Doug Brion and Chris Vann.

Q169 The Chair: We are pleased to have two entrepreneurs to give evidence to us: Doug Brion, the founder and CEO of Matta, and Chris Vann, the chief operating officer for Autolus Therapeutics. You are both welcome, and thank you for coming to give evidence to us. As you will both know, our inquiry is essentially investigating the ability of science and technology companies in the UK to scale up, build and grow in the UK. By way of introduction, could you each set out for us what your company does, what size it is now and the journey it has been on since its foundation?

Chris Vann: Autolus is a spin-out from University College London. It is a biotech that makes products, one type of which is CAR-T cells. We re-engineer white blood cells to particularly address needs in cancer and autoimmune disease. This has profound effects; I will not go through them but they are really encouraging for the health of the nation. The company is now 10 years old. We are British registered. We have manufacturing and research in the UK. Since 2018 we have been NASDAQ listed, and to date we have raised $1.8 billion of capital. We have 575 employees in the UK out of our total global workforce of 750. We recently launched our first product in the US market. We have regulatory approval in the UK and Europe, and we are pending reimbursement.

Doug Brion: I thank you for the opportunity to give evidence today. This is an area that I am passionate about. I am at the beginning; I am a mere minnow compared to Chris. I am the co-founder and CEO of Matta, where we build industrial AI for factories. We have been going for nearly two years now since I finished my PhD at Cambridge in engineering, and we closed our first investment round around February/March last year. We are based in London. We are just in the legals for another round now, and we will have total funding of around $15 million-ish. There are 10 of us on the team. We build AI models where you can take a camera and strap it into any factory—you name it, from traffic lights to nuclear submarines to waterproof coats. It sits there and learns what looks good if things go wrong, and it can flag up defects and anomalies to operators on the fly. That is a little overview of us.

Q170 The Chair: Clearly you are at different stages, but a question for both of you is whether there were any moments when government interventions proved critical in allowing your companies to grow. Or were there moments where government interventions would have been appreciated but were not forthcoming?

Doug Brion: Innovate UK has been fantastic for us. During my PhD, almost for fun, I remember trying to apply, because I knew I wanted to spin out, and writing a grant application. I ended up getting it and then panicked, thinking, “Okay, this is real now”. The fact that Innovate UK backed us at such an early stage, even when we did not have VCs in—we were still inside the university—was a forcing function for getting us going. It provided the capital that we needed to limp through until we got our first VC investment. The risk that Innovate UK took on us at the early stage is the reason why we are here today and have brought in infinitely more private capital from VCs than it put in, so I have nothing bad to say about it. I know it is going through a big restructure at the moment with how it awards grants, but I want to make sure that it still has that pro-risk mentality for backing entrepreneurs in the super early stages, because that is when it is most effective.

Chris Vann: There are three areas where the UK Government have been particularly helpful. First, the R&D tax credits have been very important to us. Secondly, when we needed to scale up to supply for clinical trials, the availability of the Cell and Gene Therapy Catapult facility, which was one of the few in the world at the time, definitely helped us to avoid having to put in capital to either build or, essentially, build and lease back a similar type of facility for ourselves, so that was really useful.

Thirdly, I want to shout out to local government. Stevenage Borough Council was amazing. We built a world-class cell manufacturing facility in half the time that that took anywhere else in the world. There are very good stories about pioneering or other technology like pre-assembled modules to do that, but the council was instrumental in clearing the planning and finding us the space to do that in record time, because otherwise—particularly as that was during Covid—we would not have been able to launch as we would not have had suitable facilities.

There are two areas where it would be fair to say we have concern about government engagement. First, we have not been able to secure any support for that facility, even though we have put around £250 million into it. We have built a workforce of 380, of which we have actually trained 250, at a cost of around £37,000 a head to us, but we have received no support for manufacturing.

The second area where we are still open to the outcome, but we are concerned because of what was mentioned earlier, is that it is important to have your products available in your home market, but we are still in the middle of the NICE negotiations and there is still a high degree of uncertainty. The home market is really important in our industry.

Q171 Baroness Northover: Can we expand on what you were just saying, which was fascinating? How do you view the overall scene for UK science and technology companies that are trying to scale up? What major barriers do they face? That obviously might include the kind of barriers that you have faced with your companies. Do the Government currently understand the scale and nature of the problems that you might be flagging? Do you see change in that, in terms of what they are seeking to bring forward at the moment? Where would you want to see further change?

