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There are risks and no rewards | New Economics Foundation

The government invests billions of dollars in research and development-so why doesn’t it have a place in the results?

2021 already looks like a An important year for the UK’s initial public offering (IPO)In the first quarter of 2021, £5.6 billion has been raised-the largest amount since the 2008 financial crisis. Go public by selling its shares on the stock exchange. This means they can raise funds by selling new shares to the public. Initial public offerings are also opportunities for founders and early investors to profit by selling some or all of the company’s shares.

Most IPOs have occurred without public attention.recent Deliveroo IPOHowever, it was accompanied by worker strikes, investor boycotts, and one of the worst first-day performances in the history of the London IPO. Later this year, Oxford Nanopore, another major British technology startup, will be listed on the London Stock Exchange. Given that it has no publicly recognized brand or employee issues, few people will pay attention to its IPO. But this IPO is unusual because an early investor—the British government—will get nothing.

As early as 2009, Innovative Britain, a public institution, £199,000 awarded to Oxford Nanopore. At the time, the company was Worth only £56 millionMore than a decade later, the government provided more support to the company by signing a contract with the company without a competitive bidding process to provide tests to analyze the Covid gene sequence-a deal worth up to 144 million pounds. When private investors put money into a company, they usually get a portion of the company’s ownership in return. But since Innovate UK is a public institution, this did not happen. If Innovate UK acquired a stake in Oxford Nanopore in 2009, the £199,000 investment is now worth nearly £14.5 million. This could provide 72 more 200,000 GBP grant other Innovative company without the government spending more public funds.

When private investors put money into a company, they usually get a portion of the company’s ownership in return. But because Innovation Britain is a public institution, this did not happen. “

The UK public sector directly and indirectly spends over 14.4 billion pounds each year on funding research and development (R&D) to solve some of the main challenges we face. The government will not get any direct return from its investment—neither the company’s equity nor the ownership of any intellectual property (IP). On the contrary, where intellectual property does appear, it is usually owned by the company and any private investors. This has led to a system in which the company and innovation are partially funded by public funds, but despite the investment risk, the public receives no direct return. At the same time, private sector investment allows you to directly acquire shares in companies or intellectual property.

The traditional logic is that government grants can promote the private sector to make breakthroughs in high-risk areas, such as uncertainty about the likelihood of success or uncertainty about the length of time before expected financial returns. In turn, the innovations brought about by government investment will generate goods and services, employment opportunities, and increase tax revenue from growing enterprises and jobs, thereby benefiting the government and the public. However, what may have been true in history is controversial today. Many companies are very good at minimizing local taxes by creatively structuring their businesses, and innovative new companies, especially technology companies, usually do not create a lot of job opportunities.

However, there is a growing movement led by key thinkers like this Mariana Mazucato, Change the way the government invests. In this proposal, The state will invest in the company in exchange for the company’s shares, intellectual property ownership, intellectual property licensing fees or sales tax. This means that although the government bears the financial risk of the investment, it also bears any financial return. This will better reflect the role of the state in the innovation process and generate revenue, which the government can use to invest in other companies without having to spend extra money.Head of Innovation UK Publicly questioned Whether holding equity may be the future of the organization, admit The political wind is changing”.

“…The company and innovation are partly funded by public funds, but despite the investment risks, the public does not get any direct returns.”

On the basis of this excellent proposal, here are two promising models to change the way the government invests:

First, the government can create a Public IP sharing”. This means that the public (in the form of the state) will retain all or part of any intellectual property rights generated by publicly funded R&D-this depends on the level of government funding for research. All public IPs are available for all People use it-but people and companies who want to use it commercially will be charged to access it.

Unlike our existing government investment system, this proposal recognizes the importance of public investment in R&D and ensures that all resulting intellectual property rights are collectively owned. Since intellectual property will be more widely available, it also means that it can be used to maximize potential innovation.

This is an option for management issues. The second is to create a public equity venture capital company and actively invest in the company in exchange for equity. The level of ownership will depend on the level of investment.Any profits made by public investment and owned venture capital companies through the management and sale of their shares in the company will be used for further R&D investment – any additional profits can be invested in public services or evenly distributed to the public as Innovation dividend.

The new public R&D investment model will ensure that we obtain a more direct return on investment, promote innovation through open intellectual property channels, and adopt a more entrepreneurial approach to raise public funds for investment. This will ensure that when companies like Oxford Nanopore achieve major success with public funding, the public and the wider economy will also benefit.

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