7644 Annual Review.

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What impact We
What impact does NESTA make? Annual Review 2008

de
does NESTA ho
make? ide
th
ch

Annual Review 2008

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We are
demonstrating
how bold new
ideas can meet
the UK’s toughest
challenges.
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NESTA
NESTA is the National Endowment for Science, Technology NESTA
and the Arts – a unique and independent body with a mission 1 Plough Place
to make the UK more innovative. London
EC4A 1DE
We invest in early-stage companies, inform policy, and deliver
practical programmes that inspire others to solve the big Telephone 020 7438 2500
challenges of the future. www.nesta.org.uk

Our independence and ability to work across different We also have an office in Dundee and representatives
sectors allow us to bring together ideas from a wide range in Scotland, Wales and Northern Ireland.
of perspectives. And because we can take a longer-term view,
we are able to assume a greater burden of risk than others. ISBN
978-1-84875-032-6
NESTA does not work alone. Our success depends on the
strength of the partnerships we form with innovators,
policymakers, community organisations, educators and other
investors. We bring the best ideas, new flows of capital and
talented people together, and encourage others to develop
them further.

Design
Bostock and Pollitt Limited, London
Photography
Lee Mawdsley
Angus Bremner
Print
Quadracolour
This report is printed on FSC accredited
paper which is Elemental Chlorine Free
(ECF). The paper is manufactured
to ISO 14001 standards with the raw
materials purchased from suppliers
operating sustainable forest reserves.
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Contents
Why should anyone listen to NESTA? 2 Chairman’s introduction
What does impact mean? 4 Chief Executive’s review
But how is NESTA – and innovation –
relevant? 8 Public services
So do you work solely in the
public sector? 14 Corporate innovation
What about small creative businesses? 20 Creative economy
Giving advice is easy – but what practical
experience does NESTA itself have? 26 Commercial investment
Are the conventional boundaries
between public, private and voluntary
still relevant? 32 Social investment
How do we know if any of this work
is actually making a difference to the UK’s
economic performance? 36 Measuring innovation
Should the UK be trying to create
its own versions of Silicon Valley? 40 Place
42 Board of Trustees and Committees

44 Our year

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Chairman’s introduction

Why should anyone listen to NESTA?

The necessity to cut costs in a recession such as this can make it
difficult to think beyond the immediate needs of survival. But, of
course, recessions create successes amongst those who have planned
not only to survive the downturn but to come out the other side in
a stronger position.
With less money around in commerce and in public services, it is the
innovators who find the way to get ahead.
It is timely, then, that NESTA’s programmes, research and investments
are producing practical insights into innovative approaches that
business, public services, investors, government and others can use
for economic and social benefit.
Indeed much of our experimental work is now at a stage where,
proven on a small scale, it is ready to be broadened out. We will
increasingly be encouraging partners with greater resources than
we have to take the work on.
As you will see, NESTA’s reach is broad:
– Our investment support to start-up companies is demonstrating
how cash at a critical stage, often combined with NESTA-sourced
management, can make early-stage enterprises more likely
to succeed.
– ‘Open innovation’ programmes are helping to create new products
and ventures in large companies by harnessing inventiveness
from outside the company.
– The Big Green Challenge is showing how communities can
come together to generate energy savings in imaginative ways.
– NESTA’s comprehensive research programme points the way for
public policy to provide a more productive climate for innovation.
As the DIUS White Paper ‘Innovation Nation’ trailed in 2007, we
led the establishment of two major projects in 2008: an Innovation
Index (see p.37) to provide metrics for judging progress and guiding
innovation policy; and The Lab (see p.11), to experiment with ways
to overcome multiple barriers to new ways of thinking in the delivery
of public services. A third outcome of the White Paper, the Innovation
Research Centre, is a collaboration between NESTA, the Economic
and Social Research Council, DIUS and the Technology Strategy
Board, which will commission research into the role, drivers and
impact of innovation.
We are building a detailed
knowledge of how innovation
works best in the UK.
We have been enormously helped by the two Advisory Boards
we recruited for these tasks, led by Lord Currie (the Index) and
Sir David Henshaw (The Lab). Indeed, NESTA receives tremendously
experienced and skilled help from a wide range of non-executives
(whose profiles appear on p.42). Two – Dr Stuart Cosgrove and
Professor William Morris – concluded their terms in 2008, and we
record our thanks to them for their guidance over the past four years.
The energy of Jonathan Kestenbaum and his staff sets a palpable
pace and vibrancy to the organisation which, I believe you will
agree in reading this review, sets the UK in better stead to rebound
strongly when the current stringency abates.
Sir Chris Powell
Chairman

2 NESTA Annual Review 2008

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Chief Executive’s review
What does impact mean?
The UK began 2008 facing some significant long-term challenges –
not least continuing economic turbulence, environmental threats and
huge demographic changes. It became increasingly clear as the year
went on that we also face an acute immediate challenge in the form
of the credit crunch and subsequent recession.
Challenges of this scale need new ideas and new approaches.
On that everyone can agree. The question is: what can government,
companies and individuals do to encourage those new ideas?
Impact means producing
results – practical ideas that
others can use, at a time when
bold new thinking is critical.
Some might answer: “Nothing – someone either has a new idea
or they don’t”. Our work at NESTA demonstrates that such an answer
is wrong. Innovative approaches to problems require much more
than a lone genius with a flash of inspiration. Some environments
help new ideas to emerge; other environments discourage new ideas.
And once the ideas exist, some environments help them spread and
some environments kill them off.
We want to demonstrate what makes new ideas and approaches
more likely to appear and more likely to flourish. The aim is to develop
a series of ‘models’ – sets of practical insights that show what we
can do to improve the UK’s ability to come up with, and successfully
exploit, new ideas.
Our models span a wide range of areas. This was a conscious decision.
We do not think that innovation is or should be confined to certain
‘creative’ sectors of the economy. On the contrary, new ideas happen
everywhere – in businesses, in public services, in communities, in
universities, and in schools.
We see over and over again that innovation arises out of diversity
and difference. So our methods try to bring a diversity of insight.
We combine research with practical experimentation – funding ideas
on the ground and spreading their success.
This review is about what we have learnt so far.
Jonathan Kestenbaum
Chief Executive
NESTA Annual Review 2008 5
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“NESTA has been incredibly supportive

to us as an investor. We’ve been impressed
by their ability to offer relevant assistance
and guidance when needed, also by their
confidence in us.”
Dan Hon, Six to Start

With £50 million of our £400 million

endowment now being invested in start-up
businesses, and £10 million available to
invest every year, NESTA is now the UK’s
single biggest seed capital investor. One of
our recent new investments was in Six to Start,
an alternative reality games company run by
Dan Hon (pictured, left). We’ve taken a 12.5%
stake in the business, which is already working
with Penguin to develop six online multimedia
stories. The firm also has projects underway
with Channel 4, the BBC and Puffin.
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Public services

But how is NESTA –

and innovation –
relevant?

8 NESTA Annual Review 2008

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The whole of the UK

will benefit from what
we do – look at our
work to shape the
public services we all
need for the future.