Doug Brion: I start by saying that we are in a very good place. I am super-positive about the future of the UK in tech and start-ups in general. We have the third-highest VC investment anywhere in the world—the US is first, then China and then us. We have incredible universities, incredible talent and fantastic start-ups at different stages, so there are a lot of things going for us. Previous witnesses mentioned the recent London Tech Week, where Jensen Huang from NVIDIA said that we are in a Goldilocks position of having companies such as DeepMind in London, as well as Wayve, Synthesia and so on. We have Oxford, Cambridge and Imperial, and the third-highest VC investment. This is ours to lose now; the bedrock is there.

For us, a lot of it is mood music. Even though we have all these fantastic foundations, we need to be more positive about what we have and more ambitious about scale so that the start-ups and companies we build can punch on a global scale from day one. There is an ambition part.

We focus lots on the scale-up side—we will talk about that more in the rest of this this committee—but we should not forget about the top of the funnel and where those companies are coming from. I fear that we are becoming more complacent about being a place where innovation happens and all these people spin out. So many people I know from Oxford, Cambridge and Imperial all immediately move to San Francisco or the valley. We can capture the companies that start here, get to series A and then get acquired, because we knew they were here, but we are not capturing the huge amount of brain drain of people who we train up, who develop ideas and who immediately move to the US. Focusing on the top of the funnel and talent is really important, especially now, with what is happening geopolitically in the US and elsewhere—there is a huge opportunity to bring talent in. We are not graduating enough top engineers and computer scientists and so on. If anyone is fantastic in those fields, they should come, come, come—that would be fantastic.

The other difference that I have found in the UK, compared to time I have spent in the US, is around networks and convening—the previous witnesses mentioned this. I have genuinely landed in San Francisco airport, met someone over coffee two hours later and then been taken to a party for hardware VCs by a stranger. Can you imagine that happening in the UK? Someone I have known for 10 years will not invite me to a party. That is the ecosystem that we are trying to compete against.

Being in both AI, which is very much what is coming in the future, and manufacturing, which is traditional and old school, I have found that we have a lot of parallel universes that everyone operates in. I am fortunate enough to be part of the Royal Academy of Engineering, the Royal Commission for the Exhibition of 1851 and all these organisations that are fantastic at convening more of the established crowd. But we do not have the same structures for convening the start-ups in fintech and AI and so on and bringing those parties together. I have had brilliant experiences at the Royal Academy, where you will be sat next to the CTO of a defence prime or the CEO of a massive manufacturer and you can then strike a deal there. That is how business happens, and we do not do enough of that. I will stop rambling.

Chris Vann: Our industry, which sells gene therapy, tends to convene on a global level. I will tell you about the relevance of that. It was not recorded there, but I am head of the European working party for that global traders association. I have been the treasurer and I am also a board member. The industry generally—it is important to put it into context—is in a tough position globally at the moment because of all the changes in the world and all the issues around the macroeconomic environment influencing the willingness to invest.

Coming back to the UK specifically, what we are looking for as an environment in which to flourish is stability, speed of decision-making and easy navigation of what is on offer. There are many bodies in the UK and, if you are a small biotech company—I am thinking particularly about when we were the size of Doug’s company—it is quite a difficult journey to navigate all of what is on offer in the UK. There are some exceptional policies and we will eventually benefit from the patent box and the R&D credits. There have been smorgasbords of some really good policies.

We have also, for the most part, benefited from a really good regulatory agency in the MHRA. We have obviously gone through what I would call a wobble with Brexit, when we did not have people on the opposite side to interact with. That had real consequences: our application was delayed for six months in the UK and we nearly missed the deadline for starting the paediatric study, which would have delayed the European submission.

There are many good elements to the UK, not least of which is the science. But one of the things that is really difficult to gather is an integrated strategy. There is a smorgasbord that is difficult to penetrate and understand if you are a small biotech. There is also no overarching theme; for example, decisions on tax are related to the investment we make in people. Remember that over 90%—probably closer to 95%—of the use of the facility will be export, and there is no connection, for example, between the benefits there and the support we get.

