Brands seek out UK innovators

23 May 2012

LONDON: Major firms like Unilever, DeLaRue and AkzoNobel are keen to exploit the potential offered by innovative UK start-ups and talent, but believe more could be done to develop these areas.

PA Consulting spoke to 112 executives from sectors with a particular interest in innovation, a list including representatives from Procter & Gamble, Kraft, Nokia and Philips.

One of the main conclusions was that a successful "innovation economy" needs young companies with a turnover in the £50m to £100m range, and a policy environment supporting them.

"For Unilever, start-ups can be an interesting source of ideas, but realistically businesses with revenues exceeding £100m are our bread and butter," Neal Matheson, head of new business and open innovation at Unilever, the FMCG giant, said.

"Smaller businesses compete with megabrand projects for resources, while the bigger ones integrate well and leverage the capabilities of Unilever to grow fast. There is an opportunity for the UK to help organisations scale small £10m businesses to £100m where they are attractive on their own or to multinationals."

DeLaRue, active in areas from software provision to designing secure payment systems, has also taken a broad approach to identifying viable allies.

"The UK is an excellent location for De La Rue," said Philip Cooper, its head of ideas development. "Over the past ten years, I have seen a material increase in the competence of entrepreneurs, their links with academia and the number of technology-based start-ups."

However, Simon Cook, chief executive of DFJ Esprit, the venture capital firm, warned early-growth start-ups with a turnover of £3m and successful players generating £30m or more can easily get support, but a shortfall exists between these tiers.

"The UK broadly matches Silicon Valley in the provision of start-up and early-growth funding for high-tech businesses, and there are many sources of funding for the mature growth phase for profitable companies," he added.

"However, there is a £2bn gap in funding for mid-stage technology businesses, which is having a material impact on growth. This funding should not be provided by government - rather, funds should be developed that provide an attractive long-term framework for investors."

In demonstration of the promise the UK holds, AkzoNobel, the paints and chemicals group, recently created an R&D unit in the country, and expects to yield several advantages as a result, thanks to this team's "grounded approach" and a "global outlook".

"AkzoNobel's decision to establish a new R&D team in the UK was driven by several factors but one of the foremost was the relatively low cost of highly creative, visionary staff here," said Stephen Davies, R&D director, interior wall, at AkzoNobel Decorative Paints.

Data sourced from PA Consulting; additional content by Warc staff