March 15, 2013
UK technology companies and entrepreneurs are not getting the support they need and valuable revenue is being lost overseas, according to a hard-hitting report from the Science and Technology Committee.
The Committee Chair, Andrew Miller MP, said: "British entrepreneurs are being badly let down by a lack of access to financial support and a system that often forces them to sell out to private equity investors or larger foreign companies to get ideas off the ground."
With no coherent innovation policy and not enough being done to leverage academic research into economic benefits, the Committee says UK technology companies are effectively being forced to seek private equity investment. It has found evidence that small technology firms are frequently being bought up by larger overseas companies before they can develop into enterprises that would produce jobs and wealth in the UK.
Finance, it says, is a major obstacle and Government grant funding is often bureaucratic to apply for and only enough to "get an idea off the ground".
Andrew Miller said: "The Government needs to look at how it can provide the infrastructure to support innovation by ensuring small technology firms have access to finance, facilities and advice."
He added: "Equity investments have a place, but too many companies are forced into over-reliance on this route because other types of funding are unavailable. Pension funds used to be a source of patient capital for firms that needed time to bridge the so-called 'valley of death' and get new technologies to market, but regulation has changed the way they operate and restricted this sort of finance."
He continued: "The UK has terrific potential in its technology sector and science base, but small and medium-sized businesses need better support to commercialise their ideas and get them to market. I hope the Government recognises that it needs to be more proactive if it wants to secure long term growth and competitiveness in the UK."