How can the UK close the Valley of Death gap?
Taking a research concept to full-scale commercial success can be a challenging task. Natalie Daniels presents expert opinion on the ‘valley of death’ funding gap and the process between innovation and commercialisation.
The ‘valley of death’, the divide between research and commercialisation, is regarded as a major challenge in the UK economy. Improving access to the right skills, infrastructure and funding are the tools you will need to emerge from the valley alive. The term ‘valley of death’ refers to the funding gap that exists between initial research and the commercialisation of new technology. It describes the point where a business has a working prototype for a product or service that has not yet been developed enough to earn money through commercial sales.
Is the concept a result of not knowing enough about how to bridge the gap? Peter Dobson states, ‘I believe, that the ‘valley of death’ issue is poorly understood. In fact, he believes there are two. The first gap occurs as the development reaches technology readiness level (TRL) 4–5, and it has to be helped in the UK. ‘Most start-ups don’t raise significant funds in the first place,’ and that is what causes the first gap. Dobson believes the second is between TRL 5–9 and is largely down to companies struggling to get investment to take the prototypes through to full commercial production. Dobson is not the only one who believes there are two ‘valleys of death’ – Professor Derek Fray also notes that there are different obstacles to funding a spin-out company and transferring an idea to an existing company. ‘Some universities have funds to support spin-out companies and these funds can be used to leverage support from government agencies. Business angels can also be approached, but it is very important to have someone on the team that has done this before.’
Many universities across the UK have formed spin-out companies to showcase the R&D work happening in and around their departments. Isis Innovation is responsible for creating spin-out companies based on academic research generated within the University of Oxford and has spun-out a new company every two months on average. Richard Holliday said, ‘There are numerous examples of advanced materials moving from the lab to the market. From an Oxford perspective, companies like Fuel3D and Oxford PV are just a couple that have successfully made the transition from the lab to commercialisation.’
University research collaborations
In July 2015, the Government released the Dowling Review of Business-University Research Collaborations report to review the relationships between UK businesses and university researchers to set out a framework that supports future innovations. This report emphasised the need to sustain long-term partnerships. Peter Deakin stressed, ‘It is important to mention the Dowling report and the need to avoid short-term targets, particularly financial, for technology transfer offices, in recognition of the fact that knowledge exchange is a long-term process that needs sustained effort. It isn’t something that can be measured on short-term revenue generation.’
There are business-led schemes available such as those from Innovate UK and Scottish Enterprise, which were set up to help drive innovation in science and technology for the UK economy. ‘In recent years there has been development of a network of Catapult and innovation centres to help bridge the gap. The general feeling is that it is a little too early to know if the organisations that have been launched in the UK will be successful on a long-term basis,’ said Deakin.
The likes of Crowdfunder, Crowdcube and Kickstarter have been dominating the internet over the past few years as researchers turn to global support for an alternative source of investors. Sugru, a silicone technology in the form of mouldable glue used for fixing and sticking things, and SCiO, a Pocket Molecular Sensor, are just two examples of successful funding campaigns in the UK and USA, which have completed the transition in taking a concept from the lab to full-scale production.
‘Crowdfunding is a comparatively new form of funding for early stage technologies and is certainly worth exploring. Successfully funded projects tend to be ones that relate to an important social cause or can capture the imagination of the public,’ said Holliday.
Faced with intense competition for government money, scientists can turn to the public for support. Although many crowdfunding websites are cautious about revealing exactly how much money has been raised for science, money from these sites has contributed millions of pounds to R&D.
Gaining funding is a piece of the puzzle that researchers quite often find the most challenging part. Bringing the concept to life is just the start – it is then about moving forward with investors to provide translation funding – and it is funding that could see change over the next few months. ‘A lot of people in the university sector are anticipating the outcome of the comprehensive spending review. The feeling around here is the hope that the necessary funding is continued and not cut,’ says Deakin.
In light of the recent Autumn Statement, there has been good and bad news for UK science, as the Chancellor revealed the science budget would be protected in real terms – equating to an increase to £4.7bln over the next five years. However, the increase to the science budget came amid a 17% cut for the Department for Business, Innovation and Skills, which is in charge of the majority of Government science spending.
Holliday suggests the first step towards gaining funding and commercialisation is by working with internal staff, such as the Technology Transfer Office, if you are studying within university. ‘They will help you assess the commercial potential of your technology, protect the IP and help to find funds for the development of the proof-of-concept. Your concept doesn’t need to answer every question, but it should demonstrate that the technology works and has a strong commercial potential.’
Businesses and universities need confidence that the R&D of any project is thorough and worth investing in. Companies play an essential role in bringing a product from a concept to full-scale products by either developing them in-house, or building on an initial idea.
To do this, preparation is essential, as Professor Fray suggests, ‘It is very important to make a compelling presentation, preferably starting with something the audience knows about – it is no use going into very detailed science straight away. Once the audience is interested, it is much easier to convince them about your vision.’
It remains to be seen how the Autumn statement will affect R&D funding for the science sector. For those trying to move from lab to market, remember, ‘a researcher setting out to commercialise a lab discovery will be unlikely to see a return on their efforts for many years. It will be a long journey, not a single event,’ says Holliday.
There are many ways to get your concept or idea out to the public. Deakin concludes, ‘The primary way to disseminate knowledge and innovation is through publication, and other forms of scientific communication to help to build the collective body of knowledge upon which future inventions are founded.’
1.7% is spent on the domestic product of research in the current science budget.
95,989 successfully funded projects through Kickstarter as of 17 November 2015.
2,386 research grant proposals to EPSRC were considered through peer review between April 2014–March 2015. The EPSRC provided funding for 914
To read the Dowling report in full, visit bit.ly/1OPEYNj