Science and TechnologyWritten evidence submitted by Professor Peter Dobson, Begbroke Science Park, University of Oxford

1. What are the difficulties of funding the commercialisation of research, and how can they be overcome?

There are essentially two main routes to commercialisation: by striking a license deal with an existing Company, or setting up a spin-off Company. The former pre-supposes that one has some form of protectable Intellectual Property (IP) and the means to form the appropriate contacts with companies in the market and then negotiate a deal. The latter requires that finance is available to start up a company. Both of these options have to be set against a background that it takes several years to develop and idea to a stage where it is ready for market and can start to generate income. With most high technology ideas that involve manufacturing something (as opposed to generating and embedding a bit of software) this timescale is typically in excess of 12 years. This is the biggest stumbling block: Investors generally do not understand this and are impatient to see a fast return (typically four to five years).

2. Are there specific science and engineering sectors where it is particularly difficult to commercialise research? Are there common difficulties and common solutions across sectors?

Yes, any operation that involves manufacture and involves capital intensive manufacture is very difficult in the UK, because investors do not want to take a long term view or risk. This applies across all sectors, from microelectronics, to new forms of energy generation and storage, and advanced healthcare ideas (especially point-of-care biosensors). In the latter there is often the added difficulty of getting regulatory approval that can add more time to the route to revenue generation. Regulatory issues also slow down and enhance the financial risk in a lot of renewable energy sectors too.

Solutions to the problem of manufacturing investment could lie in having some form of Government guarantee to encourage investors to put funding into longer term projects. This could involve some form of minimum guarantee on the return on investment, but it will by itself give additional delay and red-tape in that a new level of technical audit will be needed and the question has to be asked “who would conduct such an audit?”

Relaxing regulatory requirements is not desirable in the case of “health”; however for planning issues in connection with renewable energy, water provision, and agriculture there does need to be reform and a speeding up of the process.

3. What, if any, examples are there of UK-based research having to be transferred outside the UK for commercialisation? Why did this occur?

Much of the microelectronics and optoelectronics industry has now moved away from the UK. This is largely because of the lack of capital investment available. Much of the newer display technologies were originated in the UK, but few (if any) goods are made here and the “value” being returned to the UK is small. Lithium battery technology was both discovered and invented largely in the UK, but we have no sizeable companies in this area.

Most of the reasons are because of the difficulties in attracting capital investment, AND in not having the appropriately skilled workforce to take things past the early development stage. As a nation we have not put enough emphasis in our Engineering training on “making things”. Too many of our University Engineering courses are emphasising “modelling” rather than “making” and we lack the training of skills that used to take place in Technical Colleges.

4. What evidence is there that Government and Technology Strategy Board initiatives to date have improved the commercialisation of research?

The setting up of the TSB was a major step forwards. Through its Knowledge Transfer Networks there is a steady improvement in connecting businesses together, to connect some companies with appropriate University groups and to generally improve the transfer of know-how between the HE sector and business. Knowledge Transfer Partnerships also play a valuable role in this area. The main issue here is one of “time”. Getting the evidence to show the benefit of the new TSB initiatives will take an observation time on the same scale as that of the Technology Readiness Level timescales, ie: at least 12 years.

5. What impact will the Government’s innovation, research and growth strategies have on bridging the valley of death?

With the current proposals of very limited investment, there will be virtually no effect. In fact it might even make things worse. The level of investment needed is around 50 times higher than what has been proposed.

6. Should the UK seek to encourage more private equity investment (including venture capital and angel investment) into science and engineering sectors and if so, how can this be achieved?

As mentioned in section 1, if a Government guarantee can be devised to assure investors that they will get some return eventually on their money this would make a difference. However, it does need careful auditing to ensure that there are sound technical and business reasons for the investment. We do not want to see a repeat of the fiasco in the US whereby Govt backing was given to Solyndra, a solar cell company that from the outset looked like a very unsound idea.

7. What other types of investment or support should the Government develop?

The Government has to invest heavily in training at all levels, especially in manufacturing. We need to bring back Technical College education, and we need to see a shift in emphasis in Universities towards practical engineering. The Government should also encourage (and provide funding) for training of researchers in the merits and processes of commercialising their research.

Declaration of Interests

I am the Strategic Advisor on Nanotechnology to RCUK and the Director of Oxford University’s Begbroke Science Park. I do not currently hold a Board position on any company. I am on the Scientific Advisory Board of several companies and organisations.

January 2012

Prepared 11th March 2013