Tom Hopkins: EIS and VCTs will Aid UK’s ‘Fourth Industrial Revolution’

  • On June 27, 2018
  • By GrowthInvest

The Prime Minister has unveiled the government’s new industrial strategy, which is intended to put the UK at the forefront of the global economy – and, argues Tom Hopkins, EIS and VCTs are perfectly positioned to help.

Theresa May stood outside Jodrell Bank last month and looked to the stars – and Britain’s future – and in doing so highlighted once again the UK’s position as a global leader in innovation and research and development (R&D).

“We are ranked first in the world for research into the defining technologies of the next decade, from genomics and synthetic biology, to robotics and satellites,” said May, framed by the colossus of the University of Manchester’s space radio telescope. “With one per cent of the world’s population, we are home to 12 of the top 100 universities.”

Undoubtedly, we are a collectively creative nation and the prime minister gave plenty of examples of famous British innovators – from Sir Isaac Newton to Sir Tim Berners-Lee. Historically, however, while no one doubts we Brits have been full of good ideas, we have not been very good at commercialising these ideas in the UK – instead tending to leave that to foreigners. Indeed, Sir Tim famously declared the World Wide Web ‘is for everyone’ – a fading British sentiment if ever there was one, especially as we head to a post-Brexit world.

May highlighted some reinvention stories in parts of the country – one such example being Hull, where she noted the area had gone from whaling to wind-turbines. What the PM did not mention was that Hull University invented the LCD screen.

Wouldn’t it be great if Hull was now the centre for global LCD manufacturing? Unfortunately, the idea was commercialised and monetised in South Korea. And there are hundreds of such examples – CDs from Surrey University, defibrillators from Queens, Belfast and fibre-optics from Imperial, to name a few.

Thankfully, the days of a professor publishing a paper without an attached patent are largely over and there is now a recognition in the universities they should not only be protecting these ideas but also looking to commercialise them in the UK.

This change in attitude has been driven by government, which of course wants a return on the some £5bn of taxpayer money allocated to R&D, and the universities and professors wanting to generate value for themselves.

And this ‘professionalisation’ of Britain’s ideas factory has been supported by investors in various sectors and niches.

“Our challenge as a nation, and my determination as Prime Minister, is not just to lead the world in the fourth industrial revolution – but to ensure that every part of our country powers that success,” May proclaimed. That is all very well, but it is a vision requires the government to invest in education, transport infrastructure, mobile and broadband connections, the right regulation and a whole lot more.

In particular, the Government wants to address four grand challenges:

  • Artificial intelligence and big data – to transform the prevention, early diagnosis and treatment of diseases
  • Healthy ageing – to add five years to life expectancy by 2035
  • Clean growth – to halve the energy usage of new buildings by 2030
  •  Future mobility – for cars and vans to be effectively zero-emission by 2040

Funding, Funding, Funding
To achieve its ambitions, the government will need to provide funding and encourage investment in innovation and growth. “As a government, we have set the goal of research and development investment reaching 2.4% of GDP by 2027 – more than ever before,” said May. “That could translate to an additional £80bn investment in the ideas of the future over the next decade.”

And that is why venture capital trusts (VCTs) and the Enterprise Investment Scheme (EIS) are now at the heart of the new industrial strategy. The UK is already one of the best places to start and grow a high-tech business, and the Patient Capital Review-driven rule changes to the EIS and VCT schemes are to ensure this pot of capital was invested into growth businesses and innovation. An annual £2bn pot – the amount raised under the two schemes each year – should help the UK achieve its global goals.

“All have the chance to be part of one of the most exciting periods of discovery the world has ever known,” closed Mrs May in true Churchillian style. “Among their number will be names to be inscribed alongside the greatest figures of the past on the honour roll of scientific achievement. And together, we can continue a tradition of innovation that will extend our horizons and transform our lives.”

And by investing in the right EIS and VCT managers, advisers and their clients might well also be able to benefit financially from UK PLC being at the forefront of that fourth industrial revolution.

To view the article, click here.

Source: Professional Adviser

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