Energy sector investment adviser Brendan Bilton argues that a support network – and money – will help developers cross the ‘valley of death’
The UK is failing new technology developers that have passed the “proof of concept” phase and are ready to move to making prototypes.
The UK has a lot of support for a bright idea. Seed funding, “angel” investors, and grants from sources such as InnovateUK and “smart awards” are great and really active, providing funding at the level of a few tens of thousands of pounds. But unless the project is a digital one, funding has to go up a gear to get to the prototype stage. Although other developments like 3-D printing can nibble away at the bill, significant investment is needed because there are no shortcuts when conducting field tests and prototyping.
Many hundreds of thousand pounds, maybe even a few million, are needed, and it is a high-risk investment. InnovateUK might fund up to ten projects over a couple of years but that is a very small number compared with the opportunity.
UK developers have to search for venture capital investment. But although venture capital has its place, its stringent approach can stifle innovation because the outcome of an innovative development may not be the one expected and there is little opportunity for redirection.
I hoped that the government’s Clean Growth Strategy would start to build a network that helps pull developers through that process and cuts costs to individual companies by centralisation. In Germany, for example, developers can tap into a network of government-funded research institutes that lift some of the burden of background R&D from developers – and are spread across the regions so they are in touch with local needs. Funding is available from local and regional governments as well as the federal government, and regional research institutes have links to large companies that are looking for innovation and want to invest.
The UK needs a similar approach that cuts costs for innovators. It should develop a more supportive environment and a network that helps developers step through the process.
But most importantly, the UK should abandon its fear of trying to “pick winners” and instead make more investments and accept that some will succeed and some will fail.
First published in the April 2018 issue of New Power Report.
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