Students get ready: technology’s coming home
IT WOULDN’T be August without the usual hand-wringing about exams getting easier and too few students taking science subjects. Yet the debate has never been more relevant, as the UK’s technology businesses weigh the odds of ever becoming world class corporations.
A reasonable number have made the leap in recent decades, though perhaps eclipsed by US consumer tech giants and the growth of the internet. Software groups Micro Focus and Sage, along with cyber security group Sophos, still have London listings. ARM Holdings, Imagination Technologies, CSR, Autonomy and Misys have sold to large US tech groups or global private equity funds.
Many more have cashed in while still relatively small. A healthy start-up culture in our major cities, backed by perennial British creativity and a surge in non-scientific young entrepreneurs learning to code has produced some exciting early-stage businesses, soon flattered by offers from Silicon Valley companies and nearby investors.
When it comes to scaling home grown businesses into global enterprises, perhaps UK founders are sometimes too quick to bow to the perceived greater wisdom of deep pocketed US and Asian companies. Comparatively high ratings on US stock markets, for example, seem to have coloured entrepreneurs’ judgement.
They might point to high revenue multiples paid overseas in recent years for small companies yet to turn a profit, with little proprietary technology to their names. Many have been, in truth, retail focused businesses driven by internet marketing platforms and the promise of big data.
Government deserves at least two cheers for attempting to raise the profile of UK tech overseas. David Cameron’s fondness for showcasing the potential of London’s Silicon Roundabout and Tech Nation has continued under Theresa May. Realistically, however, the next ARM or Imagination Technologies isn’t going to be born in Curtain Road. At the heart of a sustainable tech company with global potential are innovation and new science. We’re talking labs, several PhDs, engineers and invention.
Turning academic ideas into commercial reality is by no means new in the UK. Cambridge’s ‘Silicon Fen’ is well known for producing some fine companies over the years, while universities all over the country are developing world class intellectual property, either in formal partnerships with big business or from the desks of individual students, as was the case with our own company.
Innovate UK, the Government’s own funding arm, grants around £400m a year to game changing ideas with applications in industry, infrastructure and medical science. Sitting alongside institutional investment and public markets, it’s a vital resource for getting ‘big’ UK technology off the ground, as well as a prestigious endorsement. The annual pot, however, equates to a single, lower midmarket private equity fund. It’s nowhere near enough to allow the UK tech sector to dare to think big.
High hopes, then, for the British Business Bank’s new £2.5bn patient capital programme for long-term investment in potential high growth companies in the UK that want to become successful, world-class businesses.
Demonstrable success will also inspire and enthuse more school students from an earlier stage to follow scientific paths, although again, government must be relentless in its pursuit of ultimately producing more of our own engineers and technologists. The uptake of STEM studies from GCSE to degree level and beyond seems to yo-yo, providing inconsistent hope for our skill base. Little will change until there is a clear trend of sustainable, year-on-year growth in these subjects.
The recent FIFA World Cup inevitably evoked memories of England’s finest footballing hour in 1966. In that year there were almost nine million people working in UK manufacturing. Three years earlier Harold Wilson, as opposition leader, was promising to embrace the ‘white heat’ of technological and scientific change for the benefit of British industry. Manufacturing now employs just 2.6 million, but the industry is no longer about merely turning raw materials into physical products.
The value chain in industry is increasingly complex. Manufacturers are adapting with technology in production - robotics, computer design, augmented and virtual reality - requiring new forms of training for different skills and a need for companies, all levels of the education sector and government to work together delivering them. Encouragingly, almost 75% of R&D spend in the UK last year was from manufacturers.
We are well placed in the UK to develop and scale ideas with real-life, problem-solving industrial applications. Our links to the global automotive and aerospace sectors, for example, remain very strong. Meanwhile, a high proportion of our universities are already world class centres of research excellence. The clear disconnect between their accessibility and appeal to UK students, appropriate public funding for commercialisation and the nation’s confidence to aim high in engineering and technology must be fixed urgently.
Coding courses, app building and growing businesses as ‘data plays’ are all great. They create jobs and generate wealth from ideas that often enhance people’s day-to-day lives. However, migrating our tech companies from essentially service businesses to global innovators will need locally sourced, cutting edge scientific knowledge, combined with a more ambitious entrepreneurial mindset.
Students’ choices will play no small part in seizing a huge opportunity right now for themselves, for business and for the UK. Football’s World Cup may have gone to France, but let’s make sure technology’s coming home.