remain fiercely self-sufficient.
Despite acknowledging that collaboration with government, trade associations or corporates could bring benefits, such as access to broader networks and unfamiliar markets, more than half sought no public or private support to scale up overseas.
Collaboration between big businesses and scaleups can be mutually beneficial: big businesses have strong brands, market access and maturity, while scaleups have agility, energy and speed to market. The magic is bringing them together.
Cultural barriers ….Many scaleups are wary of collaboration, with nearly half of firms worried that they would be sacrificing control of their identity. Some express frustration that large businesses often expect them to adhere to onerous, time-consuming and expensive processes, like security and contract negotiations.
Corporates must simplify their processes to make it easier and cheaper for young businesses to work with them. More also must be done to raise awareness of the various models of collaboration between corporates, entrepreneurs, and aspiring scaleups, as well as the mutual benefits and success stories.
Big business can help scaleups to develop their products and establish themselves in new markets more quickly than they could alone. A number of big banks have already done this with innovative fintech firms. Yet UK corporates have often been sluggish to keep up with adopting innovative technologies.
According to a DELOITTE survey, just 16 per cent of business leaders considered their organisation ready to exploit innovative technologies like robotics, cognitive computing, and artificial intelligence. This was lower than both the global and Western Europe average.
Collaboration with scaleups can help big businesses experiment with innovation in a low cost, low risk way. This could include three to six month accelerators, where corporates provide “seed” funding and intensive mentoring for startups to grow quickly, developing products or services they are interested in.
The benefits to both sides are clear. The strength in big corporate collaboration with early stage businesses lies in our differences. To prepare for the future and ensure that the UK’s resurgence of optimism continues, businesses need to build partnerships beyond the boundaries of our organisations.
M&A: ENERGY AND AI
M&A between energy and artificial intelligence firms soared this year | Courtney Goldsmith, City A.M. October 24 2017
Mergers and acquisitions (M&A) between energy and artificial intelligence (AI) or big data companies shot up over the past year as renewable energy firms work to better manage fluctuating production …according to a report by business adviser BDO. Current energy infrastructure and management systems are unable to accommodate the fluctuations in production from wind and solar, BDO said. "Making the demand for electricity ‘intelligent’ means that vital capacity can be provided when and where it is most needed and pave the way for a cleaner, more affordable, and more secure energy system".
BDO found M&A activity among the two groups rose 50 per cent over the past 12 months, with an average reported deal value jumping from $500m (£380m) to $3.5bn. While the adoption of new technologies to improve prediction models is slow, BDO said the utilities sector is starting to see a "marked" shift where both the production and distribution sides were adapting. The firm pointed to a number of recent acquisitions in the sector, including smart metering firm ITRON's purchase of demand response provider COMVERGE for about $100m. Comverge uses machine learning to improve demand forecasts.
Major tech firms like IBM and Google are also investing in the space. IBM Research has already partnered with 200 companies that use its solar and wind forecasting technology.
FRENCH TRIP FOR UK ENTREPRENEURS
London tech startups head on Brexit trade mission to France with Mayor of London Sadiq Khan | Lynsey Barber, City A.M. October 23, 2017
The Mayor of London is leading a delegation of top tech startups to Paris to rustle up investment interest from across the channel and bolster innovation ties between the two cities. Entrepeneurs from SMARTZER, a platform which can make online video shoppable, pregnancy health app BABY2BODY and REALEYES, which uses technology to read emotional reactions to advertising, will all travel to France as part of the Mayor's Business Programme, supported by KPMG and Eurostar.
It comes as new figures show London attracted more than £2bn in capital investment over the past decade creating nearly 6,000 jobs. And London firms, including the likes Asos, have invested nearly £6bn into France.
OXFORD ENTERPRISE INITIATIVES
Oxford university looks to raise its game with start-up hub |Jonathan Moules, FT. October 23, 2017
Tim Cook of Apple to open Oxford university start-up hub | Jonathan Moules, FT. October 11
The push to set up the OXFORD FOUNDRY is a recognition that the city needs to raise its game as a location for start-up companies.
