Sunday, 26 February 2012

Financial Support for Innovation - has the UK got it right?

One of the stories I like to tell to British people concerns a senior member of my staff at Occidental Chemical; this is now some years ago.  He was a long term employee and had accumulated four weeks annual vacation - you started with two weeks (to be taken after you had worked for a year) and then accumulated an extra day a  year.  Most Brits are appalled and disbelieving at this point, but it gets worse.  Sam (not his real name) was a family man and elected to take off the whole of August to take his large family camping.  For some reason, this came to the attention of my boss.  "Fire him," was his terse instruction, "if he can be away for an entire month, we don't need him at all".  I didn't do it, and although the US culture has gradually changed to slightly longer vacations, it still represents a rather dramatic difference between the US and UK work ethics.

The reason for telling this story is the announcement by the Technology Strategy Board that it is shutting down its Smart program for a month starting March 1st.  The Smart program used to be managed by Business Link, then it was taken over by the TSB, who changed its name to Grant for R&D, and has now changed it back to Smart.  It is not entirely clear why the TSB thinks it is OK to stop processing applications for innovation grants for a month, but no doubt they are making some important changes to make Smart smarter.

I applied for one of these grants once.  It was summarily rejected after review by a single reviewer.  It was a "novel" idea in his view, but not "innovative".  Among a myriad of other flaws he found in my proposal, his version of the risks involved was entirely at variance with my own.  There is no opportunity to question or rebut the assessors solitary views, but the applicant has an opportunity to resubmit a revised application - presumably to be reviewed again by the same rather narrow visioned individual.  Hint to the TSB - people are notoriously bad at assessing risk but a panel usually is more effective; come to one of Captum's Technology Valuation MasterClasses to learn more.

The TSB application was in stark contrast to my application a few years ago in the US to the NIH for a Small Business Innovative Research (SBIR) grant for a new medical device.  All US government research organizations are required to allocate a fixed percentage (it used to be 3%) of their budget for SBIR grants.  Another helpful hint - why don't all the UK government backed research organizations, EPRSC, BBSRC, etc, do the same rather than just fund university research?  My application, which was very much at the concept stage, without patents or an impressive management team (I'm being modest - aside from me I had two very well respected partners), was given a thumbs up by the assessment panel for a $100k grant, no match funding required.  However, because we didn't comply with the requirements for human experimentation - we planned to try out the non-invasive device on ourselves - we were asked to reapply at the next round.  Unfortunately, I moved to the UK before I could make that happen.

All of which takes me to the report issued this month by FINNOV  (Finance, Innovation and Growth)   a research collaboration between seven (high powered) European Institutions aimed at understanding the relationship between changing financial markets, innovation dynamics, and economic performance.   Among a number of recommendations, they suggest less emphasis on university spin-outs, which usually fail, and more investment on research (see my blog of 27 January); credit scoring criteria should be revised (19 February blog); public funding of innovation should be reformed to function as venture capital (also 19 February).  I always tend to agree with eminent bodies who recommend my own ideas, but I'm not totally convinced that FINNOV is right is asserting that the Green Economy is the next big thing after the Internet- energy technology will be a key issue as we run out of hydrocarbon deposits over the next 20 - 40 years..  I do think they have it right in asserting that what we need is Finance for Innovation, not Innovation for Finance. Let's hope that the UK government listens to that.. 

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