30th March 2020, London: The UK Innovation and Science Seed Fund (UKI2S) has published an independent economic analysis showing how its investment and continuing support have generated benefits for early stage companies and for the UK economy as a whole. The report, by economic research specialists SQW Consulting, demonstrates the unique value of UKI2S in commercialising scientific research from public sector research establishments.
Dr Andrew Muir, Investment Director, UKI2S, said, “The Fund strives to enable and accelerate the commercial success of innovative companies stemming from the UK’s research base, developing great science into great companies. The start-ups and companies we support range from nuclear fusion to agrifoods and from engineering biology to process monitoring. In the UK we have an incredibly rich scientific R&D base and we work with entrepreneurs to keep the UK at the forefront of global scientific innovation. This has never been more important than in today’s rapidly changing world. I am delighted to see that the benefits to the UK brought about by UKI2S’s support for its portfolio companies since its inception are reflected so clearly in this report.”
Headline findings of the new report are as follows:
- Critical founding role – The report found that over three-quarters (78%) of the 57 companies in the portfolio would not have been established or would have ceased to operate without UKI2S support.
- Co-Investment – For every £1 of UKI2S investment, there has been £34 of follow-on investment from other sources. UKI2S has provided companies with almost £15 million of equity funding. These companies have gone on to receive subsequent investment of over £500 million, almost all from the private sector.
- Highly R&D intensive – The companies are deeply committed to long term development of their technology. The data behind the study shows that portfolio companies spend over 50% of their funding on R&D and continue to do so well after initial products are launched.
- UK prosperity – Around 95% of all sales are exported. The companies are developing ground-breaking and often world-beating technologies. Their markets are global and UKI2S portfolio companies have already exported almost £170m of goods and services although many are still in development mode.
- National reach – UKI2S invests in companies throughout the UK. 57% of UKI2S portfolio companies are outside London and the South-East.
- Jobs – Over 770 jobs have been created by portfolio companies of which the study found that 300 were directly attributable to the Fund’s role. These are highly skilled and high productivity roles with an average salary of close to £50,000.
- Successful investment realisations can bolster economic growth – The Fund has successfully exited three portfolio companies recently, all to major international acquirers (including Apple) and is recycling the profits into the next generation of start-ups. Meanwhile acquirers are building new operations around the unique skills of their UK acquisitions, expanding the economic impact in the UK.
“UK Research & Innovation works to drive innovation and maximise the impact of our research investments, as well as supporting businesses to realise the potential of new technologies, develop ideas and make them a commercial success. Following the first review undertaken by SQW in 2013, this latest review highlights that the UK Innovation & Science Seed Fund has gone from strength to strength, delivering truly exceptional economic, societal and commercial impacts over the course of 17 years. UK Research & Innovation is proud to invest in, and be part of UKI2S, helping to ensure the UK is the best place in the world to do research, innovate and grow businesses.” Commented Dr Liz Kirby, Executive Director - Business and Innovation, STFC; Dr Karen Lewis, Executive Director - Capability & Innovation, BBSRC and Dr Jacky Wood, Head of Business Partnerships, NERC.
The Defence Science and Technology Laboratory is one of the core partners, and has been involved since the start of the Fund. Graham Farnsworth, Head of Intellectual Property for Dstl, said: “The fund allows us to invest in very-early stage technology, which can go on to provide answers to some of our challenges in Defence. It’s important for us to invest in SMEs and to harness innovation, as well as to commercialise some of the intellectual property developed at Dstl.”
Mark White, Investment Director, UKI2S, added, “The UK Government’s target of increasing investment in R&D to 2.4% of UK GDP by 2027 is ambitious and will only be possible by leveraging private sector investment through public sector funding. This is often assumed to come from large corporates but fast-growing and R&D intensive start-ups are an increasingly important part of the picture. Now more than ever, it is important to support the UK’s strength in innovation to aid the UK’s long-term economic growth in challenging times and to provide solutions to global issues.”
ENDS
Notes to editors
About the UK Innovation & Science Seed Fund (UKI2S)
UKI2S is a national seed investment fund that helps the UK to build innovative businesses, leverage private investment and grow jobs. UKI2S achieves this by nurturing new businesses arising from the great science undertaken in the UK; providing the patient, long-term committed capital and strategic advice these companies need. UKI2S is usually a founder investor and often the sole investor in the very earliest stages. Over the past decade and more UKI2S has built a substantial track record with 57 portfolio companies created – with only £15m of capital from UKI2S – that between them have attracted over £500m of later stage investment and now have a combined market value of over £750m. UKI2S works closely with its partners – led by STFC, BBSRC and NERC, which are all part of UK Research & Innovation (UKRI) and Dstl – and is aligned with the Catapults and Innovate UK to create the best environment for innovation to flourish and in turn, boost the UK’s competitiveness and productivity by commercialising key technological advances in industrial biotech, ag tech, healthcare, medicine, clean energy, materials, artificial intelligence, software and space. UKI2S is independently managed by specialist venture capital firm Midven www.midven.co.uk
For more information, please visit www.ukinnovationscienceseedfund.co.uk.
View the full report and associated video.
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The Defence Science and Technology Laboratory (Dstl) delivers high-impact science and technology (S & T) for the UK's defence, security and prosperity.
Our role is to deliver S&T for defence and security and to steward defence and security S&T capabilities.
Dstl is an Executive Agency of the MOD, run along commercial lines. It is one of the principal government organisations dedicated to S&T in the defence and security field, with six sites; Porton Down, near Salisbury, Portsdown West, near Portsmouth, Fort Halstead, near Sevenoaks, Sandridge, near St Albans, Langhurst, near Horsham and Alverstoke, near Gosport.
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