UK Government Industrial Policy Still Wrong

On January 15, 2010, in Nanotech, by Tim

The Economist takes a look at the new industrial policy being proposed by the UK government and concludes that they should stick to providing basic services.

Labour’s new industrial policy is more realistic about what the government can accomplish than the version that prevailed in the 1960s and 1970s. For that reason, it should avoid its predecessor’s fate, which led to the government supporting lame ducks rather than winners. But it still suffers from the illusion that ministers can behave like impresarios, conducting economic development from their podium in Whitehall. And it is the wrong priority.

What business wants the state to concentrate on is providing essential public services such as decent education at an affordable cost. It wants less meddling through burdensome regulations. Above all it is crying out for a credible plan to sort out the battered public finances, so that firms do not buckle under the burden of higher taxation and a surge in interest rates caused by excessive public borrowing. That might not amount to a new industrial policy but it would work a lot better.

Of course if we want to reforge the economy using the whit heat of technology, having properly funded Universities doing properly funded research would be a good place to start.

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Why Government Nanotechnology Policy is Ineffective

On October 17, 2009, in Economy 2.0, Europe, Nanotech, credit crunched, by Tim

We Do Not Know This Biscuit Of Which You Speak

Browsing through various Twitter feeds this morning a couple of seemingly unrelated items caught my attention. The first was that the British Prime Minister, Gordon Brown, was unable or unwilling to name his favourite biscuit, despite the questions being posed twelve times, thus exposing himself to understandable ridicule. His handlers later clarified the situation once they had seen this mornings front pages, claiming that he had “missed the question”, twelve times in all, and is partial to ”anything with a bit of chocolate” but is ”trying very hard to cut down.”

It still beggars belief that the person running the country is either so terrified up upsetting anyone that he would refuse to name a biscuit, or perhaps doesn’t know anything about biscuits. There’s a definite whiff of “It Came From Outer Space” here, and despite “monitoring radio transmissions from your planet for many years, we know not of this biscuit of which you speak.”

The second items was a new FAQ (frequently asked questions) about nanotechnology from the European Commission which alleges that by 2014, 10% of all manufacturing jobs worldwide will be related to nanotechnology. Hmmm, I wonder of the Chinese garment industry knows about that?

What these two snippets reveal is that when it comes to Government decision making there is something badly wrong. For the European Commission to be spending over a billion euros a year on nanotechnology based on a few five year old report summaries and press releases that it scraped from the web is quite staggering, although admittedly some of the recent credit crunch was created by bankers doing similarly sloppy due diligence into things they didn’t understand. Similarly, for questions about biscuits to be deflected until a pool of advisers and focus groups can cook up an answer calculated to appeal to the most voters raises huge questions over the competence of people in charge of the budgets.

To some extent it confirms what many people have suspected all along. While government funding of nanotechnology at an academic level is very welcome, the diffusion of technologies into the economy is usually despite government decisions rather than as a result of them .

PS I’m quite partial to Garibaldis (or squashed fly biscuits as we used to call them), but as I’ll be in Amsterdam again soon I may temporarily switch my allegiance to pepernoten.

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Paid By The Word?

On October 15, 2009, in Europe, Nanotech, Publications, by Tim

I’m slightly puzzled by this announcement from the TSB with the headline “Investment of just over GBP80m in innovative technologies announced at Innovate09″

Did a committee of people deliberate whether “just over £80m” sounded better and clearer than a simple “£82.5 million” or were they just getting paid by the word?

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Nanoscale Technology Strategy 2009-12

On October 15, 2009, in Nanotech, by Tim

The UK’s Technology Strategy Board (TSB) has launched a new four year plan for nanoscale technologies.  Google can’t seem to find it, but you can download the NanoscaleTechnologiesStrategy file here.

The strategy aims to achieve the following objectives: – Further develop knowledge transfer and collaboration in the emerging field of nanoscale technologies between academia and industry – Encourage collaboration with Research Councils – Work to promote responsible commercialisation of nanotechnologies – Further develop appropriate approaches to working with Europe for UK benefit – Working towards a common  UK Government strategy for nanotechnology. Following on from the publication of the strategy, the Technology Strategy Board hopes to discuss priority areas of focus with the business community and establish where we can offer help and advice through our activities.

There’s plenty of the usual stuff about engaging industry and some rather shaky looking predictions for markets, but while setting up web sites and engaging industry and leveraging European money is all fine, there’s little in there to tackle the fundamental problem facing the UK, the lack of nanotechnology industry! So here’s our strategy for 2009-12

  1. Support basic research. While we know a lot more than we used to about nanotechnologies we are still at an early stage. It has taken biotech thirty years to get this far, and nanotech will face a similar long haul.
  2. Create more spin outs. There is no point in supporting something that doesn’t exist. The cash will be sucked up by the usual bunch who haven’t moved nanotech forward one iota. A system of small, no strings attached grants for technology based start ups would encourage university spin outs and support them through that difficult first year of product development.
  3. Address the issues of process and manufacturing. The UK trumpets about a wide range of open access facilities, but how many of them actually do what is needed by business? The key to getting to market is moving a lab based process to an industrial process, meaning not just scale up, but quality control and reproducibility. Leveraging the UKs strengths in pharma and chemicals is an obvious place to start.
  4. Cut regulation for start ups – employers national insurance contributions, corporation tax and demands for information from the Office of National Statistics dissuade companies from expanding. Funding start ups to employ people is surely better than funding people to be idle.
  5. Fire 90% of university tech transfer people and replace them with people who understand how small businesses and science based innovation actually works.
  6. Stop forcing organisations such as the TSB to add conditions such as “invest only in those activities that recognise the need for sustainable development” to their funding criteria. It is a meaningless condition, simple to circumvent and wastes everyone’s time.

