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16 August, 2006 - 11:27 By Staff Reporter

Centre for Business Research highlights need for US-style scheme in the UK

A new report from Cambridge University’s Centre for Business Research argues that the UK should urgently introduce a US scheme that has successfully converted billions of dollars of taxpayer-funded research into valuable products and helped build hundreds of successful companies.

A new report from Cambridge University’s Centre for Business Research argues that the UK should urgently introduce a US scheme that has successfully converted billions of dollars of taxpayer-funded research into valuable products and helped build hundreds of successful companies.

The US government uses its Small Business Innovation Research programme and procurement budgets to build successful science & technology industries by supporting hi-tech firms, says report author David Connell.

He said: “Through such mechanisms early stage US businesses get access to government funding for R & D which is at a level significantly larger per company than UK firms receive, probably by an order of magnitude.”

Unlike Uk government grant schemes and R & D tax credits, the SBIR programme provides 100 per cent funding right from the start of a business’s life and is therefore much more effective at getting new starters underway.

Founded in 1982, the SBIR programme provides over 4,000 Research & Devel-opment contracts and awards, worth over $2bn every year to small US companies, including start-ups and university spin-outs.

It has also helped thousands of these businesses onto the first rung of the lucrative US government procurement ladder.

Other US set-aside legislation steers a hefty 40 per cent of US government procurement budgets, directly and indirectly, towards small US companies.

Connell said: “Despite government efforts, we still do not have effective policies in the Uk to ensure that public sector procurement plays its full role in the innovation economy we need to build to remain competitive.

“The SBIR programme is one of the most successful and best regarded of such policies and comes from a nation that is probably the most successful of all in building science & technology industries. We would do well to study and imitate it.”

The Centre for Business Research report (‘Secrets of the World’s largest Seed Capital Fund’) cites entrepreneurial academic Dr Helen Lee, who set up the diagnostic development unit at Cambridge University’s Department of Haematology with the aim of developing innovative, simple, rapid and inexpensive diagnostic tests – particularly for use in developing countries.

But she and her colleagues established the company now developing the technology – Diagnostics for the Real World Ltd – in the United States.

So far it has received $5.5 million of SBIR funding from the National institutes of Health. Dr Lee says: “We would all have preferred to establish the company in Cambridge, rather than California, because Cambridge is where the research & development has taken place.

“But the funding gap for start-up biotech companies in the UK is such that we did not have a choice.”

• Copies of the report are available from the CBR on 01223 765320.

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