Turning the UK’s untapped innovation potential into regional growth

Our new report, ‘From Innovation to Impact’, finds that that the UK is rich in research, ideas and entrepreneurial talent, but lacking in the support needed for innovative businesses to grow. 

Analysis by Beauhurst of over 12,000 grant-backed businesses reveals a significant untapped innovation cohort: firms that are still trading and innovating, but have yet to secure follow-on equity, achieve an exit or demonstrate clear signs of commercial scale.

Helping more of these firms succeed could create skilled jobs, attract private investment and allow communities across the UK to retain more of the economic value generated by innovation.

The national challenge

The UK’s untapped innovation cohort is across every region and nation.

A regional breakdown of the data shows the proportion of firms yet to achieve commercial scale, ranging from 32.2% in London to 47.4% in the West Midlands. 

There are notable variations across the four nations of the UK, ranging from 33.0% in Northern Ireland to 39.6% in Wales.

The sector challenge

Commercialisation outcomes vary considerably across sectors. While businesses in creative and media, lifestyle and entertainment, and software have attracted particularly high levels of equity investment, other sectors such as travel and transportation, safety and security, and education have attracted much lower levels. 

The path to commercial success

The businesses that were interviewed all identified three key factors for successful commercialisation: 

• Faster regulatory routes to market

• Strong local innovation ecosystems and clusters that connect businesses with universities, investors, customers and skills providers

• Capabilities needed to scale, including access to finance

Our report makes five recommendations for policymakers to help existing and future innovators, including an increase to long-term government investment, faster and more predictable regulations, and a single point of contact in each combined authority.

From innovation to impact: Kelpi’s story

What if seaweed could help solve one of packaging's biggest sustainability challenges? Since 2020, Kelpi has been developing a patented seaweed-based coating designed to replace the plastic layers used in paper, card and fibre packaging. Backed by more than £7 million in private investment and support from Innovate UK, the business has made significant progress, but the journey from innovation to commercial scale has not been without its challenges.

Our new life sciences commercialisation pilot with the University of York

Reflecting the report’s call for stronger local innovation clusters, we are launching a new 12-week Accelerator programme with the University of York’s Life Sciences Incubator.

Aiming to fast-track the commercialisation of scientific research, the majority of academics involved have already spun out a business and are looking to raise additional investment or increase their revenue. 

By connecting research-led businesses with expertise, networks, finance and commercial opportunities we can help them scale successfully.

Paul Thwaite, Chief Executive Officer, NatWest Group:

“The UK already has many of the foundations required for success: internationally-recognised universities, renowned scientific research, and more unicorn companies than any country outside the USA and China. 

Our report shows that the UK’s full innovation opportunity is hiding in plain sight. In every nation and region of the UK there are countless innovative businesses that have potential but have yet to turn that into commercial growth. 

The Chancellor is right to put innovation at the heart of the UK's growth agenda. If we want more world-leading businesses to start, scale and stay here, we need to remove barriers to growth, strengthen local innovation ecosystems, and give ambitious businesses faster access to the funding, talent and support they need.”