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Are some start-ups extracting the free funding?

You’re a great 6G start-up—perhaps some smart folks at a University, say, who see potential starting into business together, or you’re refugees from some big dumb service provider that’s proving too slow to bring that game-changing bit of comms innovation to market.

Are some start-ups extracting the free funding?
Written by
Guy Redmill
Published on
27 Jun 2023

You’re a great 6G start-up—perhaps some smart folks at a University, say, who see potential starting into business together, or you’re refugees from some big dumb service provider that’s proving too slow to bring that game-changing bit of comms innovation to market.

Good news: you just missed the first round of the EU’s new Smart Networks and Services Joint Undertaking, a €250 million Horizon Europe scheme all about constructing a first-class European supply chain for advanced 5G systems and building out of Europe’s 6G technology capacities—but for sure you’ll get on the next round!

And while you’re applying, no harm in applying for some of the UK’s £110 million telecoms R&D package of developing next-generation 5G and 6G wireless technology and telecoms security: maybe you’ll at least get a workbench or two at the nation’s new £80m “cutting-edge telecoms lab” in bucolic Solihull.

Don’t be disheartened if you don’t—it’s time to bung in for some of the £250 million government supported programme to deliver on the UK’s vision of a 5G Supply Chain Diversification Strategy. Don’t want to be tied too closely to Rishi Sunak’s spending plans? No problem—just pivot back to Brussels: in In 2021, the European Union spent €328 billion on R&D in total—and just this month coughed up another €8.1 billion worth of state aid for microelectronics R&D, among all the other things it  is prepared to make funding available for.

So, no need to email Joe Biden—if you want to get some money to develop a great tech or comms idea, there doesn’t seem much of a desert in terms of schemes to apply for help to. But what happens once you have built a PoC or a Minimal Viable Product?

On paper, there are loads of ways to advertise your capability. Via its Find the SME you need! link, the NetworldEurope SME working group provides industry and academia with information of what expertise and skills SMEs can bring in terms of 5G/6G innovation. There, an MNO looking to get a new supplier can search by domain of technological expertise or the vertical sectors they specialise in, e.g., 5G, IoT, SatCom, NGI or other; if you wanted, say, help abound mission critical communications you can find a small tech expert, same for international digital partnership, radar—the list goes on.

SMEs can also easily broadcast their willingness to help by using a resource like techUK’s SME Connect service; suppliers keep asking for bids for their money—Civica is always looking for innovative UK technology start-ups focused around artificial intelligence, automation and connected devices. Don’t fancy the public sector as a market? Then why not try and join a big vendor’s SME Partner Programme, like Big Blue’s?

But while there are for sure some examples of bigger firms taking a chance or two on folding a smaller partner into its supply chain, there aren’t that many. How we know this: show us all the UK tech firms that have bootstrapped themselves via such contracts into going public. (We’ll come back to unicorns.)

A trillion pound market? Well, yes and no

There are some—in 2021, UK tech public listings raised a record £6.6bn, more than double for 2020. But of that list, very few were actually hard-core tech: is Deliveroo such a firm? Is (actually non-UK) review site Trustpilot? A fintech like a Wise?

The Government trumpets how well home-grown UK techs are doing (‘UK tech industry demonstrated its resilience in 2022, reaching a combined market value of $1 trillion’), but it’s either impact tech (companies creating technological solutions to reach the UN Sustainable Development Goals) or, again, fintechs that are leading this charge. And as for unicorns as a metric of economic success: those same Whitehall figures say in 2022 there were over 85,000 start-ups and scale-ups… and just 144 unicorns and 237 futurecorns (no, we have no idea either).

What’s happening here? Why does all the support and encouragement for non-fintech or Green IT firms patently out there not translating into real mid-size companies?

You would think that many of these would aspire to grow, but many do not. There is more than a touch of ‘start-ups being more than content to bid for public R&D money, getting a few hundred thousand pounds or euros, do some activity before starting another bid round/repeat’ here for comfort.

In other words, they do not seriously seek to commercialise their services or move on to full deployment with a real operator or grow organically by winning customers. We find the lack of ambition galling, but then there may be a hard logic here as for all the PR, most big tech companies—MNOs perhaps most of all?—do not want to buy from unproven vendors or be bothered dealing with small fry.

If we carry on as we are, then we will continue to foster a busy cycle of public money investment at one that creates interesting ideas and demonstrators, but which fail to grow out of the grant funding ecosystem enough to become real companies… and on the other end, incumbents who can just sit there and carry on doing what they like pretty much unperturbed by market forces, as no-one’s going to threaten their dominance enough for them to break a sweat!

Worse, we’ll end up with lots of promising ideas but most of which are just put back in the cupboard, as they will have met the criteria of the funding project – but no one’s buying or deploying them. How much innovation is lost in this way?

That’s no way to run a market. And it’s certainly not what we’re about here at Redmill, as we believe in innovation, creative destruction and as wide customer choice as possible.

So, if you are involved in 5G R&D and have done one too many grant applications that lead to some operating capital for a while but are actually serious about delivering commercial products rather than writing slide decks—work with us, because we can help you as we want the same thing as you.

Otherwise, keep waiting: like London omnibuses, there’e bound to be another funding round coming along soon enough!

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