Conclusion 6

DSIT and UKRI face severe challenges in helping UK research and innovation to scale up commercially against a backdrop of intense international competition and a tight fiscal environment. The government considers research and innovation and the diffusion of new technologies to be vital to the UK’s future and to achieving its long-term goals, including growing the UK economy. Huge economic gains are possible if UK universities can spin out their research and innovation into successful commercial ventures. For example, DSIT believes that there is great economic potential if the UK can build commercially on its academic leadership in fields such as engineering biology and quantum technologies. DSIT and UKRI are aware of such potential, but also note systemic problems such as not having the right skills and a tendency for companies to spin out too early. They have work underway to help increase the chances of commercial success. For example, UKRI has started a Proof-of-Concept fund to assist new ventures prior to incorporation so that they can become more attractive to external investors. Similarly, Innovate UK which sits within UKRI, aims to support innovative businesses to grow and scale. However, the financial challenges faced by UK universities may limit or curtail their research and innovation work. recommendation DSIT and UKRI, with other government departments, should do more to bring together a unified picture and response to the challenges of commercially scaling innovation in the UK. This should include: • an assessment of where the UK is demonstrating strength in research but failing to scale innovation, with specific reference to the impact of the Proof-of-Concept fund; and • the setting out of plans to optimise its use of funding while monitoring any changes in research activity at UK universities resulting from ongoing financial challenges. 6 1 Strategic direction Introduction