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Financing Industrial Biotechnology in the UK

This report looks at the state of financing in the UK's industrial biotechnology sector and suggests ways to improve early-stage and growth funding.

This report looks at the state of financing in the UK's industrial biotechnology sector and suggests ways to improve early-stage and growth funding.

Key findings:

  • Industrial biotechnology companies in the UK suffer from low rates of investment. This creates chicken-and-egg scenarios whereby venture capitalists (VCs) are reluctant to invest due to issues stemming from a lack of early-stage funding.
  • There are however ways of unlocking early-stage opportunities for UK industrial biotechnology start-ups which include a modified tax system and ways of improving collaboration.
  • Growth-stage success rates could also be improved through, for example, more government support, more availability of shared facilities, and loan guarantees. 
  • Longer term investment could be encouraged through measures such as tax incentives for retail investors or preferential tax treatment for profits from such investments.

Industrial biotechnology refers to biological processes used in industries apart from healthcare. The industry it exemplifies the problems faced by companies that develop novel technology. These companies need funding to develop and test the technology they have come up with. They need demonstrations to convince investors and large companies that the technology will work. They need to scale up processes from the laboratory to the plant, usually in several stages.

 

The high degree of uncertainty and technical risk for these companies means they struggle for investment in a shrinking early-stage venture capital market. But the effects of this technology can be transformative . The results are not just in profits or cost savings, but in lower energy usage, less landfill and reduced greenhouse gases.

 

This report summarises the feedback and key conclusions from a survey of participants in the UK industrial biotechnology sector, and represents only a snapshot of the industry. While we believe the approach is representative of the industry as a whole, we would welcome feedback and further comments. 

 

Authors:

Technology Greenhouse Ltd