With most of us beginning to turn our thoughts back to running our businesses against the backdrop of a COVID-stricken economy, Dr Mark Tock points out that recessions create both challenges and opportunities…
With experts predicting a 25-30% drop in economic output and British tech firms posting their worst performance since the financial crash of 2008, it’s easy to see why the future might appear particularly gloomy.
There are however reasons for optimism.
Recessions create both challenges and opportunities. They necessitate innovation and often act as a filter mechanism for fast growing start-ups. The 2008 financial crisis for example was followed by a decade of annual growth in the number of new tech-based businesses created.
Not all parts of the tech sector will be impacted equally. Far-sighted investment means that well-capitalised lab-based companies, for example, are prepared to weather a six-month downturn. Many have kept working through lockdown and some have pivoted activity to address the challenge of COVID-19.
UK has a robust innovation ecosystem
The UK has a vibrant and robust innovation ecosystem including over 150 universities, a significant number of corporate R&D facilities, public sector research campuses, science parks, incubators, and innovation hubs.
The UK Science Park Association (UKSPA) counts over 130 such innovation hubs within their membership, which already support over 6000 tech-based companies employing some 120,000 highly skilled workers. These engine-houses of innovation and productivity will have a vital role in rebuilding our economy and helping new tech-companies to create competitive advantage by embedding innovation as a core strategy for growth.
In these turbulent times, it is more evident than ever how these innovation hubs are evolving and adapting in helping their communities in providing safe and effective environments, many of whom are at the forefront of developing solutions in combating the pandemic.
We must reach our new normal
The pipeline of businesses considering co-location within an innovation community like Nexus hasn’t diminished during lockdown. If anything, the number of serious enquiries, especially for laboratories, has increased. Whether that speaks specifically to the value of co-location, the quality of services and space available, and / or the power of aggregating tech businesses is not entirely clear. What is clear is that we are seeing a pause in deal flow, and building pent-up demand within our own pipeline, rather than a stop. The companies involved are waiting for us to reach our new normal as quickly as possible so that they can join our community.
The recent ‘We Are One Report’ from Nexus Leeds shows how impactful innovation hubs can be. In its first year of operations, including lockdown, Nexus supported 36 tech companies to create over 125 new highly skilled jobs driven by £8m in investment and £11m in new collaborative research funding. These include lab-based start-up Keracol which briefly switched activity to produce sanitiser, and AI companies Scaled Insights and Itecho Health which are working with NHS and public health colleagues on products to mitigate the effects of COVID-19.
Innovation hubs have a critical role in supporting tech companies to benefit from partnering with world class research universities.
Author: Dr Mark Tock is UKSPA Director & Company Secretary and Operations Managing Director at Nexus Leeds. Among its membership, UKSPA supports a diverse network of laboratories located within areas of innovation