- Husayn Kassai hatched his entrepreneurial idea at Oxford university. He co-founded the online identity checking service ONFIDO with another former student after graduating from Keble College in 2012. But within three months they had quit Onfido’s office in Oxford, mainly because local investors were unwilling to back them, and moved to London. Onfido is now a multinational business employing 150 people in the UK, India and the US.
- Entrepreneur Marcelo Bravo has launched several companies in Oxford ….is chief executive of drugs manufacturer OXFORD PHARMASCIENCE, which for many years was based in the city but recently moved its headquarters to London because of a lack of suitable office space.
Housed in a former ice factory in Oxford city centre, the facility provides university students with a space in which to work on their entrepreneurial ideas and the chance to meet possible financial backers. The facility was funded by £3.2m in gifts, including £1m from Reid Hoffman, co-founder of the LinkedIn social network, as well as support from the charitable foundation of Mohamed Amersi, the entrepreneur, EY, the accountancy, Meltwater, the US-based data analytics business, and the DeTao Education Group of China.
An entrepreneur advisory group chaired by Brent Hoberman, the LASTMINUTE.COM co-founder and an Oxford graduate, and including Phil Libin, co-founder of note-taking app EVERNOTE, and Biz Stone, TWITTER co-founder, helped design The Foundry. Previous student tech ventures created in Oxford have received mentoring support from the Launchpad programme run by the Saïd Business School, which also managed the fundraising for the new start-up space.
Students who establish commercial ventures that are judged to have exceptional growth prospects can join the foundry’s so-called accelerator programme, where they can be mentored by experienced entrepreneurs and meet potential investors offering equity funding. The foundry also has some equity funding of its own to put forward.
Oxford has for decades played second fiddle to its academic rival Cambridge, both in terms of the number of new businesses and the amount of venture capital funding. There were 353 technology start-ups established each year on average in Cambridge between 2011 and 2015, compared to 232 in Oxford…. Cambridge start-ups have also made far more acquisitions during 2011-16: 419 compared to Oxford’s 261. However:
- OXFORD ENTREPRENEURS is the largest student society at the university and the biggest such body in Europe.
- The university already runs an incubator that has worked with more than 50 start-ups and attracted $40m in funding since 2011.
- OXFORD SCIENCES INNOVATION is the world’s largest university venture capital fund for a single institution, with £590m of assets under management. It backs new businesses generated out of students’ research.
- OXFORD UNIVERSITY INNOVATION, a university subsidiary that oversees the conversion of scientific breakthroughs into commercial ventures, generated 21 spin-offs last year compared with 10 in 2015. The OUI’s seed funding increased from £9.5m to £52.6m during the same period, and involves backing for breakthroughs in areas including the life sciences, robotics, quantum computing and autonomous vehicles. Adam Stoten, OUI chief operating officer.
- Oxford-based entrepreneurs are helped by a local network of wealthy individuals willing to invest in start-up companies, and high-profile backers such as star fund manager Neil Woodford, whose team is based in an industrial park in the city’s Cowley neighbourhood.
- Oxford and the surrounding area has generated some high-profile success stories. The town of Abingdon is home to SOPHOS, the cyber security company that was the biggest initial public offering of a UK software group when it listed on the London Stock Exchange in 2015.
AI, BLOCKCHAIN & IoT
Fringe technologies are swiftly moving to the mainstream – and businesses need to be ready | City A.M - Tom Thackray, director of innovation at the CBI - October 20, 2017
Three technologies– artificial intelligence, blockchain, and the Internet of Things – are …shifting rapidly into the mainstream. Artificial intelligence solves problems. Blockchain changes how businesses exchange value. The Internet of Things unlocks big data. Businesses of all sizes and sectors will be impacted as disruptive technologies go mainstream over the next five years and they have a clear window of opportunity to prepare themselves.