NESTA Annual Review 2008 9

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Public services continued
Public services such as health, education, transport and social
services face a much tougher financial environment over the
next five years.
Moreover, they face substantial long-term challenges in the
shape of climate change, rising levels of immigration, and an ageing
population. In the past, governments have reacted to such changes
by trying to improve existing systems and structures. However,
to deal with the scale and nature of change that we are facing in
the 21st century, traditional solutions alone will not be enough.
Fresh thinking is urgently needed. We cannot continue to tinker
at the edges, particularly in the face of recession.
During 2008, NESTA has worked to understand where these new and
radical solutions might come from, and how they could actually be
put into practice. In particular, we set up projects to explore whether
those outside the management structures – frontline workers, users
of services or community groups, with their close experience of
delivery – could be a source of this new thinking. This notion has been
much talked about in government for ten years now. But it has proved
difficult to get it to work in practice. Our projects aim to find out why.
Our Innovations in Mental Health project challenged frontline workers,
service users and carers to come up with new ways to deliver mental
health services that could – with the right support – become national
projects with real impact. Eleven projects were selected and are now
being piloted. Our partners in this project were the Mental Health
Foundation, Mental Health Media, Mind, Rethink and the Sainsbury
Centre for Mental Health.
The Health Launchpad, a joint initiative with the Young Foundation,
focused on using social enterprises and social entrepreneurs to help
reduce the strain on the NHS by shifting the focus of care for long-
term conditions from hospitals to the community. Social enterprises
(see p.33) are particularly well-suited to do this – they have the
social or environmental aims of a charity, but are run in the same way
as a mainstream profit-making business. The Launchpad is already
supporting a number of new healthcare ventures, both commercial
and not-for-profit.
10 NESTA Annual Review 2008
The Big Green Challenge is a £1 million prize fund from NESTA
that challenged groups of people to find new ways of reducing
CO2 emissions in their communities. Launched in October 2007,
the Big Green Challenge attracted more than 350 applicants.
During 2008, we supported 100 of the most promising groups to
develop their ideas into detailed delivery plans. Ten finalists were
selected, and they are now putting their ideas into practice over
the course of 12 months.
The experience of these projects, coupled with our wider research,
has yielded some powerful lessons.
We found that frontline workers and users are full of clever new ideas.
We have no doubt that this is true right across public services – and
that those new ideas could transform public services for the better.
At the same time, we found that in many instances the ideas are
being blocked by middle management. This is not a new finding.
But to date there have been few solutions. Some have argued
that a strong and visionary senior manager is needed to break
through this opposition. But our work suggests that, while senior
management support is valuable, it will never be enough on its own.
Even if users or frontline workers with a new idea manage to reach
a senior manager, he or she will not have the time to shepherd the
idea through the organisation.
It seems that it may be a mistake to see middle managers as the
enemy. They need to be part of the solution. In a number of our
projects, innovations from the front line were successful precisely
because they found a supportive middle manager. This person
could give the idea more time, and typically dealt with precisely
the sorts of issue – the need to meet targets, the need to
conform to administrative processes – that were the barriers
to innovation in the first place. So if we want new ideas in our
public services, we have to find ways to co-opt that crucial
middle layer of management.
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We also found that bringing new ideas to bear on social problems
needs realism as well as ambition. Frontline innovators have to
work with the culture and mindset of the organisation and not in
flat contradiction to it. Take the example of mental health services.
They are focused strongly on risk minimisation. A working-level
innovator in mental health who attempts to work on the basis
of a different paradigm will not make progress.
That is not to say radical change is impossible. On the contrary,
it is often what the service needs. But it has to happen in stages.
Our work on involving community groups has also revealed a great
deal. Like frontline workers, community groups are frequently ignored.
We found that they were buzzing with ideas. And those ideas are
not simply about the short-term or the small-scale. On the contrary,
local communities are not short of long-term vision. That vision just
needs supporting.
With the Big Green Challenge, we have learnt that a challenge
prize – if structured correctly – is a very effective way of providing
the needed support. We have heard from participating community
groups that the programme gave them not only a sense of urgency
and focus for taking their ideas forward, but also the space and
permission to shift from short-term thinking (e.g. applying for more
traditional forms of funding) to longer-term, more ambitious thinking.
We also learnt other, less obvious, lessons about the power of offering
a prize. Prize funds have been much talked about recently as a means
of unlocking innovative ideas relatively cheaply. We found that they
are also a very powerful tool of research and consultation. Central
government often struggles to understand what is happening ‘out
there’ in local communities and regions. Our experience is that running
a properly structured prize process generates a tremendous amount
of rich information about the environment in which the participants
are operating. We have also learnt a great deal about the interaction
of local government, planning law and procurement.
An ageing UK
One in three people in the UK is now aged over 50,
and in 2008, for the first time, there were more over-
60s than young people aged under 16. The UK’s
ageing society is placing increasingly acute demands
on the provision of existing public services – such as
health and care services – and creating pressure for
new, better and more personalised types of services.
A major strand of The Lab has been designed to
tackle this challenge. Age Unlimited, which will
launch in early 2009, targets people in their fifties
and over, experimenting with more flexible and
innovative approaches to employment, leisure,
self-help and independent living.
The latter part of 2008 was spent pulling together plans for The Lab –
NESTA’s Public Services Innovation Laboratory – which will take this
work to the next level. It is a new programme, designed to provide
the freedom, flexible capital and expertise to test radical new ideas
for tackling our most pressing social challenges.
It will trial practical ways of fostering radical responses to some
of our most pressing social challenges. By experimenting and learning,
The Lab will build a body of evidence about how to approach
innovation in public services. It will help create wider capacity for
new ways of working, by sharing what works and facilitating learning.
The Lab is not a physical space or an institution – it is a set of
practical projects delivered with and through partners who, like
NESTA, are grappling with how to develop radical new solutions
for the benefit of citizens.
By the time of our next Annual Review, The Lab will form a significant
part of NESTA’s work, and we are confident it will already be having
an impact on public services and social issues more widely.
NESTA Annual Review 2008 11
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“NESTA was able to support us in our

user-led innovation initiative and show
us new ways of how we could work
with our customers to generate ideas.”
Allison Wightman, Virgin Atlantic

Allison Wightman is one of the key members

of the Virgin Atlantic team working with us on
V-Jam. Virgin is famous for its willingness to try
new ideas, and experiment with different ways
of doing things, which makes it an ideal partner
for a project like this. We wanted a real-life
project to experiment with user-led approaches
to innovation; Virgin wanted to get closer
to its customers and use their insights to help
develop new products and services. So far it is
proving to be the perfect pilot.
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Corporate innovation

So do you work solely

in the public sector?

14 NESTA Annual Review 2008

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We are just as active

in the private sector,
working with
companies to help
them unlock their
own innovative ideas.

