NatWest, Beauhurst research reveals the UK’s untapped innovation potential and the support gap for IP-rich companies

Image: NatWest Group

NatWest’s new economic report on innovation reveals a gap in support for innovators. The bank points out that helping more of these firms succeed could create skilled jobs, attract private investment and allow communities across the UK to retain more of the economic value generated by innovation. 

From Innovation to Impact: Translating the UK’s Untapped Innovation Cohort into Regional Growth, produced in conjunction with Beauhurst, finds that that the UK is rich in research, ideas and entrepreneurial talent, but lacking in the support that innovative businesses need to grow. 

Analysis by Beauhurst of over 12,000 grant-backed businesses reveals a significant untapped innovation cohort: firms that are still trading and innovating, but have yet to secure follow-on equity, achieve an exit or demonstrate clear signs of commercial scale. 

The UK’s untapped innovation cohort is across every region and nation. 

However, a regional breakdown of the data shows that the proportion of firms yet to achieve commercial scale ranges from 32.2% in London to 47.4% in the West Midlands. When analysed by the constituent four nations of the UK, it ranges from 33.0% in Northern Ireland to 39.6% in Wales. 

Commercialisation outcomes vary considerably across sectors. While businesses in creative and media, lifestyle and entertainment, and software have attracted particularly high levels of equity investment, other sectors such as travel and transportation, safety and security, and education have attracted much lower levels. 

The path to commercial success 

The businesses that were interviewed all identified three key factors for successful commercialisation: 

• Faster regulatory routes to market 

• Strong local innovation ecosystems and clusters that connect businesses with universities, investors, customers and skills providers 

• Capabilities needed to scale, including access to finance 

Our report makes five recommendations for policymakers to help existing and future innovators, including an increase to long-term government investment, faster and more predictable regulations, and a single point of contact in each combined authority. 

Paul Thwaite, Chief Executive Officer, NatWest Group, says: 

“The UK already has many of the foundations required for success: internationally recognised universities, renowned scientific research, and more unicorn companies than any country outside the USA and China. Our report shows that the UK’s full innovation opportunity is hiding in plain sight. In every nation and region of the UK there are countless innovative businesses that have potential but have yet to turn that into commercial growth.” 

He adds:

“The Chancellor is right to put innovation at the heart of the UK’s growth agenda. If we want more world-leading businesses to start, scale and stay here, we need to remove barriers to growth, strengthen local innovation ecosystems, and give ambitious businesses faster access to the funding, talent and support they need.” 

Regional economic analysis 

NatWest has broken down the UK results according to regions: these can be found on the NatWest media site here: https://www.natwestgroup.com/news-and-insights.html