A helping hand for STEM start-ups
In a recent industrial strategy document for the life sciences sector, Greg Clark MP, Secretary of State for Business Energy and Industrial Strategy, commented on the UK’s strong intellectual standing at an international level, represented by both the presence of world-leading university business and life science faculties, and of renowned researchers and companies within the UK. This is an ideal opportunity on which to capitalise.
As you will be aware, developments from scientific experimentation on clinical care in health services around the world consume a significant length of time with no initial return, and have a high rate of failure.
This is a lengthy and elaborate process for getting a venture to market. It begins with the early stages of basic science, then the 'asset' is converted from initial safety testing and action/reaction studies into clinical studies, through to proof of concept and ultimately in large multicentre, locally-based, clinical research involving hundreds or thousands of patients with the target disease. This is a high risk/reward venture for the lucky few that succeed.
It is important to remember that the intellectual property/concept/molecule/idea to be developed is the foundation of developing an asset to market. However, the other elements of identifying the right people, having appropriate infrastructure, and business environment also play an equal and important role and should not be neglected as the idea develops into a business. This is where a significant proportion of failures occur.
This is why the concept of business mentoring with people who have relevant ideas within your area, be they technical or more general, is critical. As I start my work as an Entrepreneur-in-Residence, I know from experience where the bumps in the road may be and can shine a light on them, allowing the initiator of the start-up business to make key decisions with a deeper knowledge and understanding within the sector. Of course, this not only applies to science but all relevant sectors.
The government announced an increase in research and development investment of £2.3 billion in 2021/22 from around 9.5 billion representing a significant commitment to this sector. Navigating and understanding this is important as it presents funding opportunities for start-up science organisations.
According to the 2017 UK Life Science Start-Up Report, published by BioCity Group, in the five years to the end of 2016 the number of new research focused companies formed reached 332, which is the highest level since collecting information began. This, however, has been dominated by the East and South East of England and London, with numbers for the rest of the UK declining over the last 10 years.
The percentage of university ‘Spin-Outs’ over the last 10 years has also increased. Although this growth has been predominantly led by the universities of Cambridge, Oxford and UCL, we at the Nottingham University Business School are encouraged by the potential. In the data, approximately half the companies raising investment were university spin-outs, showing that businesses of this background have a strongly defined benefit in raising capital.
So, a growing sector with University STEM based start-ups is attractive to both government and investor support. This is a positive perspective, as long as lessons are learned from the past, ideally supported through mentorship in the Entrepreneur-in-Residence programme.
David Dent FCMI is an Entrepreneur-In-Residence at Nottingham University Business School.