NESTA Annual Review 2008 15

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Corporate innovation continued
The economic environment in which companies operate
changed radically over the course of 2008. With it,
corporate priorities have inevitably had to change too.
But we do not think that innovation is off the corporate agenda.
On the contrary, many companies need innovation more than ever.
But it will have to be innovation that delivers immediate value to
customers – and customers who typically have less to spend.
The new ideas that enable companies to innovate do not necessarily
come from new inventions or technology, but rather from using
new business models to extract value from existing technologies –
for example, the low-cost airline, or the pre-paid mobile phone.
However, actually generating those new ideas is not straightforward.
It is no coincidence that those sorts of ‘disruptive’ innovations are
often created by new entrants to an industry. Existing companies
find it difficult to think outside established patterns of working.
A potentially exciting way of tackling this is to use ‘open’ processes
of innovation, in which external partners and collaborators are
encouraged to offer their own input and ideas. It can lead to radical
breakthroughs and the accelerated development of products, as
the example of Apple’s iPod and iTunes shows. An open innovation
process involving (among others) Apple, PortalPlayer, Wolfson
Electronics, Toshiba and Texas Instruments, created the now-iconic
music player in six months. High-profile organisations such as Philips,
the BBC and Nokia have also applied open innovation models to
good effect. But it is not straightforward.
We spent 2008 working with corporates in a variety of different
environments. These were designed to explore various aspects
of the challenges of open innovation and how to overcome them.
The same underlying issue continually re-emerged in different forms:
how to create the right environment of trust, which is essential before
companies can be expected to share their ideas. Open innovation
cannot happen without it, yet trust is not easy to create. Standard
ways of doing business, such as detailed contracts, often do the
very opposite.
16 NESTA Annual Review 2008
One way we found was to bring together companies from very
different sectors to work on common problems. Corporate
Connections – which builds on an existing network called H-I Network
– involves a series of collaborative workshops with a wide range
of companies, including AXA, GlaxoSmithKline, Procter & Gamble,
E.ON, Philips and QinetiQ. Networking and relationship-building were
important by-products of the programme, but the real aim was to
give the participants the chance to work together on common issues
for mutual benefit, or share proprietary technologies with the aim
of finding practical new applications.
One particular advantage of NESTA’s approach is that it offers
the chance for major corporations to collaborate with each other –
whereas the open innovation processes set up by companies in
their own right tend to involve only the lead business and a lot
of much smaller firms. Bringing together companies of the calibre
of Procter & Gamble, GlaxoSmithKline, and BASF to work together
as equals could generate even more spectacular results.
We are also excited by the work we did during 2008 on open
innovation between small and large companies. This raised particular
challenges to begin with. Small and large companies should be natural
partners. Small companies are often the best source of new ideas
and new products for large companies, who have the resources,
the credibility and the pre-existing network relationships to sell and
market those ideas. And in theory an innovative SME can have
an idea, protect it, and then try selling it to big companies.
But it became clear that in practice it is extremely difficult to do this.
Not every innovation can be protected and, even for those that can,
it takes considerable time and resources to get to the point of having
a patented, marketable product. SMEs do not have those resources,
and they do not have enough insight into whether large firms are
interested in what they have to offer. The SME does not know the right
way into the large businesses – who to talk to, how the company culture
works, how their idea fits with the potential customer needs. Even if
it can overcome those issues, large and small companies cannot simply
share ideas in an open way. For small companies to sell their innovative
ideas successfully to large companies, both parties need a neutral space
in which they can develop trust.
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‘Airlock’

Instead of pitching their innovative idea direct to the potential corporate

customer, SMEs pitch in the ‘airlock’ to a partnership of NESTA and other
innovation brokers who understand the corporate customer. The ideas are
not passed on at this stage.
In this ‘airlock’, SMEs feel free to discuss their ideas more openly. They have
the confidence that the corporate cannot ‘steal’ their ideas before they are
ready. But they can also gain valuable feedback on whether their ideas have
market potential.
The top ten per cent of promising ideas are selected by the partnership.
It provides the SMEs with some modest financial support to develop
and protect the ideas. The SME then pitches directly to the corporate.

Last year we developed a powerful new way of helping SMEs

‘Managed serendipity’
Two of the companies taking part in Corporate
Connections – McLaren and NATS – have, as
a result of the programme, started a major new
business collaboration in the worldwide air traffic
control market, where NATS has established a
reputation of excellence. NATS is the UK market
leader, providing air traffic services at the UK’s
major airports including Heathrow – the world’s
busiest for international traffic.
In a remarkable piece of ‘managed serendipity’,
race control computing developed by F1
Champions McLaren is now being adapted to
aid the management of aircraft on the ground.
This venture into A-CDM (Airports-Collaborative
Decision Making) software could significantly
enhance efficiency and has a global marketplace.
McLaren Applied Technologies is currently
recruiting staff to develop the new product.
Business Development Director Chris Crockford
said: “NESTA’s Corporate Connections programme
has given McLaren an unexpected opportunity
to work with a totally unrelated business.
It shows that in the right circumstances the most
interesting innovations can come from unlikely
collaborations.”
develop their ideas and sell them successfully to large organisations.
The basic concept is that of an ‘airlock’ – a safe space in which
ideas can be worked up with the necessary input from all sides,
whilst mitigating confidential or commercial concerns (see Box).
The potential commercial returns from this process are significant.
NESTA contributed £125,000 in financial support to the SMEs
to help them through this process. The end result was that the
corporate identified ideas worth $200 million in new market
potential, which they are now actively developing with the SMEs
who originated them.
In some of our other projects we explored how to harness creative
ideas from end-users and entrepreneurial individuals, often through
dedicated websites and social networks.
The Open Ventures Challenge used this approach to support the
fundraising efforts of Cancer Research UK. The charity is inviting people
across the UK to come up with new ideas that could generate up to
£10 million to support its work, with the emphasis on new commercial
and collaborative ventures, rather than conventional fundraising. Ideas
have already been posted online, and the best will be developed during
the spring of 2009. The short-listed teams will then compete for start-
up funding in front of the charity’s venture board.
V-Jam, on the other hand, focuses on how open innovation can be used
in a more targeted way to involve end-users, and make the most of their
ideas. Our partner here is Virgin Atlantic, and the aim is to gain new
insights from its customers that may eventually lead to new products
and services in the form of web applications, which the individuals
concerned will help to develop and derive a financial return from.

As with all our projects, the means we are using to do this are just
as important as the end result. We are assembling a set of unique
insights about how to make user-led innovation actually work,
instead of just being a concept in a book.

NESTA Annual Review 2008 17

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“Starter for 6 taught me about financial

forecasting, but in a relevant and
accessible way so I could tailor it to what
I was doing. Their expertise enabled
me to sort out specifics and progress
the business.”
Scott Jarvie

Scott Jarvie is a successful Starter for 6

entrepreneur. We helped give him the start-up
funding he needed to set up his own business,
Jarvie-Design, which is unusual in that it works
both in 3D (such as furniture and kitchenware)
and 2D (such as branding and website
development). It is the financial discipline
he learned from Starter for 6 that has made
the most difference for Scott, helping him
to balance his own design priorities with
the practical and financial demands of
a growing business.
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Creative economy

What about small

creative businesses?

20 NESTA Annual Review 2008

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Too many creative

start-ups never reach
critical mass – we
are finding out why.

