The Oxford Accelerator Part 2: Scaling innovation

Oxford 2035: Scaling innovation Start

Contents A defining moment for Oxford – and the Golden Triangle page 1 AI, scientific acceleration and the next decade of innovation page 2 Ecosystems, placemaking and the race for talent page 4 Venture building and commercialising research page 7 Get in touch page 10

Contributors We would like to thank the following individuals for attending and contributing to this discussion and white paper: Maya Ward Investor Investment Director Gresham House Ventures

Henry Majed Visiting Fellow Saïd Business School

Matt Dawkes CFO Thomas White Oxford

Peter McLintock BD Ambassador Mills & Reeve

Sarah Haywood Managing Director Advanced Oxford

Matthew Frohn Partner Longwall Venture Partners

Simon Guillaumé Regional Engagement and Innovation Manager University of Oxford

Zickie Lim Partner, Head of VC and Investments Mills & Reeve

David Mott Founder Partner Oxford Capital

Andrew Gaule CEO Aimava Limited

Tammy Dougan Senior Business Partnerships Manager University of Oxford

Dona Ardeman Partner, Head of Investment Funds Mills & Reeve

Sebastian Johnson Director of Ecosystems, ARC Advanced Research Clusters

Dr Lennard Lee Medical Oncologist University of Oxford

Ayokunmi Ajetunmobi Head of Ventures The Pioneer Group

Edmund Goodin Principal Associate, Corporate Mills & Reeve

Mat Gazeley Regional Coverage Director HSBC

David Walker Endowment Officer Magdalen College

Robert Pinheiro Senior BD Manager Mills & Reeve

Stephanie Caird Partner, Life Sciences Mills & Reeve

A defining moment for Oxford – and the Golden Triangle

1

For decades, the arc connecting Oxford, Cambridge and London has established itself as one of the world’s leading centres for scientific discovery, life sciences and technological innovation.

From breakthrough medical research and AI development to quantum computing and deep tech, the region has built a global reputation for turning brilliant ideas into successful businesses.

Oxford now has the opportunity to build on its solid foundations in research commercialisation, developed over the last 50+years. With the Government looking for levers to pull to achieve economic growth, increased investment in the Oxford-Cambridge corridor has been announced to make it into the UK’s ‘Silicon Valley’.

The global race for talent, investment and innovation is intensifying. The US continues to dominate venture capital and scale-up funding. China is investing heavily in technology and infrastructure. European countries such as Belgium, the Netherlands and Denmark are becoming increasingly ambitious and coordinated in their approach to life sciences and innovation-led growth.

At the same time, the UK faces continued challenges around infrastructure, planning, housing affordability, access to capital and the long-term funding of universities and research institutions. Frequent changes in our political leadership, together with the policy upheaval this usually brings has made investors nervous and resulted in a more difficult fundraising market.

There is, however, a growing sense of opportunity.

Oxford’s ecosystem continues to evolve rapidly. Collaboration between universities, investors, developers, corporates and government is deepening. AI and automation are transforming scientific research. New clusters and innovation hubs are emerging. And internationally, the UK is increasingly viewed as a stable and trusted place to build globally significant businesses.

To explore these opportunities and challenges, Mills & Reeve brought together investors, academics, developers, founders and innovation leaders to discuss what the next decade could look like for Oxford, the Golden Triangle and the UK’s wider innovation economy.

Oxford has the ideas and global reputation; it now needs the infrastructure investment, diversity of capital (and capital at the right levels) storytelling and coordination to match its scientific ambition, as this white paper explores.

AI, scientific acceleration and the next decade of innovation

2

One of the most forward-looking discussions centred on the transformative impact AI could have on Oxford’s scientific ecosystem over the next decade.

Our guest speaker Dr Lennard Lee highlighted how Oxford researchers are already using AI and robotics to accelerate scientific discovery, particularly within cancer vaccine research and laboratory automation.

His keynote began with reflections on the Covid-19 pandemic, which he described as a “defining moment” for UK science and innovation. The rapid development of vaccines demonstrated the power of collaboration between universities, investors, researchers and government.

