Techhub Event with David Willetts, Minister for Universities and Science

Last night, I attended the Techhub event where Elizabeth Varley (from Techhub) chaired a panel with David Willetts (Minister for Universities and Science) and Anthony Browne (Mayor’s Office Advisor for Economic Development) to face an array of entrepreneurs to discuss and take questions on the future of the Silicon Roundabout; I think it was great for Techhub to arrange this and look forward to other events, although I appreciate it has set off a debate about the role of Techhub (see here and here). I honestly expected a bit of a grilling session of the two politicians but they got off quite lightly I think – I was going to say a few words about public sector procurement, but my chest infection/ bubonic plague or whatever it is got in the way.

One of the disappointing cop outs was about the £200 million fund for innovation that many of us were rather interested in hearing about – start ups can rarely access the money that they need. To quote from the official website, these “Enterprise Capital Funds (ECFs) address a market weakness in the provision of equity finance to SMEs by using Government funding alongside private sector investment to establish funds that operate within the ‘equity gap’. An equity gap arises where businesses with viable investment propositions are unable to attract investment from informal investors or venture capitalists.” Wow – that sounds amazing – until you get to the bit where its controlled by a bunch of Venture Capital Funds – part of the problem, not the solution. Startups through to early stage businesses need funding solutions that sit well outside what venture capitalists are happy with – and the incubator/ innovation model is alive and well in the tech world but hardly something that your average investor will touch. That the minister was unable to provide any real detail on the scheme, such as details of companies that haven’t been funded is very poor. The Minister even suggested that there were not the mechanisms in place to provide small amounts of funding which is a ridiculous proposition – both the Technology Strategy Board and the Enterprise Finance Guarantee Scheme (EFG) are just such mechanisms, and some of the TSB small competitions are a great way of funding this innovation. The EFG on the other hand is a great disappointment. One other post I read cited similar experiences to me and another which highlighted that not everyone necessarily deserves funding – which is also true. I do think the funding model is broken for start ups though and it is about the £10-£50k size – latching on to existing structures, more TSB competitions would be perfect; fully backed EFGs with accountability from banks to detail exactly how many EFG applications they receive, process and accept/ reject (banks in my experience are more than willing to offer other debt products, but actively dissuade consideration of the EFG). At least the Minister agreed to return at some point with whomever runs the Enterprise Capital Fund which could be amusing!

The other area which I would have liked to hear more about would have been government efforts to help SMEs with getting into public sector procurement (and given that I’ve mentioned that my last post or two, I won’t again). There were also some interesting points raised about education and lack of decent computer science engineers in the UK, immigration for highly skilled migrants and the ridiculous system about not having the NI exemption in London (a tremendous way to dis-incentivise start ups from employing locally).