NESTA Annual Review 2008 21

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Creative economy continued
The practical tools we developed in 2008 to boost corporate
creativity can apply to all sectors of industry. But the creative
sector also has specific challenges of its own. We learnt a great
deal in 2008 about how it can tackle those.
The creative sector is a vital resource for the UK. It employs over
a million people and contributes £60 billion a year to UK plc.
In recent years industries like film, music and entertainment
have grown twice as fast as the economy as a whole.
More than that, the creative industries are crucial to the ability
of the UK to generate new ideas. We have found that creative
businesses make contributions to innovation that go well beyond
their own industry. They support and stimulate innovation in other
sectors. Businesses in the UK that make heavy use of creative goods
and services in their production processes are much more likely
to introduce new product innovations. We have set up a project
to encourage this sort of cross-sectoral knowledge transfer
by developing links between creative and non-creative SMEs
using innovation ‘vouchers’.
Like other businesses, creative ones are now facing a much
colder economic climate. In particular, the UK creative economy
is characterised by many small firms, few of which ever reach
a significant size, and none that could hope to rival global players
like Disney. Our work in this area has been designed to understand
why this is the case and what can be done about it.
The start-up phase of creative businesses raises one important
set of issues. In 2008, the Starter for 6 project (which grew out
of NESTA’s own Academy programme) continued to deliver training,
business advice and mentoring to young Scottish entrepreneurs,
building on an established track record of success. Independent
evaluation found that it added around £2.16 for every £1 invested
from public funds. The models and materials that we have developed
are now being used by other organisations across the UK, including
the National Council for Graduate Entrepreneurs, and Skillset, the
Sector Skills Council for Creative Media.
What makes it so effective? You might think, for example, that effective
business support for new entrepreneurs would be about hiring the
best advisers possible, even if it costs; or that it was about giving the
entrepreneurs a really comprehensive ‘mini-MBA’ business training.
22 NESTA Annual Review 2008
We have found that in fact the exact opposite is the case. Projects
that experimented with a high-end, high-support approach did not
necessarily create high-value businesses. One of the most powerful
and effective forms of support is to bring the entrepreneurs together
as a group on a regular basis – and even more importantly, set up
arrangements for ‘graduates’ to mentor those going through the
programme. The chance to talk to people facing the same issues,
with the same learning curve to climb, has been more effective
in many cases than contact with a business advisor. It is also useful
to cross-pollinate the programme with innovative businesses from
other sectors to share perspective and learning, because they have
product development life cycles which are a) similar and b) quite
different from other types of businesses.
Starter for 6 in particular now has the potential to become a
fully-fledged network or community of entrepreneurs, with huge
potential not just for learning and support, but for collaboration
and business development.
That is not to say that training and advice is irrelevant. Far from it.
But we have learnt that typical business advice schemes have too
much content and try to cover too much. It is much more effective
to focus ruthlessly on the three or four really key concepts or
techniques that the entrepreneur needs to grasp.
Start-up is just the beginning though. Creative businesses continue
to need support as they grow, but their needs are very different
from the start-up stage. We have been carrying out research and
experimentation to build practical toolkits for how to do this.
Many people believe that digital technology could be a means for
small creative companies to reach a wider audience as well as achieve
higher sales. We have been testing this in the film sector through
our Take 12 – Digital Innovation in Film programme, in partnership
with the UK Film Council.
7644 Annual Review.qxd 18/2/09 10:08 Page 23

The programme is showing that while digital technology does

provide an opportunity for film businesses to get closer to their
audience, this is challenging. Digital technology is not a guaranteed
Raising our game
route to make money from film content. Film businesses are
One sector of the creative economy that is far more
largely unaccustomed to engaging with audiences so directly.
important than it may initially appear is the games
industry. Some may dismiss the world of computer
We think that the industry needs to stop assuming that digital
gaming as a marginal mania, but the gaming industry
technology means that every small producer talks directly to its
is a huge opportunity for the UK: we are the third
audience. Collaboration will be very important. There appears to
largest video games market in the world and the
be value in building scale by collaborating with other rights holders
fourth largest development player. However, the
and pooling catalogues, and in doing deals with the gatekeepers
fact that Canada recently overtook Britain for third
of the new digital platforms.
place – largely as a result of heavy government
support – is a good indication of the challenges our
In 2009 we aim to make these insights more robust and to integrate
own industry is facing. We could stand to benefit
them into an overall model of how to support creative businesses
significantly from the continued growth and wider
in the growth stage.
application of gaming technology, but we can
only do this if we can compete effectively against
Another key issue is convergence. Reports frequently talk about
some extremely sophisticated – and subsidised –
how audiences are increasingly choosing to consume content across
competition. This will involve addressing some fairly
media platforms. They usually go on to say that companies could
fundamental challenges, including a shortage
develop new business models based on this. In reality, while some
of skilled people, and a lack of early-stage finance
small creative businesses are engaging with this, many are missing
for both start-ups and more established studios.
out. For example, our work in the games sector has shown that
the UK’s strong position in the video games area is declining, partly Raise the Game is a NESTA initiative launched
because games companies are not working closely enough with other in July 2008, which is designed to address many
types of media businesses and are not doing enough business online. of these issues. Developed in partnership with
Tiga, the national trade association for the games
Gaming, like other parts of the creative sector, produces a great deal industry, Raise the Game is offering active support
of what we have identified as ‘hidden innovation’. The games industry to small-scale developers to help them grow
is highly innovative (see Box). But it does not usually meet formal their businesses, and create and exploit their own
criteria for R&D spending, because studios find it difficult to separate intellectual property.
R&D activities from other spending. So no one measures this
innovation – and more importantly, games companies are not eligible
for tax credits. This is just one example of the crucial importance of
having better, broader measures of innovation in the UK, which can
capture the full rich picture of what is actually happening.

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“The commitment of NESTA has been

fundamental to the successful launch
of the ground-breaking UMIP Premier
Fund. NESTA’s continuing support
of the Fund is highly valued and will
significantly contribute to the
commercialisation of intellectual
property emanating from The University
of Manchester.”
Peter Sanderson, UMIP

We’re one of the leading investors in the UMIP

Premier Fund, the largest institutional fund
in Europe focused on a single university. Under
the chairmanship of Peter Sanderson (pictured,
left, with NESTA’s David Hunter), this fund
invests in spin-out businesses from the
University of Manchester’s world-renowned
science and technology departments.
Over time the fund could reach £50 million,
covering some 20 early-stage investments.
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Commercial investment

Giving advice is easy –

but what practical
experience does
NESTA itself have?

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We invest in early-
stage high-tech
businesses, and
are building a
deep knowledge
of what works
and what does not.

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Commercial investment continued

NESTA works very closely with high-tech start-ups in

various ways. Our aims are to demonstrate that a commercial
return is possible in early-stage investments, and to combine
practical experience with research models to promote change
in the sector.

