Anne Campbell, Labour MP for Cambridge and David Connell, Founder of TTP Ventures, have called for the introduction of a UK law similar to the Small Business Innovation Development Act in the United States.
Cambridge MP and venture capitalist join forces to call for innovation law
Mrs Campbell has also announced her intention to bring in a Private Member's Bill to achieve this during this Parliament.
The call comes in a report by David Connell on the role of customer funding and Government procurement in building new science and technology based companies*.
In her foreword to the study, Anne Campbell says 'The Government is putting enormous efforts into strengthening the UK's science base. But, if the UK is to remain competitive in the 21st century, it must have the right policies to take full commercial and economic advantage of this investment'.
Connell's paper examines the business strategies underpinning the UK's most successful new technology companies. It concludes that 'soft start ups', in which customers fund early R&D projects, have had a much greater role to play in exploiting new technologies and scientific advances than is generally realised. Autonomy, Filtronics and Cambridge Silicon Radio are quoted as examples.
The paper also looks at the role that the US Federal Government has played in funding innovations for which it has a requirement as a customer. This practice has for many years played a key role in building US technology companies, like Sun Microsystems Inc.
A key instrument of US policy is the Small Business Innovation Research Program, originally set up by Ronald Reagan over 20 years ago. The SBIR program requires that two and a half per cent of R&D expenditure by US Government agencies is spent with small businesses and it operates through a series of competitive tenders at intervals through the year. Contracts worth about $1.8 billion dollars a year are awarded through the SBIR program, though the total level of Federal R&D contracts awarded to small US firms is probably two to three times this figure.
'In the Unites States venture capital and Government procurement play a complementary role in developing early stage science and technology companies,' claims David Connell. 'If the UK is to build more and larger technology companies, the Government must pull its weight as a customer during the early stages'.
The paper argues that Departmental budgets and procurement processes are simply not designed for buying feasibility studies and prototypes from early stage technology companies. As a result, even where budgets are available, dealing with UK Government customers can be time consuming and bureaucratic. The paper quotes one case in which it took six months just to prepare the legal contract.
The UK Government's flagship policy in the area, the 'Small Business Research Initiative', is modelled on the US SBIR program. However, participating in the UK SBRI programme is not mandatory for Government departments and few of the key agencies are involved. The DTI, which manages the scheme, is known to be dissatisfied with its effectiveness. 'Since it was set up in 2001, this initiative has almost completely failed to deliver,' argues Connell. 'There are simply too many conflicting pressures on civil servants to prevent it from working in its present form'.
David Connell and Anne Campbell argue that the UK situation will only be remedied by similar legislation to that in the US, and Mrs Campbell is therefore seeking to bring in a Private Member's Bill to introduce a US style SBIR programme during the current Parliament.
'The Government has rightly put great emphasis on the need to improve procurement practices', says Anne Campbell, 'but simply publishing guidelines is unlikely to be sufficient to change deeply embedded Departmental cultures. Government customers have a crucial role to play in a modern innovation economy, but we need legislation to get the ball rolling'.
*A copy of the full paper 'Exploiting the UK's Science and Technology Base: How to Fill the Gaping Hole in UK Government Policy' - with a Foreword by Anne Campbell, MP - can be obtained from TTP Ventures, Melbourn Science Park, Melbourn, Royston SG8 6EE, email@example.com Tel. +44 (0)1763 262626 or download a PDF here.
David has degrees in Physics, Operational Research and Economics.
Access to TTP Group and TTP Communication's technical expertise and business experience helps TTP Ventures select investments in other start ups (i.e. not TTP spin-outs) and help them grow. Its investment portfolio includes spin offs from Toshiba's Cambridge Research Laboratory, Aventis, QinetiQ, Oxford Instruments and Cambridge and Glasgow Universities. TTP Ventures' fund investors include Boeing and Siemens.
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Anne Campbell MP
Alex Wood Hall,
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TTP Ventures supports early stage technology companies with investment and incubation services.