What would really help us is an integrated industrial strategy, particularly to take you from an SME to a revenue-generating company. We need stability in the environment and simpler, speedier decision-making.

Q172 Lord Borwick: One of the major barriers we have been exploring in this inquiry is access to scale-up finance. So few British investors seem to be prepared to invest more than £50 million in something. Where would you look if you had decided to get investors from the UK?

Chris Vann: When we talk about investment, it is important to say that there is more than just investment. We are very fortunate, and here I say a big thank you to Martin Murphy, Ed Hodgkin and others. Our founding investor was Syncona, and it has stayed with us; it is currently around 10% of the shareholding. We had investment from Syncona, and then we managed to add Arix and Woodford, which was an adventure. We then did a broader international round, before we went to IPO. You are right: there is a shortage of places where you can go to get investment.

The other important thing is that around that investment needs to be built an industry, if you like, of specialist investors who bring more than just the money to the company—who are engaged in company formation and provide other support.

Doug Brion: I have some numbers on that point. Last year, in VC, the UK took in $16.8 billion, Germany was on $8.3 billion and the US was on around $150 billion. That is just to give some scale.

We are lucky that firms such as Balderton and Index are based here, and they will do ticket sizes over that amount on the VC side. We are fortunate in London that the majority of the large international multi-stage bay area firms have their European offices here, and they are sophisticated at investing in UK start-ups. Obviously, a disadvantage is that all the proceeds, if it is successful, go back to the US, rather than being a domestic win.

There are other left-field things on how to scale, not just from pure VCs but at the corporate side. I have always been surprised that companies such as BAE Systems and Rolls-Royce do not have, as far as I am aware, a corporate venture arm, whereas most of their US equivalents do. Often, for very large rounds, you will get strategics coming in, and the likes of Microsoft, Google, NVIDIA and all these big US tech companies investing in companies. Perhaps our big players can do more on that front for those growth stages. More needs to be done.

Chris Vann: One area of pension reform that there has been a lot of focus on, so I will not go through it, is venture capital investing in shares. Another area that is quite tricky in the UK is getting loans and other vehicles that allow growth, so it is also important to look at growth funds. For example, our factory is financed by UBS and built by Reef Group, and we lease it back, because that is a more efficient use of capital. Other types of capital are important.

Q173 Lord Ranger of Northwood: It is exciting to hear about two businesses growing and being successful, and it is a real pleasure to have you here giving evidence.

I have been involved in looking at this area since the late 2000s, when we had the original start-up environment in London and all the excitement around that. I have followed it through; I am an angel investor, and I look at small and large businesses, and I look at the landscape.

Doug, you highlighted the culture on the west coast and here. Last week was London Tech Week, the week before that was SXSW London, later in the year there will be FinTech Week and next week I will be in Newcastle at TechNExt. There is a constant stream of these activities and events, but are they bringing together the right people for you? Are you finding that you are getting those VCs there in a structured way?

I ask that because there was a debate on this on Friday in the House of Lords, which you may have heard, in which I encouraged bolder moves around how money can come in. As you said, Doug, the UK is in third place when it comes to investment from VCs, but we are miles behind the US and China, with France catching up. There is something cultural there. Do you feel a need for a more specific focus on funding and the culture around funding? How can we improve that?

Doug Brion: Thank you for your question. All these events are fantastic—they bring people together and add to the positive atmosphere—but they are almost too structured to be productive, if that makes sense. We need a more consistent convening, where relationships can be built, versus a once-a-year thing where you fly in all the big names but no real relationships are established for you to then do business. In venture investing, people are not after a single point; they are after the graph of points over time to see how you are growing.

We can look at what Paris is doing at the moment. Our biggest focus in the UK should be what is happening in France, especially on the AI side. At the moment, we have double the VC investment that it has, and more companies, but its growth is going through the roof. It has lots of initiatives, such as STATION F, with which you may be familiar; it is a massive campus built in Paris, with more than 1,000 start-ups in the same space, hundreds of VCs, and everything there to try to foster these connections.