Our investment approach is based on five main premises:

1 Commercial return: only by demonstrating that commercial returns
can be made will we attract private investment into the early stage.
2 A long-term, sustainable fund: a series of government initiatives
have been launched and come to an end in the last ten years:
University Challenge Funds, Regional Venture Capital Funds,
Enterprise Capital Funds and so on. NESTA is committed to being
a long-term player in this field.
3 UK-wide scope: NESTA’s remit covers the Nations and Regions,
and we work at a national, regional and local level.
4 Consistent focus: our agenda is focused solely on understanding
how to encourage early-stage innovative high-growth companies.
We have no other policy objectives and no need to lobby for
additional funding or tax breaks.
5 Public and private sector insight: uniquely, we combine practical
deal-making on a fully commercial basis with a public service remit
and a research capability. This gives us a unique ability to draw
powerful and convincing lessons.
In 2008 we made six new direct investments (worth a total
of £1,050,000) and nine further investments (worth £969,642),
and made a commitment of £500,000 to one fund. We now have
a portfolio of 48 investee companies and five investment funds.
The issue of the shortage of finance for innovative start-ups in the
UK has been much discussed over the years. A wide variety of factors
have been cited as possible causes, including some large and systemic
ones such as ‘City short-termism’ and ‘a lack of entrepreneurialism
in British culture’.
It has become increasingly clear to us over the last year that a systemic
approach is correct – no one factor explains the problem. But there
is no need to resort to sweeping statements about the UK’s financial
system or its culture. The diagram (right) sets out our understanding
of the situation: a vicious circle of mutually reinforcing problems.
Through a mixture of practical experience and academically rigorous
research, we are testing a series of models which tackle various parts
of this vicious circle.
Inexperienced management teams
running early-stage companies
Shrinking small Lack of serial entrepreneurs
seed-stage funds and management
Difficult High failure rates
fundraising and few ‘big hits’
Small rounds with Below average
insufficient support returns on funds
All agree that growing high-tech businesses need support.
The question is what type of support is most valuable. Mentoring
has been popular in this field for some time. We have found that it
is most valuable in providing companies with input on specific quasi-
technical issues – for example, on intellectual property. It is less
useful as general management support. Mentors rely on goodwill
to be heard, and management teams do not always listen to them
even when they should. Our findings are that there is no substitute
for a highly experienced Chair and/or non-executive directors.
They can provide the fledgling management team with expertise
and constructive challenge that cannot be ignored.
It would be reasonable to assume that investors in start-up companies
would be professional and effective investors. Surprisingly, we found
that this was often not the case. For example, the contracts used
by investors in early-stage companies are often either unrealistically
onerous for the entrepreneurs or too lax, not setting clear performance
expectations. On other occasions we found them to be overly complex.
We have therefore developed a standard template for a contract.

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Kinetique Fund

Another example of NESTA taking a more proactive

role is our appointment as the manager of the
Kinetique Biomedical Seed Fund. We’ve been the
leading start-up investor for many small businesses
in the past, and currently have investments in
48 companies and five early-stage focused funds,
but this is the first time that we’ve taken on the
role of an FSA-regulated fund manager.
This particular fund is a University Challenge Seed
Fund, which provides start-up funding for spin-out
companies from King’s College London and Queen
Mary, University of London. Taking on the fund
management role will deepen our experience of
the early-stage investment sector, and build closer
ties with the two colleges.

We conducted some in-depth quantitative research on the early-

Shifting Sands
In September 2008, we published Shifting Sands,
a detailed report on the changing nature of the UK’s
early-stage venture capital market. Venture capital
is absolutely vital for small start-ups, but even
before the onset of the credit crunch the supply
of private sector funding for riskier early-stage
investments was already getting tighter. As a result
the public sector is becoming much more important,
and a prolonged recession will only intensify the
pressure on government to fill the gap left by the
VCs, while demonstrating that the public money
it invests is being spent wisely and will generate
a suitable return for the economy as a whole.
At the same time, those private sector investors
who do remain in the market are more often than
not individuals, rather than funds. There are whole
new categories of business ‘angel’, from ‘mega
angels’ who can invest large sums in their own
right, to cohorts of angels who invest as groups
or syndicates. Some of these investors will also
team up with the public sector on particular
opportunities, and this partnership model is
rapidly becoming the standard model.
stage venture capital market during 2008, backed up by our practical
experience. It has already generated some important insights.
In doing so, it shows how a blending of research and practical insight
can shine a new light on old problems.
For example, policymakers and investors have long agreed that
a top-quality management team is vital to the success of a start-up.
Observers of the UK investment scene have known for some time
that UK management teams are often not as good as they should
be. Understandably enough, they have looked for wider explanations
of this general phenomenon – weaknesses in UK management
training, or even a problem with the UK’s ‘business culture’.
Our work suggests that quite specific features of the market can in
fact explain this problem. Our research showed that, at the moment,
much early-stage investment fails to inject sufficient capital in any
funding round. This has two important effects. One, it prevents
companies from attracting top-quality management, as they have
only a small funding runway ahead of them. Two, even if the company
does have excellent managers, they end up devoting too much time
and energy constantly to raising additional rounds. This distracts
them from their core activities of building their product, service and
business. The result either way is poor management performance.
Our work can also explain why this problem of small funding arises.
It is in large measure the result of the shift in the structure of funding
towards business angels and public funds. Both of these tend to lack
deep pockets compared to institutional funds.

We will be conducting more work in the future to understand business

angels better.

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“Growing social finance – investment

in social enterprises – means we can
unlock the right resources for some of
the UK’s most exciting and ambitious
businesses, and help them to ‘do good
and do well’.”
Sarah McGeehan, NESTA

Social enterprises are a new model for 21st

century business, combining the social and
environmental goals of a charity with the
processes you would find in a profit-making
firm. There are now more than 55,000
organisations like this in the UK, contributing
£8.4 billion to the UK economy every year.
Sarah McGeehan heads up social finance for
NESTA, helping to encourage the growth
of more successful social enterprises like the
Hoxton Apprentice, a flourishing restaurant
and bar in North London.
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Are the conventional

boundaries between
public, private and
voluntary still relevant?
Less so, and NESTA’s
work on social
investment shows why.

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Social investment

Social enterprises – like Cafédirect and Jamie Oliver’s Fifteen

restaurant group – are a new model for 21st century business,
combining the social and environmental goals of a charity
with the processes you find in a successful profit-making firm.
There are now more than 55,000 organisations like this in
the UK, and together they turn over £27 billion and contribute
£8.4 billion to the UK economy every year.

Social enterprises can play a key role in tackling some of the social
challenges we are all now facing. But our research has shown that
funding is a significant barrier. The sort of ‘private equity’ investment
that helps to start up and expand profit-making enterprises is harder to
come by for those with social or environmental objectives. Structuring
capital investment for this sort of business is challenging and the
supply of funds far more limited. Yet without such capital investment
the emerging social enterprise sector may lack the resources to seize
new opportunities, or even fail in fundamental ways. We believe this
is the time to transform investment in the social enterprise sector, and
that NESTA is uniquely placed to help this happen.

Over the next three years we will work with a wide range of partners
to develop and test new approaches to stimulate the demand for,
and supply of, social enterprise capital. Our ambition is to act as
a market-maker to help the social finance sector mature and grow.
Bridges Social Entrepreneurs Fund
Our three-year programme will address the barriers currently
A good example of the work already happening
restricting the development of risk capital, and explore how these
in this area is the Bridges Social Entrepreneurs
can best be overcome.
Fund, which we invested in and helped launch
in November 2008. Bridges Ventures is a fund
management company that aims to achieve social
or environmental aims while generating attractive
returns for investors. The fund will be dedicated
to social enterprises, and has already raised
£4.25 million from a number of investors, including
NESTA. Each enterprise will receive up to £1 million
in equity capital, and priority will be given to
ventures that can deliver a high social impact as
well as solid financial performance.
Over time, the fund hopes to attract more
investment into the social enterprise sector by
demonstrating the real social and economic value
of investments like these. Support for new social
enterprises, to help them prepare for funding,
is another important part of the scheme.

