Britain doesn’t have a science problem – it has a commercialisation problem

Britain has a world-class scientific heritage stretching back to the founding of the Royal Society in 1660. From Robert Hooke and Isaac Newton to an extraordinary record of Nobel Prize winners, the UK has consistently produced scientific breakthroughs that have changed the world. Yet despite this strength, Britain has failed to build globally significant science companies. The problem is not scientific talent but commercialisation. For decades, Britain has developed an overly bureaucratic, risk-averse culture that makes it unnecessarily difficult for innovative businesses to secure investment, grow and remain British-owned. My own career has repeatedly illustrated this.

In 1978, after experiencing first-hand how difficult it was to raise capital for a new business, I launched Venture Capital Report (VCR). The idea was simple: publish investment opportunities from entrepreneurs seeking funding and distribute them to paying investors. Each company profile outlined the business, market, management team, financial projections and proposed investment structure. The timing could hardly have been worse. Britain suffered from high taxation, weak private investment and extensive state control. The top rate of tax reached 98%, leaving little private capital available for investment. Intellectual property created in universities was effectively controlled by Government, while sectors including nuclear power, telecommunications, steel and car manufacturing were dominated by state-run organisations.

During my apprenticeship at Harwell in the 1960s, then Europe’s largest research establishment, I saw the limitations of this model. With thousands of staff but little incentive to innovate or reward exceptional performance, bureaucracy replaced entrepreneurship. Britain pioneered civil nuclear technology, yet today imports nuclear power stations. Large state bureaucracies rarely create globally competitive businesses because they reward process rather than results.

Against this backdrop, I was astonished to discover my proposed magazine was technically illegal. A solicitor confirmed this, but believing Britain desperately needed more entrepreneurial activity, I decided to publish it anyway. The first issue appeared in December 1978. Following Margaret Thatcher’s election in 1979, the Government became far more supportive of enterprise. The Cabinet Office subscribed to VCR, and I was regularly invited to Downing Street to discuss the practical obstacles facing entrepreneurs with successive Chancellors. Those discussions helped shape initiatives including the Business Start-up Scheme, the Loan Guarantee Scheme and the Business Expansion Scheme. Meanwhile, VCR connected entrepreneurs directly with serious investors. More than 900 investors subscribed, each paying £350 annually, enabling founders to avoid months approaching people who lacked either the capital or commitment to invest.

In the late 1980s, seeing that VCR was having a good effect, the Government decided to launch 5 regional lookalikes. I was invited to give the launch speech.  But on examination the Government lawyers concluded this would be illegal. Soon afterwards, I received a letter from Michael Heseltine, then President of the Board of Trade, saying: “We very much like what you are doing… But we think you are illegal. Don’t worry – carry on and we will change the law.” The concepts of the “sophisticated investor” and the “high-net-worth individual” were introduced, creating the legal framework that still underpins private investment in young companies.

A much bigger breakthrough came in 2012 with the introduction of the Seed Enterprise Investment Scheme (SEIS). It remains the Government’s most effective initiative for encouraging investment in start-up businesses. Investors receive income tax relief equal to 50% of their investment, while capital gains are tax free if the investment succeeds. The impact was transformative. Before SEIS, raising modest seed funding remained extremely difficult. Afterwards, many innovative companies could realistically secure around £250,000 to prove their technology and begin building a business. Thousands of companies have benefited. In 2012 I had already spent almost thirty years investing in science start-ups through Oxford Technology, having launched our first specialist seed fund in 1983 because science entrepreneurs rarely attracted conventional investment.

When SEIS was introduced, I approached the Financial Conduct Authority (FCA) to establish an FCA-approved science start-up fund. Despite my experience, I was told I could market the fund only to “professional investors”, defined as people who had made ten similar investments every quarter, for each of the last 4 quarters. “But not a single person in the world has done this.” “That’s your problem. Those are our rules.” This perfectly illustrates Britain’s regulatory problem. One part of Government introduces policies to encourage entrepreneurship, while another creates regulations that make those policies difficult to implement. More than a decade later, repeated requests for meetings with policymakers at the Treasury and HMRC have gone unanswered.

Every year, we receive 1,000+ approaches from science entrepreneurs and invest in around five of them. We get actively involved.The founders won’t have negotiated a sales contract before. Early-stage investing inevitably involves failures, but SEIS substantially reduces investors’ downside risk through generous tax relief while preserving the possibility of exceptional returns. In our best investment to date, an investment costing £12,458 after tax relief has already returned £139,638 tax free, with potential milestone payments increasing the total return to £1.79m. The scheme clearly works. Yet one flaw continues to undermine its long-term impact. While capital gains from SEIS investments are tax free, dividends are taxed at an investor’s highest marginal income tax rate. Faced with the choice between heavily taxed dividends or a tax-free capital gain through selling the company, investors opt to sell.

The result is that many successful British science companies are acquired by overseas buyers long before reaching their full potential. Instead of growing into major UK-owned businesses, they become subsidiaries of larger international companies. The tax system unintentionally encourages short-term exits rather than long-term ownership. The evidence for SEIS is compelling. The 75 science companies in which Oxford Technology invested after 2012 employed 130 people at the initial investment, an average of less than 2. By Q4 2025, they employed 994 people in highly skilled, well-paid roles, generating substantial PAYE and other tax revenues that far exceed the initial tax relief provided to investors. SEIS is therefore not simply a cost to the Exchequer but an investment that creates innovative businesses, skilled employment and future tax receipts. Britain’s scientific excellence is beyond question. Our universities continue to produce outstanding research and talented entrepreneurs. What holds us back is not science but the regulatory and commercial environment surrounding it. If Britain wants to build the next generation of world-leading science companies, government policy must consistently support long-term investment rather than encouraging early exits. Britain does not have a science problem. It has a commercialisation problem. Fixing that and aligning tax policy would do more than any new research programme to secure the country’s long-term prosperity.