The second part of this update focuses on enabling successful sales growth for innovative businesses.
My discussion with Lord Young and question in the plenary session was focused not on investor tax breaks, but on how government can encourage smaller companies to become more successful in their sales efforts:
In public procurement of innovation, the Small Business Research Initiative seems at last to have found a nurturing home in the Technology Strategy Board. But it’s still a small scale initiative for a few public bodies, rather than a mainstream driver of innovation in procurement. The US requires Federal Agencies with extramural research and development budgets over $100 million to administer SBIR programs using an annual set-aside of 2.6% for small companies to conduct innovative research or research and development (R/R&D) that has potential for commercialisation and public benefit. The total UK expenditure meanwhile is a few £m per annum
In public procurement (OJEU) there are systematic barriers to SMEs. Most ubiquitous is the use of prequalification processes where companies are required to demonstrate evidence of 3-5 similar contracts. This is a blatant stifling of innovative approaches. Lord Young agreed that there is much to do in this field, and stated that central government contracts under £100k have dispensed with prequalification. SMEs make up 50% of UK GDP, but only 12% of public procurement.
These issues must be taken more seriously. The UK is a small home market for technology businesses, many of which would be better located in the USA. Investors like us need our investee companies to become successful through rapid realisation of their sales prospects. That’s why we started Qi3 Accelerator. It’s vital that where government can make the UK a better test-bed and first marketplace for new technologies that it should do so through disruptive, not incremental steps.