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“Working with NESTA has been great

for us here at the Farm. They have
provided the support, encouragement
and structure that we needed and,
most importantly, when we needed it.
They seem to understand how to
work with small and big organisations,
which is no mean feat.”
Bronwen Wilson, Hackney City Farm

The Hackney City Farm is one of the finalists

in the Big Green Challenge. Their entry is
all about encouraging people to reduce their
carbon footprint, and is based around the
idea of ‘60 Steps to a 60% reduction’. Lead
volunteer Bronwen Wilson is helping to
recruit 15 Green Ambassadors from the local
neighbourhood who will use the 60 practical
steps the farm team has developed in their
own community projects. The farm is aiming
to reduce its own carbon footprint by 30%
in 2009.
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How do we know if any

of this work is actually
making a difference
to the UK’s economic
performance?
We are working on
how to measure
innovation accurately
at the national level.

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Measuring innovation
NESTA has argued for several years that much innovation
is ‘hidden’ – it does not show up in official statistics about
scientific R&D. That is partly because not all technical
innovation shows up in the official statistics. But it is also
because not all innovation is technical.
Change and improvement are more often about new business models,
new distribution channels or new products than about new technology.
This is particularly important in a service economy like the UK.
This is not a new idea – academics have looked at innovation in this
way for many years now. But it is new to government. And 2008
was the year in which this way of thinking became mainstream in
government. In March 2008 the Government published its Innovation
White Paper, ‘Innovation Nation’, which was firmly based on this new,
broader view. We see this as a significant achievement, reflecting
the way in which we worked very closely with the new Department
for Innovation, Universities and Skills on the White Paper.
It brought with it a new challenge for NESTA. One of the reasons
that government historically focused on innovation as technological
change is because a set of annual figures exists that measures
technological change: namely, spending on R&D. There is currently
no way of measuring the wider concept of innovation in a consistent,
coherent way at the national level. So in the White Paper the
Government asked NESTA to develop a new Innovation Index which
would capture innovation in the UK’s increasingly important services
sectors, creative industries and in the delivery of public services.
The Index will be ready in its final form in 2010, with a pilot version
in 2009. In 2008, we successfully completed a preliminary phase
of ‘mini-projects’ to establish a credible design for the overall
shape of the Index. The key elements will be as follows:
– A macro-economic measure: showing the level of investment
in innovation as a component of GDP and its contribution
to productivity growth.
– A measure of innovation at the level of the firm: indicators
of innovation activity for key sectors of the UK economy
(software, energy, construction and so on).
– A measure of the wider conditions that enable innovation,
such as skill levels, educational effectiveness and so on.
– A framework for quantifying user-led innovation, which
is frequently neglected.
– A dedicated workstream for measuring innovation in the
public sector, an area where data are particularly poor but
where innovation is nonetheless essential.
Innovation Index
“NESTA will develop a new Innovation Index to
measure the UK’s performance as an Innovation
Nation… a pilot index will be published in 2009
with a fuller system in place by 2010.”
‘Innovation Nation’, March 2008
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“Our work on ‘hidden innovation’

has successfully made the case with
policymakers that the current tools for
measuring the UK’s performance need
to be brought into line with the reality of
innovation in our economy and society.
The next stage is to develop measures fit
for the 21st century – something we are
pioneering with our Innovation Index.”
Dr Mike Harris, NESTA

NESTA is working to increase the quality and

quantity of research on innovation, which we do
through our own research and by commissioning
leading academic and policy institutes. We use
our knowledge and our unique position in the
UK policy environment to develop and promote
a strong pro-innovation policy agenda across
the UK. We are also building a national network
of leading thinkers on innovation, based on
collaboration and forming connections between
centres of excellence.
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Should the UK
be trying to create
its own versions
of Silicon Valley?
Our work is showing
how every region
needs its own approach
to innovation, rather
than following a
standard route.

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Place

Innovation does not happen in a vacuum. It happens in

particular places, with particular political, economic and social
characteristics. In 2008 we tried to find out more about why
different places perform so differently when it comes to the
generation and exploitation of new ideas.

Part of the answer is that history matters enormously. The two

contrasting cases of Swansea and Cambridge illustrate the point.
Swansea was a major player in the production of coal, iron, copper,
tin and zinc up to the 1970s. When many of these heavy industries
closed in the 1970s, multinational companies were attracted by the
pool of low-skilled low-wage labour released by de-industrialisation.
They identified South Wales as a location for their assembly branch
plants. This seemed initially successful. At the height of production,
50 per cent of televisions and 75 per cent of video cassette recorders
(VCRs) produced in Europe were made in Wales. But by the 1990s,
these footloose industries, which required a labour force with few
specific high-level skills, began to seek out more cost-effective
locations elsewhere. So this second phase of development ended,
leaving Swansea de-industrialised again.

Over a similar period, from the 1970s to today, Cambridge went

from being a modest service-based market town to being the
UK’s most innovative city, with a high-tech cluster of some 900
innovative firms. While there are issues for it to tackle, it remains
Absorptive capacity
in a strong economic position.
In October 2008 we published our report
Innovation by Adoption, which shows that the
Both cities’ ability to innovate was strongly influenced by their
different aspects of innovation can quite happily
history. Swansea struggled to escape its industrial past to find
co-exist in different local or regional centres –
a role in the new information economy. It was precisely the lack
in fact, places that are good at generating ideas
of such a traditional industrial past that helped Cambridge
(like university towns) are not always the best
to succeed.
at commercialising them, and might do better
to team up with another city or region for that
The link between new ideas and economic growth in a region is also
phase of the process.
not simple. Other research we carried out showed that whether a
region can absorb and spread knowledge from other places is at least Likewise, those who come to live and work in
as important in generating local economic growth as the ability to UK bring with them a whole range of different
generate new ideas itself. Local businesses should not try to build links perspectives that can re-invigorate our own
with their local university just because it is local. If the skills and ideas thinking. If the UK is to fulfil its full potential
they need are to be found in other regions or even other countries, it will need to become more open to these new
then they should be encouraged to make those links. It is a mistake ideas, and get much better at exploiting them.
to have a standard view of what regions should try to do to become
more innovative.

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The Board
Board of Trustees

01 Sir Chris Powell

Sir Chris Powell is NESTA’s Chair. In the public sphere, his experience
includes chairing the Institute of Public Policy Research think tank;
The British Council’s Creative Industries Advisory Panel; Ealing
01 02 Hammersmith and Hounslow Health Authority; and Vice Chair of the
Public Diplomacy Board. He serves on the Government’s Science
Forum and the Board of Riverside Studios. In the commercial world,
Chris’s experience includes non-executive directorships at UBM,
Dr Foster, and Renew. He is a member of the Advisory Panel at PWC.

