EXCLUSIVE: The UK is Europe’s breeding ground, but Digital Catapult CEO Jeremy Silver says force-feeding start-ups to become unicorns “has not gone well”.
The former music industry boss, who held senior positions in tech start-ups acquired by Apple, now helps start-ups collaborate with industry to encourage the early adoption of advanced digital tech.
“I want founders to be as ambitious as possible and if you become a unicorn that’s a fantastic thing,” he tells Growth Business. “But prioritising that above all else and artificially force-feeding businesses to become unicorns has not gone well.”
He says the unicorn model of blitz-scaling – pumping huge amounts of capital into loss-making businesses with the aim of market domination and high growth later – has produced toxic cultures. SoftBank is well-known for previously using this model in their investments.
“That does not mean unicorns aren’t worth going for – it’s how we get there,” he says. “My message to investors is to take the longer-term view.”
In an interview with The Times, Silver said he would like to see a replica of Germany’s Mittelstand in the UK – strong mid-sized tech companies rather than a wave of sell-outs to US tech firms.
“For founders it’s very difficult,” he acknowledges. “But the opportunity to incentivise investors to stay in for longer is something we should explore. Giving businesses incentives to invest in our start-up community to a greater degree than is currently the case would be a really smart idea.
“If large company R&D tax credits were only awarded if those large companies could demonstrate they were collaborating with early stage or scale-up businesses, that would be a really good incentive for them to look there and get involved.
“There are mechanisms that would encourage connectivity here in the UK. We need to be more creative and more imaginative.”
Digital Catapult, which is Government backed, links start-ups with larger businesses, investors and researchers to improve the uptake of emerging technologies in key areas such as AI and manufacturing – what Silver calls a lab for business.
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It receives core funding from the Government-backed agency Innovate UK, which created it, as well as commercial income.
Around 400 early-stage companies a year walk through the start-up body’s doors, utilising its facilities, which include test spaces, media studios and labs.
There are currently seven 5G testbeds across the UK, acceleration programmes and tech challenges which result in collaboration and long-term contracts.
One example is Northern Irish hard drive manufacturer Seagate, which linked up with AI start-up Flexciton in one tech challenge. Problems were solved in three weeks which before took three years, Silver says.
“That’s a classic example of the way that we get involved,” he confirms. “We use our own expertise to identify companies, helping them develop, helping them match with industry and then with funding or mentors.”
One challenge facing Digital Catapult, however, is the level of bureaucracy encountered. “We’re pro-market, so we get insights very early into things that would benefit the sectors we’re focused on, but if it then takes three or four years to translate that into a funding opportunity, then that gets missed,” he says. “A lot of that is to do with bureaucracy, unfortunately.
“We need good governance when it comes to the use of public money, no question, but have we got the balance right in terms of how much governance it takes? So that we have good transparency and accountability but maybe we can be a bit faster and a bit more flexible?” he wonders.
Despite this, the organisation is seeing pleasing developments in three main areas: future telecoms, digital supply chains and metaverses.
The work they’re doing with collaborative space Sonic Labs is world leading and their £25m joint project looking at digital supply chains is seeing “real appetite and opportunity” according to Silver.
Linked to that, in Belfast, it has launched a new facility for businesses to create digital twins; in Brighton Dome, a new 5G testbed.
“When you look at that all together, it’s super exciting,” Silver beams.