Lennard suggested the pandemic fundamentally changed attitudes towards pace, ambition and scientific risk-taking, with researchers, investors and policymakers now more willing to move quickly and think at scale. It is being replayed now with work at pace to find a vaccine for Ebola following the deadly outbreak in West Africa.

AI was described not simply as a productivity tool, but as a technology capable of reshaping the entire scientific process. Lennard shared examples of AI systems being used to design cancer vaccines, analyse scientific literature and control robotic laboratory equipment. He explained how Oxford laboratories are increasingly able to run continuously through automation, with AI systems directing experiments and managing workflows 24 hours a day.

He proposed this could dramatically increase the productivity of scientific research whilst helping address longstanding talent shortages. It will not, however, replace the need for outstanding talent.

Importantly, Lennard stressed that Oxford’s opportunity lies not in trying to replicate US or Chinese approaches to AI, but in applying AI to sectors where the UK already has world-leading expertise, namely healthcare, life sciences and scientific research.

Geopolitical shifts may further strengthen the UK’s position. Concerns around political instability in the US and intellectual property protection in China could increasingly encourage researchers, founders and investors to view the UK as a safer and more stable environment.

There was strong optimism around Oxford’s long-term future, particularly given the combination of world-class universities, scientific expertise, investment capital and emerging AI capabilities.

3

“Oxford already has many of the ingredients needed to become one of the world’s leading AI-enabled science ecosystems. We have now created AI scientists, and we are running robotic labs 24/7. The opportunity now is to keep investing in the talent, infrastructure and collaboration that will turn that scientific advantage into global impact.”

Dr Lennard Lee Medical Oncologist, University of Oxford

Ecosystems, placemaking and the race for talent Placemaking remains fundamental in building and supporting successful innovation clusters.

The importance of housing, schools, retail, leisure, transport infrastructure and amenity space in supporting long-term ecosystem growth cannot be underestimated, participants said. Without those ingredients, attracting and retaining talent becomes significantly harder. Participants noted too that younger talent increasingly expects workplaces to be integrated into thriving communities rather than isolated “soulless” science parks.

The challenge is particularly acute in Oxford and Cambridge, where housing affordability continues to place pressure on recruitment and retention. Attendees said that if highly skilled workers cannot afford to live near innovation hubs, cluster growth will inevitably slow.

Successful placemaking requires coordination and alignment between multiple and often competing stakeholders. Frustration was directed towards local government, with participants pointing to how development decisions are often approached in isolation rather than considering how sites contribute to wider ecosystem growth.

Participants ultimately agreed that talent follows place. Businesses may initially choose locations because of research strengths or university links, but long-term success depends on whether people genuinely want to build their lives there.

4

Investment, capital and scaling innovation

5

Access to capital dominated much of the roundtable discussion, with participants debating whether Oxford has the depth and diversity of investment needed to expand on its existing strengths, with many noting that Oxford can be perceived as insufficiently open to those who are not already part of its innovation ecosystem.

One person noted that Cambridge has historically benefited from a stronger and more established angel investment community, creating a more mature “flywheel” where successful founders go on to back the next generation of businesses.

Oxford lags behind and is still building that cycle.

There was widespread agreement that Oxford produces exceptional science and world-class companies, with participants pointing towards recent billion-dollar deals, such as OrganOx’s sale to Japanese owned Terumo Corporation for £1.1bn and the growing international profile of Oxford-born businesses.

Several people pointed to the power of storytelling in attracting investment. There was a strong sense that Oxford does not promote itself as effectively as it might, despite its global reputation and research excellence. “Oxford is not very good at its own PR,” said one business development and marketing professional, “And the University, business and the professional community need to come together to tell that story”.

However, participants questioned whether the region has sufficiently broad access to early-stage and scale-up capital. It was suggested that too many investment rounds in the region still involve the same relatively small group of investors.

The need to diversify this investor base is clearly apparent, with attendees recognising the need to increase corporate investment, attract new angel investors and improve access to international venture capital.

