Scott White, CEO of Pragmatic Semiconductor
There’s nothing a politician likes more than a mantra – a phrase that can be repeated over and over until the thought might become reality.
And one of the latest mantras to grace British ministers is ‘scientific 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 position as a scientific superpower. More recently – late 2023 to be precise – Chancellor of the Exchequer, Jeremy Hunt, told MPs his aim was to ensure the UK could rival Silicon Valley. This year, the Prime Minister reorganized the government apparatus and created a Ministry of Science, Innovation and Technology. Start-ups and scale-ups are of course expected to play a vital role in the flourishing of commercially exploitable science.
So how skeptical should we be? It’s tempting to think of the agenda of the scientific superpowers as something of a fig leaf for government at a time when the broader economy doesn’t look particularly healthy.
That would be overly cynical. To begin with, the UK technology sector is performing quite well. It continues to attract high levels of foreign and domestic VC cash. In the first half of 2022 £14.7.7 billion of VC capital flowed to Britain. And although investment fell sharply to £8bn between July and December, the UK tech sector is still a magnet for capital. Perhaps more importantly, it is economically important for the UK to ensure that it does not lag behind the commercial development of key technologies. So no one should argue with the ambition.
But as Science Secretary George Freeman has acknowledged, Britain is not yet a scientific superpower, but rather – in his words – a “scientific powerhouse”. To achieve the former status, you must become an ‘innovation nation’. Essentially, what he meant was to create an environment in which scientific research could be successfully industrialized.
How can that be achieved? I spoke to two CEOs of scale-ups at the heart of the science and technology sector to get their thoughts on the measures needed to support their industries.
Scott White is CEO of Pragmatic Semiconductor. It was founded twelve years ago and has developed a microchip technology that does not require silicon. Today it produces cheap and flexible chips that can be used in multiple contexts. The business model revolves around manufacturing – with a facility in the North East of England – but also plans to offer customers compact manufacturing equipment. In addition, it designs its own RFID chips for tracking goods during transport.
Pragmatic just commissioned a survey of 250 technology company leaders. When asked whether the government can achieve its goal of being a scientific superpower by 2030, a healthy 68 percent answered yes, but only 40 percent believed that sufficient government support was provided.
Unbalanced investment
As White sees it, the UK’s cash-rich ecosystem remains unbalanced, with much of the funding going to start-ups rather than scale-ups. Most of the capital invested in later stages comes from abroad. “We did a Series C in 2021, 2022, that was for $125 million. Eighty percent of the investment came from outside the UK,” he says.
So on that front there is a need for capital that will allow tech companies to stay in the UK both in terms of location and control as they grow.
But what can the government actually do? Well, one way forward is to make it easier for institutions to invest. White welcomes regulatory changes for the insurance industry that allow pension funds in particular to allocate money to technology.
He also acknowledges the progress made in providing government funding through the British merchant bank and its industry, British patient capital. In addition to investments alongside VCs, the organization has set up Future Fund: Breakthrough, with £375 million earmarked for deep tech ventures. “That’s good, but the scale needs to be much bigger,” says White.
Mostafa ElSayed, CEO and co-founder of Automata
Mostafa ElSayed agrees. He is CEO and co-founder of Automatics, a company that provides automation technology for laboratories, particularly in the life sciences sector. The company’s products are designed to speed up processes such as diagnostics and clinical trials while reducing human error. He argues that some industries are better served by others when capital is allocated by VCs, with deep tech having a particular problem. “We all talk about the importance of deep tech, but accessing finance in the deep tech sector is difficult.”
And the UK may be lagging behind its European competitors. “The largest financier of deep tech is BPI France (a sovereign wealth fund), then Germany and then Scandinavia,” says ElSayed.
ElSayed says change could be coming. He quotes comments from the new head of British Business Bank, who recently floated the idea of creating a sovereign growth fund to support innovation.
Relatively small changes can also bring benefits. White points to existing programs, such as the Enterprise Investment Scheme (EIS) and Venture Capital Trusts. By offering tax breaks to those who support eligible companies, these vehicles have encouraged investors to support startups. However, once companies reach a certain size, the tax breaks will disappear, meaning the schemes will not benefit scale-ups.
Stimulate demand
It’s not just about the money. “There is also a need to support domestic demand,” says White. “For example, you can use government procurement to drive adoption.”
Indeed, in some sectors, the government has tremendous power to make things happen. ElSayed uses the example of clinical trials. The UK has a hugely important resource in the form of a National Health Service that serves more or less the entire population and can collect data accordingly. This may make Britain one of the best countries in the world to conduct clinical trials. Although it is a national service, much of the decision-making takes place at the level of local health trusts. “There needs to be a national strategy,” says ElSayed. It is a precedent that Britain already has a national strategy for genomics research.
Another important puzzle piece is the visa policy. ElSayed emphasizes the need for a regime that enables science-based companies to quickly hire staff. “When a company develops at our pace, you struggle to find people who have the right to work in the UK,” he says.
Scott White says Britain has the potential to become a scientific superpower, but clarity is needed on what that actually means. When it comes to government support, not all the puzzle pieces are in place.