Why should companies invest? Businesses that innovate grow jobs and sales twice as fast as firms that fail to do so, while adopting technology gets the best out of people, with 50 per cent of labour productivity driven by innovation.
Technologies like the cloud were seen as niche just a few years ago … but they have now matured to underpin much of the UK’s business infrastructure. The same potential is there for these three cutting-edge innovations. However …barriers to their adoption remain.
Only a third of businesses say their company has the skills and capabilities needed to adopt AI technologies. Meanwhile, the main concern for those businesses looking to adopt data driven technologies, such as the Internet of Things, is the security and privacy of devices. And while blockchain can be used across many sectors, which is a chief strength, it also means that regulators at domestic and international level must work closely together set clear standards for companies to abide by.
…., getting the adoption of cutting edge technologies right …requires a deep partnership between government, people and businesses. We:
1. need to get the regulatory conditions right. That’s why it’s so important rules like the new Data Protection Bill are passed quickly to enable businesses to make the necessary changes.
2. must ensure business, government and employee representatives work together to ensure we understand and confidently prepare for the transformative impact on people’s lives, jobs and our society. That’s why the government should set up a joint commission on artificial intelligence in 2018, involving both business and employee representatives, to better understand the impact on people’s lives, jobs and our future economic growth.
INVESTMENT POST BREXIT
Draper Esprit plans $100m investment in seed funds amid uncertainty over Brexit | Kadhim Shubber, FT. October 16, 2017
Draper Esprit, a publicly listed venture capital firm, has backed two venture capital firms - seed funds that back early-stage start-ups - that missed out on EU funding after the UK issued its formal notification to leave the bloc, as part of a new strategy of investing in funds as well as companies:
- SEEDCAMP …an early backer of TRANSFERWISE and REVOLUT, and was close to securing funding from the EIF earlier this year. Reshma Sohoni, Seedcamp’s co-founder and managing partner, said the contributions from Draper would help fill the funding gap left by the EIF in its fourth fund. Draper joined the “upwards of 20 VCs” that Seedcamp already counted as limited partners in its funds, including INDEX VENTURES and ATOMICO, said Ms Sohoni.
- EPISODE1 which has backed ZOOPLA, BETFAIR and LOVEFILM Simon Murdoch, managing partner at Episode1
They are the first of 20 investors to which Draper plans to commit $100m over the next five years. Draper Esprit invests in start-ups at a later stage than the seed funds it is now backing.
The move is a sign that UK investors are attempting to fill the large hole left by a pause in funding from the European Investment Fund following the UK’s Article 50 notification in March. Draper’s commitment follows the UK government’s decision to provide an extra £400m to the BRITISH BUSINESS BANK for investment into venture capital firms. The sums are still relatively small when compared with the €2.3bn the EIF invested in 144 UK-based venture capital firms between 2011 and 2015, accounting for more than a third of investment in UK-based venture capital firms in that period.
The EIF, which is Europe’s largest single backer of venture capital, is a subsidiary of the EUROPEAN INVESTMENT BANK and includes commercial banks and other financial institutions among its shareholders. It continued operations in the UK as normal following the vote in June last year to leave the EU but changed stance when Britain formally notified Brussels of its intention to exit. The EIF has said since the Article 50 notification that it needs to do “more thorough” due diligence before making new investments and has denied any moratorium on activities in the UK. Officials have told at least one UK fund manager they cannot make new investments until they have instructions from the European Commission and EIB.
Draper Esprit floated in 2016 in a rare move for a venture capital firm, which are typically privately held through a partnership structure. Neil Woodford is among the company’s biggest backers with a fifth of its shares …Earlier this year, the firm raised an extra £100m.
The Treasury is currently carrying out a consultation on proposals including a new national investment fund to back investors in young, high-growth businesses.