I think London is the best city on earth. It is so huge, diverse and fantastic, but that also means that the network effects get diluted throughout the whole city. A fantastic map of the Tube came out last week that showed the amount of VC raised around every Tube station. Old Street is winning—I think it has raised $13 billion since 2000. Our office is on Old Street, and when you come out of it, you do not feel that you are in the epicentre. London is too spread out. We need to form more campuses. That is what is great about Cambridge. Obviously, the scene is much smaller, but the city is so much smaller and it is all connected through the university, so that everyone knows everyone. Perhaps that can be replicated.

Perhaps bodies such as Innovate UK, which has run multiple showcases for its different grant tracks and paid for our stands at trade shows and so on, could play more of a role in bringing different parties together, at different scales—SMEs up to enterprises—and make that more structured.

Chris Vann: Life sciences is global. The reality is that the venture capital companies do not wait for people to go to them; they are coming to the UK to look for suitable products and assets to form into companies. Certainly, it is working both ways. More money will always mean more opportunity and more companies opening.

Generally, the challenge has been not so much getting SMEs formed into proof of concept but bridging—to have a UK company that is manufacturing and commercialising products. Certainly, improvement can always be made—more money, more opportunity—but I do not think that is the primary challenge in the UK for life sciences.

Q174 Baroness Young of Old Scone: Chris, talk us through the decision to float on the NASDAQ rather than in the UK. In particular, what else could we do here in the UK to make our capital markets work harder? I was very interested—if I have it right—that the vast proportion of your staff are still based here. How did you stop them all just heading off?

Chris Vann: First, we are a business, so we take concrete decisions. I can explain why we came to the UK. It was certainly due to the fact that we had a presence here and we had great staff. We built staff, but we also have great research here. We have a good home in having some of the key building blocks for a business. It is very simple: we went to NASDAQ because that is where the capital in our sector aggregates. Once we were on NASDAQ, we were raising £100 million a year on average. There were certain times when we needed to raise more, and then we had different types of finance, which I will unpack if you want me to. That is where you can raise that sum of money.

Secondly, the investors we raise with are more comfortable and more used to dealing through NASDAQ, where they can look at all the companies on offer. They basically have an easier way of navigating the system of investing in companies such as ours.

The third thing, which is really important, especially when you look at financing something that requires a lot of money, such as our healthcare, is that, for our investors, £5 million or £10 million may be a very small position for them to have. They build knowledge in order to continue to grow their investment. When we have investors take a position, they normally very thoroughly research our company and will follow its growth.

We have different types of investors. If you are interested in that, I can unpack how we came to a position where five of the top 10 investors in Autolus are US funds—specialist funds. The sixth, as I mentioned, is Syncona. The seventh is another pharmaceutical company that you will have heard of, BioNTech, which invested in us as part of a collaboration deal because it may want us to manufacture and commercialise some of its products. The next one is Blackstone, which made the largest internal investment in the UK and enabled us to build the manufacturing facility. The ninth, SOTIO, is a private holding that also owns 100%. Presumably, through it, it was given investment advice to invest in us. The 10th is the Qatari sovereign wealth fund. Those are the biggest 10 investors in Autolus.

Baroness Young of Old Scone: Did the NASDAQ floatation put you under any pressure to think about relocation?

Chris Vann: Not per se, although it would make sense. Of course, some American investors would prefer us to move. Our CFO and key members of the company are based in the US, but we were not put under pressure because we are delivering and we are focusing on the key market, which is the US. But there are certainly reasons to consider, at various stages in the life of a company, even a British one, whether you switch your headquarters. A reason that recently came up, obviously, was tariffs. We also have to be careful because of most favoured nation status when it comes to drug pricing.

Q175 Baroness Willis of Summertown: It is refreshing to hear from both of you, because you are giving a positive view of spin-outs, when we have heard a lot about the other side. I want to work back towards some of your comments, particularly those from Chris. We heard from Sir John Bell earlier in the inquiry that the scene in life sciences in the UK is bad, despite the presence of GSK and AstraZeneca. Is that your impression? Does it reflect your view? What would you want to see the Government do in their industrial strategy to address the sector’s issues?

Chris Vann: First, I agree with him. I meet him sometimes at the airport and we have discussions, and I absolutely agree with him.

You have to break it down into three different elements. First, there is the challenge of starting a biotech. We are doing okay—we should do better, because we have wonderful science, but we are doing okay, although there are certainly things such as pension reform that could help to stimulate it more.

