roundtable: technology in the thames valley 21


Duffy felt there was a semi-philanthropic role for banks and other business service providers to support commercial creativity in small businesses, along with ongoing support for the rest of the business world. “We have to make ourselves more accessible and helpful, and all the banks are now trying to do that.


“While I accept that the world of work doesn’t have to be located in one place, it sure is helpful to be able to meet and talk to people who are in your peer group. Accelerators have proved so successful in providing a focal point for start-up companies. They have to be a priority for any business region.”


They are generally successful in accessing early funding and while they develop their business they stay in the region, but ultimately they go further afield, often towards London, chasing more funding.” The presence of nearby Harwell and the Government’s Technology Strategy Board (TSB) ‘catapult funding’ was an assistance in retaining this talent locally, he noted.


Duffy: “It’s vital that what you (ConnectTVT) are doing is replicated across the UK and I accept that banks have a responsibility to lean in a bit more and help fund university spinouts and IP developers.”


Solari pointed out that if bank funding started at £5 million: “That’s way above what most start-ups need, so you are out of the game. You’re right, most banks need to do more.”


Sykes highlighted that the entry level for the banks-backed Business Growth Fund (BGF) was generally around £1m EBITDA, effectively excluding a good number of start-ups and small businesses.


Pitt explained that the funding gap was currently being serviced by various sources: PE, angels, crowd-funding, family and friends, or grants from the TSB.


Richard Devall International implications


The Thames Valley attracts more inward investment than any other region in the UK. But, the Roundtable advised, it always had to look over its shoulder.


“The UK is far and away the European magnet for tech VC money, and that’s not just in London,” Duffy stated.


Devall felt the Thames Valley itself still could do more to promote its identity.


Solari agreed: “Most Americans still don’t know what or where it is. If you mention England they’ll still think London.”


Duffy felt greater support for UK regions was merited. “Too much emphasis has gone into London, which has raced ahead and grabbed all the money and the glory, and that can’t be right, not least because it's very expensive to live there.”


Funding for start-ups


Duffy said that a suitable funding mix for growth was an ongoing question. Should it be a debt loan or venture capital arrangement, or the offer of equity?


Start-ups supported by VC and equity funding, should remember that such funders are usually interested in fast growth, added Solari. “They buy technology, but not really. They are buying profit or loss.”


James Cowper’s James Pitt is currently working with a space cluster at Culham. “We get involved with a lot of start-up companies with talent in these small local clusters.


THE BUSINESS MAGAZINE – THAMES VALLEY – NOVEMBER 2014


Duffy: “Banks always need to be conscious of their mandate (Basel accord), but we do need to be more creative, and do things differently.”


He said there was a market for seed-funding, but claimed the true funding gap was between seed and series A (an early stage company's first significant round of higher- risk funding).


Comparing American and British funding, Solari considered the US to be far more open to risk. “Here they want to help, but they want it to be secure help.”


Pitt mentioned that too often British bank or government funding had terms and conditions attached that were focused on technology development rather than its commercialisation, putting a brake on getting the product to market. Tax incentives such as R&D credits and Patent Box were helpful, but again could only be maximized by a resultant product.


Solari: “That’s where it starts. Someone has to sell something or the technology goes nowhere. Isn’t that the first question in Dragon’s Den: How much have you sold?”


Clarke agreed that several start-ups sought funding without evaluating the true commercial worth of their new technology.


Thames Valley: the grow- to place for technology?


Murray queried if the arrival of Crossrail, Western Railroute to Heathrow and an enlarged Heathrow Airport might further boost the Thames Valley’s appeal.


Devall thought that these infrastructure


improvements, allied to the region’s space for companies to grow, made the Thames Valley a better proposition than other UK regions.


The Roundtable broadly agreed, but raised concerns about ongoing poor broadband connectivity.


Solari mentioned that after 5.30pm and at weekends in his village home south of Newbury, he could hardly use the Internet because it was so slow. “The money gets allocated by the authorities, but somehow it never seems to get to where it will help.”


Funding was now going into better broadband said Devall but dealing with legacy infrastructure was making progress slower than expected, he felt.


The Roundtable agreed that the Thames Valley, while it enjoyed an enviable position in attracting technology companies, could always do more.


Chris Sykes


“The Thames Valley remains one of the most powerful tech regions in Europe if not the world,” said Devall. “We still have the leading global tech business sitting right here on our doorstep.


“We need to buck-up our ideas about how we keep our talent and encourage young entrepreneurial minds to develop their business ideas here. We need to come up with a well thought-out attractive cluster, and hopefully from there oak trees will grow.”


Solari said companies would need persuasion to get involved. “As the chairman of Ultima, I would never agree to spend money on developing the Thames Valley, when our objective is developing our own business. Companies can find the money, but they have to have a reason to invest it.”


www.businessmag.co.uk Continued overleaf ...


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