Britain will never grow its own Apple without spending more on technology R&D

David Richards
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More R&D spending is neeeded to ensure the next Apple, Google or Facebook is British (Source: Getty)

The last decade has witnessed an explosion in the number of digital startups springing up across the country – not just in east London, but across the whole of the UK. Of these, however, you can count the number of firms built around core Intellectual Property (IP) on one hand.

At a time when we’re seeing record levels of investment in the UK tech scene – topping more than $2.2bn in the first six months of 2015 alone –the inconvenient truth is that this is not filtering through to where it’s needed it the most.

The tech world, perhaps more than any other sector, lives or dies by the strength of its ideas. My company, WANdisco, was built around patented technology, and last month we announced two more. A healthy tech scene should be awash with patents, with huge resources and significant investment ploughed into research. But this is precisely where the UK falls down.

The UK scores shockingly low on IP creation compared to Europe. Belgium and Luxembourg file almost twice as many patents, while Sweden registers more than 3.5 times as many. The truth is British investment in research and development is pitiful. Currently, we invest less than 0.5 per cent of GDP in publicly funded science and research compared to an OECD average of 0.7 per cent. This puts us at the bottom of the class among the G8.

If our tech sector is ever going to mature and build on its early promise, then we need to rethink our approach, shift our attention away from exclusively supporting startups and build a more balanced strategy that focuses on companies looking to expand. This means encouraging and rewarding our digital firms that invest heavily in patents and IP creation – the bread and butter of innovation.

Combating such a pressing problem necessitates a holistic approach, affecting how we view education, investment and policy.

There is currently a massive disconnect between the needs of British industry and how our universities are equipping graduates. At this level, it’s vital that our premier educators take a more considered approach to the changing face of UK tech, tailoring their courses to train students appropriately.

As such, the private sector would benefit hugely from more meaningful partnerships with universities to ensure a steady stream of well-trained graduates capable of creating valuable IP.

Elsewhere, investors would do well to focus on long-term rather than short-term gains and actively encouraged to wait out periods of R&D in the hope for greater returns later on.

Government often talks of its efforts to ensure that the next Apple, Google or Facebook is British, but none of Silicon Valley’s giants recorded a profit overnight, spending much of their early years on research and developing quality products.

Unless a tendency for short-termism is overcome, the UK’s emerging tech sector will only ever go so far. How much will companies be willing to sacrifice in the pursuit of profit? In a world where profit is king, there is no need for research and development wings – no room for Apple to invent the iPhone or Google its maps service.

Instead, government needs to reward companies looking to build growth around IP, promoting and encouraging investment in R&D, and work more closely with investors and universities. Without efforts such as these it’s difficult to imagine our tech ever reaching full maturity.

City A.M.'s opinion pages are a place for thought-provoking views and debate. These views are not necessarily shared by City A.M.

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