Secondly, we have two of the world’s top pharmaceutical companies. We should all be happy about that.

Thirdly, when I look in the space where I am, which is between an SME and a revenue-generating mid-sized biotech, I see very few of us. I would love to give you a silver bullet for that, but, when I have been previously engaged in specific industrial strategy discussions, I have mentioned two things that would make a difference. One is a market for our products here in the UK—which, by the way, would also mean that NHS patients benefited outside of clinical trials—and the other is support for manufacturing. There are other things too. For example, we are having to build our own skills base; we need a stable tax regime; we need guidelines that are international so that we can move our products across borders, apply the same standards and so forth. I would love to give you just one policy, but there would be many elements to that policy.

Baroness Willis of Summertown: I want to ask more about the skills base. What sort of skills do you think we have a shortage in, when trying to develop this sector and spin it out?

Chris Vann: In manufacturing, we have taken people who were traffic wardens or bakers and reskilled them to work in a manufacturing facility that requires calmness, precision and a really steady hand. Those people did not previously exist.

Generally in the UK there are not too many people who have taken products all the way through. We sometimes need to resource things such as global commercial development resources outside the UK. We also have an office in Basel in Switzerland, which is where I am located. The two main things that we worry most about at the moment are getting the manufacturing people and getting the work permits that we need, if we do not have a skill in the UK, to be able to import the right people.

Baroness Willis of Summertown: Is the first one more about building a greater apprenticeship scheme?

Chris Vann: Apprenticeships and PhDs do not really work well in an environment where you need people to do repetitive jobs that are often skilled, so we have selection processes to find people with the right mental as well as operational skill sets. People who are GMP manufacturing chain trained are really hard to find.

Q176 Baroness Walmsley: We move to public procurement, which might be one of the reasons why there are not so many companies like yours, Chris.

You have talked about grants, tax credits and the support of a local authority, but we have been hearing that a contract is worth 10 times a grant, I suppose because it brings revenue and something really tangible. We have also heard about the problems that SME companies, particularly in the life sciences, have had in getting those governments contracts that would be the mainstay and would help them to get other investment later. What have your experiences been like with the UK public procurement situation and, in the case of Autolus, with the NHS?

Chris Vann: We are still going through the process of NICE approval. The first time—not unexpectedly, because we have a single-arm study—we were declined because of the level of uncertainty, so we will try to bridge those concerns. That was only last Thursday, by the way. We are engaged with the trusts; the doctors the patients and everyone wants our medicine. It is about finding a way that we can support it going on to the market without compromising our business. That is going to be a simple equation.

Baroness Walmsley: Do the royal colleges have a role in giving that confidence?

Chris Vann: Not particularly, but the specialist doctors—there are all these networks of doctors—form an opinion. We have overwhelming support from the doctors who want this product. To give you an idea, in the US, within two weeks of being on the market it was included in the NCCN guidelines representing standard of care, so it clearly has medical utility.

It is about trying to remove as many uncertainties as we can, given that we went to market with a single-arm study so we are not compared to the standard of care. The reason why you are not compared to the standard of care is that it is not practical to do a study in end of life where you are comparing yourself against something that is likely to be inferior. We are then wrestling with the challenges; for example, there is recognition that our product will save the NHS resources because it does not require routinely putting patients into intensive care. However, at this stage, there is no quantification of what that benefit is to the NHS.

Baroness Walmsley: Moving from uncertainty to cost, I know you have said how important the home market is, but would the fact that you also have a market in the United States help NICE to make the decision that you are going to be able to bring the price down?

Chris Vann: NICE’s role is to incur the lowest cost possible for the NHS, not to support business. We are a small company, without a portfolio of products in many countries, and so this is not something I can pass over. It poses us the problem that we will not necessarily take a hit on our product, because that is our only product. It will potentially raise concerns in the future about most favoured nation. We can go through the economics, but it could be that by reducing our price you end up with less tax revenue if the US price goes down.

The Chair: Doug, what is your perception of public procurement?

Doug Brion: I am fortunate—or not fortunate—in not having to deal with public procurement too much, as we are selling to manufacturers. Indirectly, we are working with some defence primes, for example, on contracts they have got from the Government. At our stage, the main thing is bureaucracy and speed, and how much you prioritise that versus a quicker, easier win by going to other companies. We are in proposals with Sheffield Forgemasters, which has just been taken public, and it is investing about £1 billion, but the timeframes are two or three years, which is longer than we have existed, so that is so far away.