It isn’t just about money, participants agreed. Other things can be equally important: Mentoring Infrastructure and market experience Strategic direction and leadership Diversity of experience from other regions

International investors do, however, see Oxford as an attractive destination, particularly given growing geopolitical uncertainty. Participants suggested concerns around China’s treatment of intellectual property and political instability in the US could create opportunities for the UK. Corporate and other types of investment remain important. Angels provide mentoring as well as investment. Corporates provide infrastructure and experience as well as money. Funds provide strategic direction and leadership. A diversity of investors from other regions brings knowledge, skills and experience from other regions and growth clusters. If all Oxford spin-outs are invested in by the same handful of investors these benefits can be missing.

The discussion repeatedly returned to just one point: it matters that the UK continues to invest in the UK.

6

“Oxford is already a world-class innovation cluster: exceptional research, ambitious founders and globally relevant science. But the next phase of growth will depend on broadening its capital base, building more investible businesses and connecting more confidently with the wider UK and international ecosystem. The opportunity is not just to generate brilliant ideas, but to scale them into globally significant companies.”

Zickie Lim Partner and Head of VC and Investments, Mills & Reeve

Venture building and commercialising research

7

The discussion moved on to question whether Oxford is doing enough to commercialise its extraordinary research base and turn ideas into scalable businesses.

Oxford’s success in creating globally significant spinouts and unicorn businesses was acknowledged - “Oxford is seen as a great unicorn assembly line”. Oxford alumni have created over 95 unicorn businesses.

Participants questioned too whether Oxford has enough independent venture builders, accelerators and commercialisation platforms compared to Cambridge or the US. Some argued Oxford is still perceived externally as relatively closed and insular, particularly for organisations trying to access university research, talent and intellectual property. “The university can be very forbidding and very difficult to break into,” said one guest.

“Venture building” models that combine operational expertise with capital are focused on helping founders navigate commercialisation, hiring, partnerships and scale-up challenges are vital. It was discussed whether Oxford has sufficient venture builders to take advantage of all the opportunities in the region.

The importance of commercially minded operators who can identify promising ideas and build management teams around them was discussed. Oxford, unlike many other innovation regions in the UK, already has the other factors needed to create successful companies.

However, there was recognition that the economics of venture building remain difficult in the UK compared to the US and the UK’s patient capital model is well developed but more is needed across all regions and sectors. Sustained institutional support is costly to maintain. We need to invest much more like Silicon Valley and Denmark. A model to follow, one guest suggested, is Denmark’s BioInnovation Institute, which received long-term funding support to build a sustainable biotech ecosystem.

The challenge is particularly acute in sectors such as AI, quantum computing and deep tech, where businesses often require substantial long-term investment before generating meaningful revenue.

The challenge facing Oxford, attendees agreed, is no longer generating ideas, but creating the commercial infrastructure, networks and diverse capital needed to scale those ideas successfully within the UK.

8

“Oxford has a great unicorn assembly line, but if we want to turn more brilliant research into scalable businesses, we need an ecosystem that is easier to access, a more sustainable venturebuilding model and more people who have actually built, scaled and sold companies.”

Dona Ardeman Partner, Head of Investment Funds, Mills & Reeve

9

“Oxford does not lack ideas, talent or ambition.

The challenge now is execution: building the capital base, commercial infrastructure and longterm partnerships that can turn scientific excellence into globally significant businesses. If we get that right, Oxford will not just remain a world-class innovation ecosystem it will become one of the most important places in the world to start and scale science-led companies.”

Edmund Goodin Principal Associate, Corporate Mills & Reeve

Get in touch

10

For any questions on the topics discussed in the report please get in touch.

Zickie Lim Partner and Head of VC and Investments, zickie.lim@mills-reeve.com

Dona Ardeman Partner and Head of Investment Funds dona.ardeman@mills-reeve.com

Edmund Goodin Principal Associate, Corporate edmund.goodin@mills-reeve.com

Stephanie Caird Partner, Life Sciences stephanie.caird@mills-reeve.com