OK chaps, let’s get on with it.


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Class R Stock – A New Mechanism For Funding Science Based Start Ups?

On June 19, 2009, in Economy 2.0, Nanotech, VC2.0, by Tim

One of the biggest threats to scientific innovation has always been the lack of capital. Venture capital only really makes sense if companies can grow rapidly, and most other equity investments tend to be illiquid until an exit is found.

Brian McConnel at Gigacom takes a look at ‘Class R’ stock, a possible investment model that is halfway between a conventional investment and a loan. Here’s how it works.

Let’s say for rough numbers that a group of angels invest $500,000 for a 10 percent stake in an early-stage company and 5 percent of gross revenues with a 5X cap (total payout: $2.5 million). The company does OK and turns into a nice small business with revenues of $2-$3 million dollars a year. Happy with that, the owners decide not to sell or try to grow much bigger. The investors in this situation will be receiving $100,000-$150,000 per year (off $2-$3 million/year in revenue), which is not a bad annual return, and will get up to $2.5 million over the life of the agreement. In other words, everyone wins — the entrepreneur is rewarded for creating a viable business, and the investors do well without having to force a sale. And they still have 5 percent equity so that if, 20 years later, the founder retires and the company gets bought, they are very happy vs. just merely happy.

Of course there is no downside protection, but then again there rarely is. However it does address one of the major problems with commercialising technology, that of what happens if the company is just a nice company, rather than a spectacular success. In some respects it’s not too different from paying a dividend, which most companies prefer not to do, certainly in the early stages, but it may be a way , combined with tax breaks, that would actively encourage much needed angel investment.

PS it’s worth looking at the comments for some other alternatives.

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Even in Uncertain Times Good Companies Can Still Attract Capital

On November 5, 2008, in Europe, Finance, Nanotech, Products, by Tim

As the financial crisis swirls around the world I’m seeing an increasing number of nanotech companies running increasingly short of cash as investors pull in their horns. It’s a good opportunity for cash rich companies to make acquisitions, something that is keeping me in the air this month, and any company that raises an equity round must be something a bit special, which brings me to this recent news from Nanosight.

Salisbury, November 2008 – NanoSight Limited, the nanoparticle characterization company, is excited to announce the completion of a new round of financing which will provide £920,000 to enable the company to expand the business with the development of new products and sales channels in the US market.

NanoSight has just closed almost £1m of investment finance in a month that has seen unprecedented financial turmoil worldwide. Having been close to breakeven for the first half of 2008, hitting sales targets and with margins better than anticipated, it was clear to the company that growth was limited by resource but not by market opportunity. Having successfully weathered the start-up process during the past four years, NanoSight can become more robust with investment in personnel, technical support and development of the underlying technology.

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The Greatest Hits of the UK Nanotech Industry….

On September 11, 2008, in Nanotech, by Tim

I seem to have spent the last month sitting on the top deck of various British Airways 747′s covering most of the world. The experience is largely random but rarely unpleasant, and while some crews efficiently and discretely  top up glasses and whisk away plates, the current bunch (BA284 from San Francisco) seem more like a bunch of autonoma  programmed by the Keystone Cops! At the moment the entertainment system  has crashed somewhere over Idaho and  will take thirty minutes to reboot – lets just hope the flight computers are rather more robust!
I recently asked a question on LinkedIn’s UK Nanotech forum about the overseas perception of UK nanotechnology. While we know the science base is world class, whenever Bubba from Indianapolis bounces up to me at a conference and asks “Hey, er, Tim, what’s happening in England” I’m always at a loss to reel off a list of the UK’s greatest nanotech hits with the ease with which some of my colleagues from other parts of the world can do, although a few high profile disasters do spring to mind.
The most worrying aspect is that no one responded to my question, either with outrage or screeds of facts about nanotech funding and UK conferences to prove me wrong.. Is it that we don’t care, is nothing happening, or is government policy just to produce more poor quality PR ? Before anyone gets too outraged, I’m referring to the ad from the Welsh Development Authority which you have to watch before every BA  film, extolling the virtues of Wales and portraying it as the industrial powerhouse of western Europe rather than a rather nice place with rather nice people  and some great hiking, which would be both more truthful and more appealing.
So come on UK, we know that BA is, in general, a decent airline (if you disagree then just try flying with their One World partner, American Airlines) and we know that the UK has some good science if not the most competitive business environment right now. However at an event like Nanofinance can’t we find a stonking great success story rather than a company which closed down two years ago as the best examples of UK Nanotech?

Feel free to argue, but I’m sure that we should, and can do better!

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