02 Sir Michael Barber

03 04
Sir Michael Barber joined McKinsey in September 2005 as the expert
partner in its Global Public Sector Practice. In this capacity, he has
been working on major transformations of public services, especially
education, in the USA, UK and other countries.

03 Professor Marc Clement

Professor Marc Clement is a prize-winning theoretical physics
05 06
graduate with a PhD in Laser Plasma Interactions from the
University of Wales, Swansea and the Rutherford Laboratory
at Oxford. He is Chair of Innovation and Senior Executive,
Vice-Chancellor’s Office at the University of Wales, Swansea.

04 Dr Stuart Cosgrove
(retired in October 2008)
07 08
Dr Stuart Cosgrove is Channel 4’s Director of Nations and Regions.
Since joining Channel 4 in 1994, the broadcaster has won numerous
international awards for dramas, documentaries and entertainment
shows that Stuart commissioned.

05 Sherry Coutu
Sherry Coutu is an experienced businesswoman and entrepreneur.
09 10
She was founder, CEO and Chairman of Interactive Investor
International plc, a software company serving the financial services
industry, and is a non-executive Director at Cambridge University
Press (Finance Board) and New Energy Finance Limited.

06 Stephen Emmott
Stephen Emmott is Director of Computational Science at Microsoft,
11 12
where he leads a multi-disciplinary, international team of scientists
focused on pioneering ‘new kinds’ of science and computing
to accelerate fundamental advances in key areas of science of
societal importance.

07 Professor Kathy Sykes

Professor Kathy Sykes is Professor of Sciences and Society at Bristol
13 14
University. She has a background in science communication and
has helped to create, among other things, a new Festival of Science
in Cheltenham, and Famelab.

15

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08 Andrew Flanagan Finance and Audit Committee

Andrew Flanagan is currently Chairman of Fleming Media, a privately Andrew Flanagan
held media investment company. From 1996 until 2006, he was Chairman
Jitesh Gadhia
Chief Executive of SMG plc, one of the UK’s leading media companies. Managing Director and Global Head of Advisory
Earlier in his career, Andrew held a number of senior financial roles at Barclays Capital
in the telecoms and IT sectors. Dr Tracy Long
Founder of Boardroom Review
Tony Thomas
09 Jitesh Gadhia Former Partner, PricewaterhouseCoopers
Jitesh Gadhia is Managing Director and Global Head of Advisory at
Endowment Committee
Barclays Capital, and was previously Managing Director of ABN AMRO
Corporate Finance. Jitesh is also a Trustee of Guy’s and St Thomas’ Jitesh Gadhia
Chairman
Charity, the UK’s largest National Health Service endowment. Mikael Breuer-Weil
Non-executive Director at RIT Capital
10 Professor Julia Goodfellow CBE Sherry Coutu
Non-executive Director at Cambridge University
Professor Julia Goodfellow is Vice-Chancellor at the University Press and New Energy Finance Ltd
of Kent. Previously, she was Chief Executive of the Biotechnology Patrick McKenna
and Biological Sciences Research Council (BBSRC). Founder and Chief Executive of Ingenious Media plc
Nick Cavalla
CIO of the University of Cambridge
11 Dr Tracy Long
Dr Tracy Long is the founder of Boardroom Review, a specialised Innovation Programmes Committee
consultancy that advises boards of directors and trustees on their Sir Michael Barber
Chairman
board performance and effectiveness. Madeleine Atkins
Vice-Chancellor, Coventry University
12 Patrick McKenna Professor David Auckland
Head of the Electrical Engineering Department,
Patrick McKenna is Chief Executive of Ingenious Media plc, one Manchester University
of the UK’s leading media investment and advisory companies. Tom Hadfield
Prior to forming Ingenious in 1998, Patrick was Chairman and Chief Patron of the National Youth Agency
Bettany Hughes
Executive of The Really Useful Group. Before that, he was a Partner Historian and broadcaster
in Deloitte & Touche, where he ran the media group. Paul Roberts
Director of Strategy, Improvement and Development
Agency for Local Government
13 Nick Starr William Roe
Nick Starr is Executive Director of the National Theatre (NT) Chairman of Highlands & Islands Enterprise
of Great Britain, appointed in 2002 to run the NT alongside Nick Starr
Executive Director of the National Theatre
Nicholas Hytner. He is also Chair of Battersea Arts Centre (BAC). of Great Britain
Professor Kathy Sykes
14 Liam Black Professor of Sciences and Society at Bristol University
Liam Black has developed and run a number of social businesses Investment Committee
and is one of Prime Minister Gordon Brown’s first Social Enterprise
Sir Chris Powell
Ambassadors. He recently helped to expand Jamie Oliver’s ‘Fifteen’ Chairman
restaurant into a global brand. His latest venture is ‘Wavelength’, Adrian Beecroft
which brings together some of the best private sector companies Partner and former Chief Investment Officer at Apax
Professor Marc Clement
with social entrepreneurs. Senior Executive, Vice-Chancellor’s Office,
University of Wales, Swansea
15 Professor William Morris Sherry Coutu
Non-executive Director at Cambridge University
(retired in January 2008) Press and New Energy Finance Ltd
Professor William Morris graduated from the Queen’s University Ian McIsaac
of Belfast with a degree in electrical engineering and spent the Former Senior Partner of Deloittes
Ernie Richardson
following 21 years in a wide variety of posts with Short Brothers CEO and Managing Partner at MTI
(now Bombardier) aerospace company in Belfast.