Draper Esprit will put up to £75m in leading tech seed funds, starting with Transferwise backer Seedcamp and Zoopla investor Episode1 | Lucy White, City A.M. October 16, 2017
Draper Esprit …has already invested in crowdfunding companies Crowdcube and Seedrs …and companies such as Graze and LoveFilm. Draper Esprit's chief executive Simon Cook: “Our plan is to create a significant fund-of-funds business, which will target investment in 10 to 20 seed funds, angel networks and early stage investment platforms over the coming years.” As well as the two investments announced today, Draper Esprit is currently looking at three more.
Draper Esprit's core strategy is to invest up to £100m in technology businesses at series A, B and C-plus rounds from its own balance sheet and its Enterprise Investment Scheme, venture capital trust and secondary funds.
British Business Bank: We’re here to help after Brexit | Peter Evans, The Sunday Times. October 1, 2017
The state-owned bank’s new chairman Lord Smith of Kelvin, 73, former chairman of the energy giant SSE and the Scottish engineer Weir … and chief executive, Keith Morgan, 53, formerly an executive director of UK Financial Investments ….want to reassure entrepreneurs that the bank will help fill the funding void left by Britain’s departure from the European Union.
That may be easier said than done. Last year the European Investment Bank and European Investment Fund (EIF) invested a total of €8.1bn (£7.1bn) in the UK, much of it into fast-growing companies. To even begin to plug the gap will mean a huge step up in the bank’s role.
The bank was set up three years ago by the then business secretary, Sir Vince Cable, with £1bn of taxpayers’ money. Its founding aim was to increase the supply of finance to small companies. It does not lend outright, but channels money into finance providers — investing in venture capital funds, taking shares in peer-to-peer lenders and issuing guarantees on loans. It supports 51,000 businesses through 90 finance partners, and was given an extra £400m in last year’s autumn statement.
Among the biggest Brexit concerns for entrepreneurs is the absence of the European Investment Fund. It is Europe’s largest source of finance for venture capital firms looking to back start-ups. The British Business Bank does the same, on a smaller scale.
The bank does appear to be investing in step with the principles of the government’s industrial strategy. Last month, it put £40m into the SERAPHIM SPACE FUND, which invests in early-stage technologies. It has also backed a fund focused on the creative industries. Other sectors highlighted in the industrial strategy include pharmaceuticals and technology.
The priorities of the bank, based in Sheffield and London, include spreading the availability of small business finance around the country. It is responsible for the £400m NORTHERN POWERHOUSE INVESTMENT FUND and £250m MIDLANDS ENGINE. Next year, a £40m fund for Cornwall and the Isles of Scilly will be launched.
The bank also wants to improve the availability of information and recently launched a business finance guide.
First there was fintech, now there's legaltech: The Law Society partners with Seedrs to support legal sector innovators | Lucy White, City A.M. October 17, 2017
THE LAW SOCIETY, the representative body for solicitors in England and Wales … has partnered with startup investment platform SEEDRS. …the Law Society is hoping to encourage its members to take up more innovative tech services in their firms.
The partnership will give Law Society members priority access to selected legaltech deals before they go live on the platform, and discounts to certain Seedrs partnership services. Investors on the platform can give mentorship as well as contribute capital, and the Law Society hopes solicitors will work with entrepreneurs to deliver innovations that can benefit the industry.
Seedrs has completed more than 530 deals with over £270m invested into campaigns on its platform.
According to a report by legaltech community LEGAL GEEK, 46 per cent of legaltech startups are helping firms become more efficient and win new customers. There has also been a 160 per cent increase in new legaltech businesses year on year.
FRANCIS CRICK INSTITUTE
Francis Crick Institute looks to turn discoveries into treatments | by Clive Cookson, FT. October 2, 2017
Commercialisation is one of the top priorities for researchers as they settle into their labs at the Francis Crick Institute, London’s new £650m biomedical science centre…. founding chief executive Paul Nurse and newly appointed chairman John Browne, 69 — emphasised their determination to speed up the “translation” of discoveries made in the laboratory into disease treatments backed by industry.
