Why has the UK stock market become less attractive? Strictly Business
Why has the British stock market become less attractive to companies and how can we change that? STRICT BUSINESS discussion
Jeremy Hunt has quite a job ahead of him to deliver on his high-tech ambition for the UK.
The Chancellor has tried to lighten the mood with stilted rhetoric about Britain’s leading achievements in life sciences, deep tech, AI, Fintech and much more.
But he faces a haunted background with the decision of £30bn technology champion Arm to go public in New York, along with corporate lender OakNorth and data group WANdisco.
The grass seemed greener on the other side of the Atlantic before the collapse of Silicon Valley Bank.
This is just the tip of an iceberg. As we learned during the pandemic (no exaggeration), Britain really is a world beater when it comes to biotech, developing vaccines and new medicines.
Many discoveries in the UK turn into start-ups and then race to Stage One approval in the regulatory process.
That indicates a chance of success. Then the fun begins with small biotech companies looking for direct funding and large pharmaceutical companies looking for licensing deals to nail down the new treatments or compounds.
Realistically, this is a hit and miss process with only a one in ten chance of success.
Nevertheless, the competition is fierce and at this point you can almost hear the buzz of great science, developed in British universities, making its way to Stanford and the west coast of the US. American venture capital is so much more willing to take risks than British financiers.
Yet we have one of the world’s largest pension funds, with some £10 billion in assets, which could be used to support homegrown businesses
HM Treasury recognizes the value of companies that emerge from our brilliant research universities. The Chancellor has set up a task force led by Oxford’s Professor Irene Tracey and Cambridge Innovation’s Dr Andrew Williamson to identify ‘best practice’ for turning university research into commercial success.
This seems to be typical Whitehall with officials more focused on the process than the results. There is, of course, enormous scope for converting university research into new ventures. This sort of thing is already happening at Russell Group universities like Southampton.
It has created a huge science center where dozens of innovations have turned into businesses.
Investment manager M&G is trying to be a pioneer in this area through Northern Gritstone, which provides funding for promising spin-outs.
Now opening up to outside investors for the first time, the £5bn Catalyst Fund is hungry for investment targets.
Tory voices such as Cavendish’s Howard Leigh argue that if the UK is to truly become a beacon for start-up funding, mechanisms such as the Enterprise Investment Scheme tax break need to be modernized and expanded.
The government is still living in fear of fiscal turbulence after the Truss fiasco last fall.
However, the UK cannot get its mojo back without generous tax breaks and a change in defensive domestic investor attitudes towards more venture capital.