NESTA Annual Review 2008 43

7644 Annual Review.qxd 18/2/09
Our year
01 [January]
02 [January]
03 [January]
January
Published
– ‘Transformers: How local areas innovate
to address social needs’, which
considered why some places are more
effective at meeting changing social
needs than others. [03,17]
– ‘Beyond the Creative Industries’,
to help improve public understanding
of the true extent of creative activity
in the UK economy.
– ‘The Difference Dividend’, one of our
‘Provocations’ series, which argued
that immigration is vital to innovation.
Launched
– The Big Green Challenge, a £1 million
prize fund to encourage people to
work together to tackle climate change,
chaired by Lord Puttnam. [01, 02]
– Design London, which brings together
design, engineering, technology
and business expertise to address
future innovation challenges.
44 NESTA Annual Review 2008
10:09 Page 44
05 [March]
February
Published
– ‘Creating Innovation’, which examined
whether the creative industries support
innovation in the wider economy.
– ‘Preparing for the Future’, a collection
of essays on equipping young people
for a rapidly changing world.
Supported
– One of the 2008 Social Innovation
Camps, which bring a wide range
of people together to use new
technology to tackle social needs.
Hosted
– The International Thought-leaders
Summit, a one-day event with leading
creative industry experts, discussing
policies for these industries in the
21st century.
– The book launch for Inventing
Entrepreneurs and The Management
of Technological Innovation.
Celebrated
– An Oscar for the animated film
Peter and the Wolf, won by Hugh
Welchman, a NESTA grant recipient.
04 [March]
08 [April]
06 [March]
March
Launched
– The Future World of Work, as part
of a wider project examining the
best ways to prepare young people
for economic and social change.
– Open Alchemy in partnership with
Oracle, which is using open innovation
to develop new products with their
suppliers. [04, 05, 06]
Celebrated
– The publication of the DIUS White
Paper, ‘Innovation Nation’, which
gives us a critical role in stimulating
innovation in the UK, and leads
to the establishment of The Lab, the
Innovation Index, and the Innovation
Research Centre.
– Becoming one of Channel 4’s four
strategic partners in its Next on 4
vision for the future.
07 [May]
09 [May]
April
Hosted
– David Cameron, Leader of the
Opposition, who outlined his three
core principles of innovation in the
Post-Bureaucratic Age. [21]
Announced
– The 100 ideas short-listed for the
Big Green Challenge.
Invested
– In the UMIP Premier Fund, which
supports businesses emerging
from the University of Manchester,
and which could eventually invest
up to £50 million.
– As part of a £1.25 million funding
in drug development company
Haemostatix.
Awarded
– Prizes to the winners of Planet SciCast
2008, a competition for the best short
films about science experiments, which
received over 70 entries this year.
Celebrated
– A Female Innovator of the Year
award for Tanya Ewing, one
of our Starter for 6 entrepreneurs
in Scotland. [08]
7644 Annual Review.qxd 18/2/09 10:09
11 [May]
12 [May]
13 [May]
May
Hosted
– The Innovation Edge conference
at the Royal Festival Hall, which was
attended by 3,000 people, and had
keynote speeches from Gordon Brown
and Bob Geldof.
[07, 09,10,11,12,14,18, 20]
Published
– ‘Total Innovation’, the third in a series
of reports on hidden innovation,
which focused on high-tech sectors
such as aerospace and pharmaceuticals.
– ‘Taking Services Seriously’, which
examined how UK services firms
can become more innovative and
more productive.
– ‘Breaking the Boundaries’, one of our
‘Provocations’ series, which argued
that using innovation to achieve
environmental sustainability must be
an overarching goal of national policy.
Launched
– The Web Science Research Initiative
on the future of the internet, with
Sir Tim Berners-Lee. [13]
Page 45
10 [May]
15 [December]
June
Hosted
– The London EASY summit, focusing
on the importance of creating a policy
framework that can help stimulate
cross-border investment in early-stage
businesses.
Published
– ‘Selling Sustainability’, which
examined how to motivate individuals
to play their own part in tackling
climate change.
Awarded
– 29 grants worth up to £10,000
to the participants in Starter for 6,
our programme for up-and-coming
entrepreneurs in Scotland.
Launched
– The Raise the Game project, to
help drive growth in the UK’s video
games industry.
14 [May]
17 [January]
16 [July]
July August
Launched Sponsored
– Consultation on the new Innovation – The UK Young Screen Entrepreneur
Index, which will measure the UK’s Award, which will enable young
capacity for innovation. movie-makers to learn more about
the international film business, and
Hosted
win a behind-the-scenes tour of the
– A policy breakfast on ‘The Future
Indian screen industry.
of Europe’s Research and Innovation
System’ with Ian Pearson and Invested in
John Denham. [22] – The IP Venture Fund, which invests
£30 million in spin-out companies
Published
at IP Group partner universities.
– ‘New Inventors’, which demonstrated
how user participation is changing Celebrated
the rules of conventional innovation. – Becoming the first UK organisation
– ‘Hidden Innovation in the Creative to benefit from the Young Innovative
Industries’, which compared how Enterprise legislation, which will allow
innovation works in four crucial us to invest up to 150 million in total,
creative sectors. and up to 11 million per company.
– ‘History Matters’, which examined
whether history does indeed matter
in the development of innovative
cities and regions.
Invested
– £500,000 in the GP Bullhound Sidecar
Fund, which focuses on technology,
media, and telecoms businesses.
– As part of a £1.1 million funding round
for Gnodal, to help develop its data-
centre technology.
Named
– The 12 UK film businesses who
will take part in our Take 12 – Digital
Innovation in Film programme. [16]
 7644 Annual Review.qxd 18/2/09
18 [May]
19 [December]
January]
20 [May]
September
Hosted
– Events and debates at the UK political
party conferences, including sessions
on the UK’s economic competitiveness,
investment in early-stage businesses,
and the video games industry.
Invested
– £3 million in the Pentech Ventures
Fund, which backs enterprise and
telecommunications software
businesses.
Published
– ‘Shifting Sands’, which examined
the changing nature of the UK’s
early-stage venture capital market.
– ‘Innovation in Services’, a series
of reports on innovation in five UK
service sectors.
– ‘The Art of Innovation’, and ‘Fine Arts
Graduates and Innovation’, two studies
on the contribution that fine arts
graduates make to innovation in the
creative industries.
– ‘Developing Entrepreneurial Graduates’,
as part of an ongoing process to
identify best practice in this area, both
in the UK and overseas.
There is more information on all of these
events, publications and achievements
at www.nesta.org.uk
10:09 Page 46
21 [April]
22 [July]
October
Published
– ‘Innovation by Adoption’, which
demonstrated the importance of new
external ideas in the development
of innovative cities and regions.
– ‘UK Global Innovation’, which explored
how innovation works in key emerging
markets, and what lessons there might
be for the UK.
Launched
– The Creative Business Catalyst pilot
programme, to bring together
business school students and creative
businesses.
Announced
– The ten finalists for the Big Green
Challenge, which encourages
people to work together to tackle
climate change.
Celebrated
– Procter & Gamble taking on three
of the products pitched to them
as part of our Corporate Open
Innovation Challenge.
23 [November]
24 [December]
25 [December]
November
Launched
– The Bridges Social Entrepreneurs
Fund, which will invest in new social
enterprises. [23]
– The Open Ventures Challenge,
to help Cancer Research UK find
new ideas to fund their research.
Hosted
– Innovation Live, in partnership
with the NHS, where more than 500
NHS professionals explored ways
to transform healthcare in the UK.
– The Rip, Mix and Burn event, to
encourage archive owners to promote
innovation by digitising their IP.
Took on
– Our first fund management role, with
the Kinetique Biomedical Seed Fund.
Published
– ‘The Failure of Market Failure’, one of
our ‘Provocations’ series, which argued
for a ‘21st century Keynesianism’.
December
Hosted
– An event on the economic downturn,
chaired by Lord Drayson, Minister of
State for Science and Innovation. [19]
Published
– ‘Attacking the Recession’, which argued
that the UK must use the short-term
economic crisis to address longer-term
challenges.
– ‘Raise the Game’, a study of the
competitiveness of the UK’s games
industry.
– ‘The UK Fashion Designer Economy’,
which aimed to provide a better
understanding of the complex UK
fashion industry.
Launched
– The Carbon Crucible initiative, bringing
researchers from different disciplines
together to help reduce the carbon
footprint of the energy industry.
[15, 24, 25]
– V-JAM, an open innovation project
with Virgin Atlantic.
Announced
– Francis Carpenter, former CEO of the
European Investment Fund, joining
NESTA Investments as a Senior Advisor.
– The new £5 million Innovation
Research Centre, to be jointly hosted
by the University of Cambridge and
Imperial College London.
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