The Crick, which was built next to the British Library and St Pancras Station in central London:
- replaces three mid-20th century research institutes that were operated by the Medical Research Council and Cancer Research UK at sites around the capital.
- is the result of a partnership including the MRC, CRUK, the WELLCOME TRUST and three universities: UCL, KING’S COLLEGE LONDON and IMPERIAL COLLEGE.
- receives £117m a year in core funding from the MRC, CRUK and Wellcome
- work covers a broad sweep of bioscience, with potential applications for conditions from cancer and heart disease to neurodegeneration and infertility.
- Most of the 1,250 scientists working at the Crick have transferred from its partners’ research labs, but the institute has also carried out an external recruitment drive over the past two years.
- has established a “rather open translational relationship” with the two largest UK drug companies, GLAXOSMITHKLINE and ASTRAZENECA, Sir Paul said.
- … a decade after leaving BP, Lord Browne has added chairing the Crick — a seven-year appointment — to a full portfolio of leadership positions, including executive chairman of L1 ENERGY, the oil and gas investment company. ….has also been president of the Royal Academy of Engineering
For many years, governments and universities have encouraged commercialisation of research, usually through technology transfer offices that identify and patent promising discoveries — and then either license them to large companies or help to create start-ups to exploit the technology. But the Crick’s leaders are taking a more flexible approach, using an in-house “translation team” of about six people.
“Often in academic institutions — and we are essentially an academic institution — the tech transfer companies are the gatekeepers and they do not always work effectively,” Sir Paul said. “One reason is that tech transfer companies always feel they have to wash their faces economically,” he added. “They often put in milestone payments so they can get small sums of money to show that they have done something and then pay for their expenses.” But he said the “milestones become millstones” on the path to commercialisation. “Our view is to get it out there quickly, cheaply, in the sense that we are not trying to make those small sums of money,” Sir Paul said. “If something works, we will get something back but we share the risk.”
PLANTS & DRUGS
Keep taking the broccoli, says British pharma company | Sabah Meddings, The Sunday Times. October 1
In 2007, the World Health Organisation estimated that the plant-derived drugs trade was worth about $100bn. The figure is expected to reach $5 trillion by 2050. That means big pharma becoming more involved. Small drug developers have done a lot of the work up to now. However, the Swiss giant Novartis has a string of partnerships working on regenerative medicine and malaria, among others. The opportunity is huge. Only 5% to 15% of the world’s known plants have been tested for therapeutic potential, according to research, which means there are still millions that could hold the key to cures. That’s before the potential of marine organisms, such as sea sponges, is examined.
- EVGEN PHARMA Plc is a drugs developer which is designing drugs using sulforaphane, a compound found in broccoli. Its treatments have been shown to kill cancer cells and improve the prospects of stroke patients. While studies have long suggested that certain “superfoods” can help fight cancer, highly-concentrated doses are now being developed.
- a series of drugs derived from cannabis is being developed by GW PHARMACEUTICALS, which is based in Cambridge, but listed in New York. It grows the plants in vast greenhouses, and is gearing up for the launch of Epidiolex — a treatment for drug-resistant epilepsy. GW has developed — through selective breeding — a form of cannabis with a lower proportion of the plant’s psychoactive substance. It means patients can experience the medicinal benefits without the mind-altering effects. In 2010, the company launched Sativex, the world’s first prescription cannabis drug. It is taken by multiple sclerosis patients.
- COMPASS PATHWAYS is to conduct a clinical trial of 400 people with a form of depression resistant to existing treatments. The hope is that psilocybin, the natural psychedelic ingredient in the mushroom, will improve their condition.
- AIM-listed AMRYT PHARMA is preparing to launch a treatment for epidermolysis bullosa, a rare genetic disorder which causes skin to tear at the slightest touch. Young sufferers are known as butterfly children. Amryt’s Oleogel, derived from birch tree bark, has been shown to help their wounds heal more quickly.