Editor, Times Enterprise Network at The Times; founding editor, The Sunday Times 100, The Sunday Times 100 Tech
Stan Boland has a plan - slash Britain's £7.5bn annual funding for R&D tax credits ("passive" funding of innovation as he calls it) and invest that £4bn or so in venture capital ("active" funding of innovation), via British Business Bank. The serial tech boss, whose exits at Element 14 (Broadcom), Icera (NVIDIA), Neul (Huawei) and Five AI (Bosch) add up to more than $1.2 billion, believes that with private sector funds leveraged in it could mean £100bn in additional money for the most promising British tech firms over the next 10 years. “£100 billion into tech would absolutely move the needle,” he told me. https://lnkd.in/ecn45adC #sundaytimes100
Luke Loveridge
1mo
I believe BBB already co-invest in VC funds? Currently any company can undertake R&D without an MBA grad from a VC who has never run a business deciding if it is worthy or not. I've seen a lot of lobbying about UK pension funds needing to invest more in VC as well. Not saying these are bad ideas, and they may have merit for sure, but let's not forget 1. most businesses undertaking R&D aren't VC funded, 2. VC funded companies aren't necessarily R&D heavy and 3. there's a lot of VC vested interests trying to increase the size of the 'market' to get more fees.
Denis Kaminskiy
1mo
While completely agreeing that more investment in tech is broadly a good thing, I can't understand why the two (VCs and tax money) are related. R&D tax credits and EIS tax incentives allow for diversification of investors and of companies that do tech and R&D. Sure, much tech will come from Unicorns, but some will come in the form of innovations and new products seeping in from trading businesses that rely on tax credits or grants or EIS investors. There is also of course VCT tax benefit for investment companies giving over 60% loss coverage for funds. The topic looks like an attempt to just grab money and control and concentrate it on the hands of a few VCs. In that world, what happens if one has a business that VCs don't like? We know they move like a herd. In that world, if one starts a VC, do they automatically get government money to look after? Or is there a gate keeper (Stan? :) Finally, not sure what problem this is trying to solve - are there lots of great unicorn embryos in the UK that can't get funded because VCs need more dry powder? Are there lots of great VC funds struggling to raise money from private investors, even when they demonstrate great consistent returns, so need government money to stay afloat?
Doug Monro
1mo
And the VC partners walk off with 2% annual mgmt fee (and carry) on the 7.5 billion …. and most of the capital spent with Google, Meta, AWS, OpenAI … not sure. Targeting entrepreneur relief, seis/eis and the r&d credits at high growth tech industries would be another more plural route. Many companies (even ones that end up big with lots of job creation, profits, corp tax etc) are not suitable for VC.
David John Kaye
1mo
What about the disciplined, boot-strapped businesses that aren't compatible with venture capital funding but use R&D tax credits? Are we to just turn them out into the cold?
Pete Hopton
1mo
There needs not only to be more funding at these early stages, but more competition, more specialist investors, and more entrepreneur-entrepreneur support. I think of the Stanford-effect, where you can walk out of the University and see 50 VCs, of which you will be funded with a single yes. It's not only a numbers game, but a game of outliers and perspectives, where committees fail the decision and delay the investment.
Paul Morris
1mo
Is this just a headline grabbing piece or a serious suggestion? Turning off R&D support would derail multiple SMEs and startup investment plans resulting in many company closures if they are unsuccessful at finding alternative funding. Choosing the winners is extremely difficult and restricting those investment decisions to a few venture capitalists and civil servants is likely to result in some big losses for the tax payer. Grants are already well managed by the civil service based on competitive tenders. Any other method is open to abuse or at risk of being a political pet project decision.
David Summerland
1mo
I can understand why you say this Stan; it was a pleasure to meet you at Silicon Catalyst Manchester, and I respect your VC view, but as such, are you not in a conflict of interest? The R&D Tax credits are the only level-playing field where British industry can grow its patents where confidentiality is everything. I saw your charts, but they cannot see what's coming, and what's just emerged as a result of R&D tax credits which will make a national impact with sovereign compatible industry large enough for the VC community work so ending the division caused by argument, do you fund fabless or manufacturing. If you are asking that question, could it be you are on the wrong road with the wrong strategy or do not understand how R&D tax credits helped companies like mine?
Nick Hunn
1mo
The debate so far seems to be missing what we want these new tech companies to be. There’s little doubt that a lot of Government R&D funding just keeps small enterprises going way beyond their best-before dates. It keeps engineers off the streets, but it would be better if they were doing more productive work somewhere else. On the other hand, VC funding can bring excellent returns to investors and company staff, but when successful, as Stan has been, it’s usually a short term sugar rush before an exit. Stan’s run with Icera, Element14 and Neul was excellent, but how many UK jobs currently exist because of them? We need the fireworks of these big successes to inspire people, but we also need to grow our base of high-value tech jobs and national productivity, both of which fall in the middle of this debate. That raises the question of how we can focus on doing better at the stuff we’re already good at, not just gambling on future icing on the cake, particularly when we don’t know what the cake will look like. It’s something Taiwan has done really well. Unfortunately, it seems to be something nobody wants to do here, as it’s not the right kind of exciting. I’d love to see a plan for making that happen.
Problem solver, product guy
1moSmall typo - Neul not Nuel, I should know. I worked there :)