BY STEVE RANGER
Small businesses working in science have big ambitions but are struggling to find the people, infrastructure and support to help them to continue that growth in the UK.
SCI recently surveyed small and medium sized enterprises working across sectors including biotech and pharma, chemicals, agriscience, materials and renewable energy to find out more about the challenges facing firms with high growth potential.
The survey found that the UK’s science SMEs have big ambitions: over half were looking to double in size within five years, with growing revenue and profits the top priorities – all of which is likely to take significant investment in R&D.
However, continuing to grow in the UK could be difficult for many who identify challenges in raising funding, finding the right skills and finding the right support to scale up – leading many smaller businesses to look abroad when ramping up to full scale manufacturing.
Half of the companies surveyed said they found it difficult or very difficult to get staff with the science, technology, engineering and maths skills they needed. And in terms of hiring from abroad, almost half of the companies said they felt the UK visa system was ‘ineffective’ and needed to be simplified and updated to ensure it covers the skills required by employers.
The survey found that R&D tax credits and Innovate UK funding were used by the majority of the SMEs; significantly fewer have used Innovate UK smart grants or applied for Horizon Europe funding. However, outside of these sources of funding there was limited awareness of other potential sources like the Northern Powerhouse Investment Fund.
Half of the companies said the UK does not have the right scale up facilities for them, something that chemicals and materials SMEs were most likely to believe. Scale-up facilities for science-based SMEs can include anything from pilot plants and specialised equipment to process development and optimisation and business support. These are often key in helping a new business develop from small-scale experiments to larger, commercial-scale production.
In contrast, agriscience and food startups were most likely to agree that the UK had the right scale-up facilities in place.
Over 60% said they were likely to look outside of the UK for manufacturing capacity in the next 20 years, with biotech and pharma the most likely to say that; SMEs working on energy and environment projects were the most likely to say they would stay in the UK for full-scale manufacturing. And almost half of the more mature businesses said they would likely list their companies outside of the UK when the time came.
SCI launched its Manifesto for an Industrial Science & Innovation Strategy in August 2023. At the time, SCI warned that while the UK retains a strong reputation as a global leader of science-based industry, particularly regarding its researchers and publications, it is far from meeting its vast economic potential.
A lack of resources to grow early-stage companies and attract the multinationals that can help deliver growth at scale means revenue is leaking out of the UK. SCI pointed out that only two of the 10 UK life science start-ups worth $1bn to float in the decade to 2021 decided to list in the UK.
According to SCI-commissioned analysis by LEK Consulting, putting in place a science-focused industrial strategy could create an additional £230bn in GVA and 240,000 jobs by 2030 in the life sciences and clean tech sectors alone, while job creation would take place in diverse locations, supporting the rebalancing of the economy from its dependence upon the south-east of England.
The companies that responded to the SCI survey were mostly established SMEs at technology readiness levels four to nine – between bench scale research and fully operational. Most of the companies surveyed had under 10 employees, although a quarter had between 20 and 100 staff.
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