It might not feel like it, but we are fortunate to be enduring a pandemic now and not 10 or 20 years ago, when the impact would have been much worse.
Every day, we see advances in deep technologies such as AI, life sciences, and genomics informing better decision-making and accelerating progress towards effective treatments and vaccinations to a previously unthinkable speed.
It is too early to say what the “new normal” will look like, but returning to exactly what we had before seems unlikelyMeanwhile, technologies we take for granted now – but that were far from common even well into the 2000s – enable businesses to remain productive and individuals to better tolerate lockdown.
A new world
It is too early to say what the “new normal” will look like, but returning to exactly what we had before seems unlikely.
Having rebuilt badly-eroded trust in their ability to contribute to the common good, science and technology will be central to our new economy, building solutions to threats both known and unanticipated.
Even before the full scale of the coronavirus crisis became apparent, the UK government had set its sights on such a future.
The 2020 Budget gave unprecedented priority to R&D - both with the surprise announcement that a previous pledge to double investment would be exceeded with an increase to £22bn annually and with the announcement of a plan to create a central research centre modelled on the American Defense Advanced Research Projects Agency.
In light of the pandemic, these commitments to protecting and supporting the UK’s science base should inspire confidence in our capability to meet the challenges of the future.
UK is well-positioned
The government framed its commitment to R&D investment as a move to maintain the UK’s global leadership in innovation.
This is a fair assessment of the UK’s current position – home to four of the world’s top ten universities, punching above its weight by producing 15.2 per cent of the world’s most highly-cited research papers, and with a G8-leading citation impact, in spite of having just 0.87 per cent of the world’s population.
University R&D is playing a key role in fighting coronavirus, from the development of vaccines and ventilators to disease spread modelling.
Congenica, for example, is a spinout from the Sanger Institute that works with Genomics England and has designed a Covid-19 Clinical Decision Support module for its data platform - this is being used to analyse the genes thought to be involved in host response to viral infection.
Encouraging investment to drive an R&D economy
Realising this vision of the future economy will require private as well as public investment. One should follow the other.
The government’s coronavirus response package for startups included £750m ringfenced for R&D-heavy businesses – outstripping the money available for venture-backed businesses through the Future Fund announced the same day – and in a post-pandemic economy, we expect further government support for R&D and the knowledge-intensive companies (KICs) built on the resulting IP.
Meanwhile, greater demand for life sciences, AI, quantum computing, advanced materials, genomics, cleantech, medtech, and big data should see more patient investors backing IP-rich companies in those sectors, rather than ‘tech-enabled’ business models that deliver short-term returns on investment but limited longer-term economic and social benefits.
I have long argued that R&D-heavy businesses – built on the step-change technology required to meet global ESG requirements – actually deliver the most impactful returns.
In recent years the Enterprise Investment Scheme (EIS) has provided a tax-efficient and risk-mitigating mechanism for retail investors to access cutting-edge but high-risk sectors and technologies.
As we prepare for a fundamental shift towards science and technology, it will be critical to ensure the pipeline of private funding – for both early-stage and growth companies – continues to flow.
This means shoring up EIS – in particular, enhancing the KIC Fund for R&D-led companies – but also ensuring that later-stage investors are motivated to provide the capital needed to sustain R&D-rich companies through their longer-than-average scale-up journeys.
Listen to Bill
Five years ago, Bill Gates gave a TED talk warning of the impact a pandemic would have on global economics and society.
Experiencing that impact, we fully appreciate what he meant.
It is clear that science and technology hold the key not only to getting ourselves out of the present situation, but also to shaping our future and securing it against similar shocks.
This has already pushed deeptech up the government’s agenda, and will do the same for investors as the opportunities for returns become increasingly evident.
Moray Wright is chief executive of Parkwalk Advisors
