UK looks abroad to improve its innovation economy

03 Jul 2025 | News

Foreign experts give evidence as the House of Lords moves forward with its review of innovation in the UK

The Palace of Westminster serves as the meeting place of the House of Commons and the House of Lords, the two houses of the Parliament of the United Kingdom. Photo credits: Kamira / BigStock

A UK inquiry looking for ways to improve the country’s innovation economy has turned to foreign experts for advice. Witnesses from Germany, Sweden, and Singapore appeared before the House of Lords Science and Technology Committee in June, sharing their experience and the occasional blunt criticism of the UK approach.

For Patrick Rose, innovation manager at Sprind, the German federal agency for breakthrough innovation, the challenge is to be selective. “We will not get involved in projects where we believe that the market or investors will actually push this technology forward,” he told the committee. This clarity enables Sprind to move swiftly, bridging the “valley of death” between innovation and exploitation with targeted injections of public capital.

Sprind’s model is considered a success, with the result that its funding is rising. Initially given €1 billion over 10 years, it currently has €250 million this year, with “expectations to go up next year because of our execution power,” Rose said.

This, he said, was where the UK often fell short. “While your planning and your strategies are bar none across Europe, your execution power is rubbish,” he told the committee. “That is the key aspect: being able to go to companies and enable them to drive technologies and scale them.”

Asked to expand, he gave the example of six synthetic biology centres established at various institutions from 2014 to 2020. “You had a plan, but you did not execute it by keeping them going and supporting them further,” he said. “That is what you need: that sense of urgency and that drive to then move forward with it.”

Darja Isaksson, director general of Swedish innovation agency Vinnova, agreed and added a need to embrace failure to the advice she would give the UK.

“When it comes to failure being celebrated, it is not because it is necessary but because this is proven to be the best and most efficient way to success,” she said. “That is just a reminder of why this investment in risk taking is so important.”

Asked about Sweden’s own success in exploiting innovation, she cited its status as the European leader, per capita, in producing unicorns, start-ups that grow to a valuation above $1 billion. 

“The reasons for this, looking back, are some good early decisions on investments in infrastructure; early capital market development; and making sure that both Nasdaq Stockholm and Swedish pension funds have gradually expanded allocations to venture and private equity,” she said.

Fund the whole ecosystem

Funding was also the chief concern of Aftab Mathur, managing director for innovation investments and emerging technologies investments at Temasek, a Singapore-based investment company. 

“We had to ensure that the funding was going to the right places in the market,” he told the committee. The “valley of death” for Singapore was not between innovation and exploitation, but later, between the series A and B funding rounds. “We had a lot of incubators and accelerators, but we did not have the funding for A and B. We stepped in and capitalised the entire VC ecosystem by funding seven or eight funds to do that.”

The next step was to set up other pools of capital, not just equity but debt and mezzanine financing. “We set up other things that would help the innovation start-up ecosystem, not just the equity part,” he said. “You need the other parts as well to function, as has happened in the US. Then we set up growth funds and pre-IPO [initial public offering] funds and capitalised the entire ecosystem to get to the liquidity events that we wanted.”

He also stressed the need for accountability, with technological milestones often necessary to track the progress of investments in businesses unable to make a quick financial return. “Holding them accountable to those metrics was very important to make sure that we had that flywheel effect from the capital side,” he said.

Finally, he mentioned the importance of generating independent intelligence on Singapore’s innovation ecosystem, information that would not be seen as “made to look rosy” because it came from the government. 

“It was about [making] the market as transparent as possible and help people to understand what is happening, to get external capital providers and the right founders and talent pool to come to Singapore,” Mathur concluded.

The inquiry is due to continue through July.

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