This is not directly linked to me, but in my network there is a lot of stuff in MoD procurement, as we all know, that needs to be improved. There has been a huge surge in new defence start-ups in the US and now Europe—the US company Anduril’s latest funding round was $2.5 billion, which is quite funny given that the total UK VC investment is $17 billion. In Europe, Germany is really the main one: Quantum-Systems, Helsing and ARX Robotics have each raised hundreds of millions, I think. The UK was in the position of having Europe’s largest defence budget with the biggest number of primes and very high exports, yet somehow no start-up has come through and everything has gone to Germany. The MoD has obviously played a role there in how procurement works.

Q177 Lord Berkeley: You have both had good successes in getting investment and working in the US, but Chris mentioned having met an awful lot of SMEs in particular that have had much less success. Leaving aside the MoD and, perhaps, the health service, what can be done to improve their success rate? Whether that is against the US or others, I do not know. Is it risk? Is it the procurement system? What would give them a better chance of success?

Chris Vann: Of the elements that mean success, you have to have access to capital. You have to have people who are willing to help form companies because, with all due respect, quite a lot of the originators of technologies are not necessarily the people to build a company. It also helps to have a clear understanding of where you will ultimately add value and where you will market the product. Every investor wants to understand when the next inflection point is and where the ultimate opportunity for a product is. You have to put all those things together.

Doug Brion: From the standpoint of start-ups and SMEs, it is about ambition. I remember that, when we first started, we were targeting a super-specific niche in manufacturing, with a very UK mindset of, “We’ve built this solution. Let’s apply it for this specific niche”. Having spent some time in the valley in the US, there is a mindset of “Go big or go home”. We then transitioned and said, “Sod it, we’re going to do the entirety of manufacturing”, which everyone in the UK would say is stupid in the sense of spreading yourself too thin. But taking that ambitious mindset from the beginning forces you to design and build your product and choose team members in a certain way, with that 10-year goal in mind—not just the next two or three years. Ambition is the biggest thing.

Lord Berkeley: Have you convinced the clients of that, who might be giving you some money?

Doug Brion: Oh yes. My life is horrendous. We currently have about 200 in the pipeline.

Lord Berkeley: The MoD?

Doug Brion: Not the MoD directly, but some defence companies.

Q178 Viscount Stansgate: You sat through most of the session we had before you arrived, so you heard the discussion about regulatory issues and so on. We have been told in past hearings that start-ups often struggle with regulatory issues, so could you say a bit about your own interaction with relevant regulators? You have already mentioned one. Has it been easy for you to develop a relationship with them in which they can assess technology swiftly and provide the assurance that investors need? How do they compare with international regulators, in your experience?

Chris Vann: We are directly engaged in setting the standards. One of the reasons we want to do this is to take away some of the complexity to deliver the product. We do this in various ways. For example, we have worked with the NHS to establish the treatment centres in the UK through the ATTC programme co-ordinated by Catapult. As I mentioned, we also are a member of ARM, the Alliance for Regenerative Medicine, and we work with it to establish standards in consultation with regulators such as the MHRA and the FDA but also, for example, if we need an industry standard to simplify the delivery of the product, we will work together to do that.

It is really important to look at where you are in the life cycle of a product. Early on, it sometimes helps not to be overregulated, so we need to talk to the people at the MHRA, for example, about novel clinical trial design. Later in the process, particularly for the commercialisation, it is very helpful to remove unnecessary costs. If there are what I call common tracks and stations, we try to reduce any uncertainty around all the elements that are common to all the manufacturers. But for us, it is best to do that through specialist trade associations or, if it is a local issue, through a local member of the BIA.

Doug Brion: We have not yet had to deal with any regulators.

Viscount Stansgate: Whom might you deal with?

Doug Brion: The biggest concern for us, in the space we are in, is the moving target of AI regulation, which still has not really been formalised. My biggest concern is that AI as a core technology will become heavily regulated, versus the use cases of AI at the end. For us, it makes complete sense to do inspection when we work. For example, in the next few years when we may be doing inspection of medical devices, our system will have to come under the regulations of those medical devices to make sure that we have a certain level of accuracy and reliability, et cetera. At the moment, we are purposefully targeting sectors where we do not need to go through regulation, which means a lot of manufactured goods still.

