The West Midlands is home to England's biggest untapped innovation opportunity, according to new NatWest research, which suggests hundreds of innovative businesses across the region could help drive the next wave of jobs, investment and economic growth.
Analysis published in From Innovation to Impact found the West Midlands has the highest share of innovation-backed businesses yet to achieve a recognised commercialisation outcome of any major English region. Almost half (47.4%) of grant-backed firms remain active and trading but have not yet secured follow-on investment, achieved an exit or demonstrated recognised scale-up growth, compared with a UK average of 38.1%.
The findings come as the West Midlands continues to strengthen its innovation ecosystem through investment in research, commercialisation and business support. Home to 1,743 innovative businesses and 838 recipients of public innovation grants, the region has established strengths in advanced manufacturing, transport technologies, engineering, clean energy and health innovation.
While many businesses successfully convert innovation into commercial growth, NatWest's analysis identified a substantial cohort that continue to innovate and trade but have yet to achieve a recognised commercialisation outcome. Only 15.4% of grant-backed businesses in the West Midlands have secured follow-on equity investment, compared with a UK average of 26.4%. The report suggests helping more businesses access finance, expertise, networks and routes to market could unlock significant new jobs, investment and productivity growth across the region.
NatWest argues that the West Midlands' next economic prize lies not in creating more innovation, but in helping more innovative businesses scale successfully and create long-term value in the region where they were founded.
Dipesh Mistry, Chair of the NatWest Midlands and East of England Regional Board, said:
"The West Midlands has no shortage of innovation. What this report shows is the scale of the opportunity still ahead of us.
"Across the region we see ambitious businesses developing world-class technologies and ideas. The challenge is helping more of those businesses access the finance, expertise and commercial connections they need to scale.
"If we can do that, the prize for the West Midlands could be significant in terms of jobs, investment and long-term economic growth."
One business highlighted in the report is University of Birmingham spinout HyProMag, which is developing technology to recover and recycle rare-earth magnets from end-of-life products.
Based at Tyseley Energy Park, where NatWest recently launched a new Accelerator, the company has grown from five employees in 2022 to around 17 today and expanded internationally through operations in Germany and a joint venture in the United States.
The report concludes that the West Midlands already possesses many of the ingredients required for innovation-led growth. Building on the region's strong innovation foundations, the opportunity now is to help more businesses convert innovation into commercial success, strengthening the region's contribution to jobs, investment and long-term economic prosperity.
For further press information, please contact Jessica Barker, Corporate Affairs Manager at NatWest: jessica.barker@natwest.com
About NatWest’s research
The findings are drawn from NatWest's From Innovation to Impact report, which examines how the UK can better convert innovation into commercial growth and regional economic prosperity.
The analysis was conducted by Beauhurst on behalf of NatWest and is based on a dataset of 12,381 UK companies that have received at least one publicly disclosed innovation grant since 2011, including Innovate UK funding. Of these, 12,199 grant recipients were included in the commercial outcomes analysis.
Companies were assigned to one of five mutually exclusive outcome categories:
- Exited – acquired, listed on a stock market or sold to new owners
- Follow-on Equity – secured additional equity investment
- Scaling – demonstrating high-growth characteristics without a recorded equity event or exit
- Untapped Innovation Cohort – still trading but without a recorded exit, follow-on equity investment or recognised scale-up signal
- Ceased – no longer operating
Regional analysis is based on companies' registered addresses.
Throughout the report, the term "untapped innovation cohort" refers to businesses that remain active and continue to innovate but have not yet secured follow-on investment, achieved an exit or demonstrated a recognised scale-up signal.
Follow-on equity figures include all subsequent equity investment raised by grant recipients and should be interpreted as an association rather than a direct measure of grant impact.
For the full report, please see here.
About NatWest
NatWest serves customers in England and Wales, supporting them with their personal, private, and business banking needs. NatWest helps customers at all stages in their lives, from opening student accounts, to buying their first home, setting up a business, and saving for retirement.
Alongside a wide range of banking services, NatWest offers businesses specialist sector knowledge in areas such as sustainable energy, commercial property and technology, as well as access to specialist entrepreneurial support.
