Assessment of the Economic Benefits and Wider Performance of the UK Innovation and Science Seed Fund
SQW’s study into the economic and wider benefits of the UK Innovation and Science Seed Fund (previously known as the Rainbow Seed Fund) since 2002/02 has been published.
The UK Innovation and Science Seed Fund (UKI2S; previously known as the Rainbow Seed Fund) is a specialist early stage venture capital fund focused on investing at the very early stages in technology companies emerging from publicly funded laboratories and campuses in the UK, and in the field of synthetic biology. The Fund is closely aligned with the activities and aims of its seven partners, led by UK Research and Innovation (UKRI) and the Defence Science and Technology Laboratory (Dstl). SQW was commissioned by the Fund Manager, on behalf of the investors and partners in UKI2S, to conduct a study on the economic and wider benefits of the Fund. The assessment covered both the core fund set up in 2002/03 and the synthetic biology sub-fund established in 2013. The study was an update to a previous assessment conducted by SQW in 2013.
The principal aim of the study was to estimate the economic contribution of UKI2S through its investments in early stage companies, specifically in terms of the effects on co-investment, employment creation, R&D expenditure, exports and Gross Value Added (GVA). In addition, the study aimed to assess the nature and scope for wider societal benefits of UKI2S. Based on a review of 37 portfolio companies, we found that:
- UKI2S has demonstrated high additionality, playing a key role in creating and supporting new businesses: over 75% of investee companies would not have been created or would have ceased to operate without investment from the Fund; this highlights the Fund’s role in helping businesses overcome the ‘Valley of Death’
- the Fund’s role extends far beyond simply the funds provided through investment: it maintains an interest in supporting its portfolio companies from the initial investment until the eventual exit
- through its investments, the Fund has made a strong contribution to the economy (see infographic below), and for every £1 of investment from the Fund there has been a return of £7 of GVA and £6 of R&D spend attributable to UKI2S
- the types of technologies developed by the portfolio companies are important more widely to society, including in areas such as health and healthcare, security and defence, and energy and the environment.
The full report can be found here.