Presentation to ERC State of Small Business Britain Conference 2017 by Kevin Baughan

1. Research & Innovation
Growth & Diffusion
Kevin Baughan
Deputy Chief Executive

2. UK Research & Innovation

3. Sir Mark Walport:
“The success of UK Research and Innovation will
ultimately be measured through the impact it delivers:
through pushing the frontiers of human knowledge,
delivering economic impact and creating better jobs
and by supporting society to become stronger, healthier
and more resilient.”
KNOWLEDGE ECONOMY SOCIETY

4. Accelerating UK economic growth through
funding and connecting business-led innovation
Innovation:
Delivering Better
Outcomes
KNOWLEDGE ECONOMY SOCIETY

5. Thriving in Constant Change
The Research Base
Harness Natural Phenomena
Increasing the Available
Building Blocks
Existing Technologies
Provide Building Blocks
Enable New Technology
Combinations
Technology
Fuels Itself
Thriving in Constant Change
• From optimising to new combinations
• From rationalising to sense making
• From commodities to skills
• From components to alliances
Brian Arthur

6. Source: Innovate UK operational data
 ≈ 60% of our core grant
funding goes to SMEs
 ≈ 80% of collaborative
projects involve at least
1 research base partner
 We work with over 140
individual research base
organisations (including
institutes and RTOs)
2,900
organisations / year
2,400
projects / year
Who does Innovate UK fund?

7. Our Productivity Challenge
USA
France
Germany
G7 average
Industrial Strategy Commission
Laying the Foundations
July 2017
G7 labour
productivity
versus the
G7 average
UK
Japan
Canada Italy
UK
Productivity isn’t everything, but in the long run
it is almost everything …. Paul Krugman

8. Our R&D Challenge
The World Bank
R&D expenditure
as a % of GDP
UK 1.7% of GDP
(1.72% in 2000)
Region 1.9%
Leaders 2.5%
The UK’s R&D is
concentrated:
• in auto, aero
& pharma
• in the large
multi-nationals

9. Assessing our Performance - ERC
Assessing the business performance effects of engagement with
publicly funded science, ERC Research Paper 61, August 2017
Firms supported
by Innovate UK
experience a better
economic growth
than their untreated
counterparts:
• +21% in employment
• +23% in turnover
in the medium term.
Those supported
by EPSRC achieved
even higher growth
• +27% in employment
• +30% in turnover
in the medium term
Innovate UK
EPSRC

10. Assessing our Performance - Overall

11. Innovation and the Frontier Economy
Frontier Productivity
Laggard Productivity
84% of the UK Economy

12. Diffusion and the rest of the Economy
84% of the UK Economy
Early majority:
Wants to know it’s a sound investment
Wants to understand the cash flow
Otherwise they will stay as they are
New forms of intervention:
Providing knowledge & expertise
Generating robust business cases
Well suited to loan investments

13. Accelerating UK economic growth through
funding and connecting business-led innovation
Innovation:
Delivering Better
Outcomes
KNOWLEDGE ECONOMY SOCIETY
Business
People Place
Infrastructure

14. Loans:
Piloting
of the new
Innovation
Loans
Equity:
Investor
Partnerships
and
Patient Capital
Challenge led: The Industrial Strategy Challenge Fund
Businesses – Incentivising Innovation
Responsive: A regular rhythm of Open/Sector competitions
The goal of our funding is to give the private sector the
confidence to invest in the markets of the future.

15. Medicines manufacturing technologies
Batteries for clean and flexible energy storage
Robots for a safer world
Self-driving vehicles
Manufacturing and materials of the future
Satellites and space technology
Industry-led and powered by multi-disciplinary
research and business academic collaboration
Through ISCF

16. Through Deployment of Patient Capital
Giving the private sector
confidence to invest.
New Investment
Accelerator Pilot:
Innovate UK grant funding
plus VC equity funding
Innovate UK skills in early
stage tech
Alongside VC skills in
assessing the management
team and business plan.
Financing Growth in Innovative Firms, Aug 2017

17. £17m
£52*
£4m
£30*
£23m
£45*
£57.5m
£64*
£30.4m
£74*£8.4m
£38*
£33.4m
£60*
£18.4m
£50*
£16m
£41*
£56m
£55*
£11.4m
£78*
£19m
£37*
*Per Registered
Business Oct16
Place – Our Funding by Region in 15/16

18. “We have had some great input
from the Catapult’s technical
experts that helped us solve
some key blockers early on in our
business development.”
Mish Gopaul, Co-founder, Fatmap
Infrastructure – Our Catapult Network

19. People – Women in Innovation

20. We can’t stop
thinking about
the future
Empowering innovative
UK businesses today to
lead the global growth
industries of tomorrow.