I was slightly concerned that, at the dawn of the AI era, which will define growth over the next couple of decades—this is dotcom but bigger—AI was not mentioned once in the regulation discussion. I feel that it is the biggest thing we have to get right in regulation to make sure that we stay competitive with the US and China and do not put ourselves in a box. Obviously, the UK is doing a fantastic leading job at this at the moment, with Rishi Sunak convening the first AI summit and all that, but we have to make sure that we are not overly focused on safety and regulation but building the thing and pushing forward too.

Q179 Lord Stern of Brentford: Doug, you mentioned that Innovate UK had been helpful and, Chris, you pointed to the potential of the Mansion House reforms in getting a bit more into equity. If you put together Innovate UK, the British Business Bank, the National Wealth Fund and the Mansion House reforms, where do you think, in that whole story, the biggest kick or push in scale-up finance could come?

Chris Vann: We have had experience of Innovate UK grants. We have had seven grants, totalling £8.5 million. That is really helpful for very small SMEs. The challenge is the administrative burden, as we have to be really careful in the UK not to swamp people with red tape. At one stage, our manufacturing challenge made an application for £2 million, and was granted £700,000 that was then withdrawn. To put that into context, the administration fee for that application cost me around £50,000 because it was so complicated, and we did not end up getting any money.

Those types of grants for small companies are critical. I can take you through the types if you want; I will leave some records. We have never qualified for investment by the British Business Bank and British Patient Capital. When we approached it, we were outside its remit. As I mentioned earlier, everyone thinks about capital, but access to loans and other financial vehicles would also have been really valuable to us during the period as we grew.

You are looking for different types of vehicles for the three stages of companies. Innovate UK-type grants are really important for SMEs, and scaling capital that you can take either into share capital but also, frankly, into loans and other types of investments is really useful if you are doing things such as building factories or expanding into new clinical programmes that will yield other value, so I would look at different vehicles for different stages. I hope that answers your question.

Lord Stern of Brentford: You described what is relevant to what, but how can we make it do better?

Doug Brion: I am happy to pick up on that. The admin point is super valid. Innovate UK has been fantastic but there is an awful lot of documentation, not just in the application process—who cares about that? It lasts for two years—but every quarter there are presentations and reports that you have to fill out. At the very beginning when we had nothing, it seemed like a lot of money, but already now it does not seem like as much, and you end up then taking a lot of resources to deal with the admin burden.

ARIA has a massive role to play. Obviously it has just got going but, from what I have heard, it is doing fantastic things. Ten years in the future, ARIA will be able to play a really big part by giving programme managers more freedom to deploy capital how they see fit. I would like to see more doubling down on ARIA, and maybe an ARIA for the growth stage. Obviously the Government are not going to commit huge amounts of money, but you can have a larger top of funnel going in and then the consolidation of funds on winners in a more long-term research ARIA-style approach.

I cannot really say anything about the Mansion House reforms that has not been covered by someone else, other than that I think consolidation is good. The talent and skill required to allocate funds to venture capital is a very specific skill, and that talent gap is maybe not talked enough about. You can consolidate all this capital from all the council funds, for example, but who is going to lead that? Who has experience in dealing with venture versus other asset classes?

I am trying to think what else we can do more of.

Lord Stern of Brentford: Could the British Business Bank and the National Wealth Fund be more easily accessible? Could it help you in scaling up?

Doug Brion: For start-ups, that would be the case. At our stage, I have not really even explored it.

Chris Vann: We have explored it and it was not available to us.

I did not answer the second part of your question, but the answer is a vehicle that funds, and a form of incentives for those types of scaling investments would be really valuable to the UK. It does not have to be share; it can be different types of loans.

The other important element of this is that people always think companies like mine are looking for cash injections. Sometimes that makes sense, like training new skills that do not exist in the UK, but for the manufacturing facility, for example, it could have been given as a loan for the levels of investment because we were trying to accelerate our investment in the UK. Some form of future tax relief or some other financial vehicle would have been equally appealing to us because we are a business. Frankly, though, the types of loans that we would need to support building a factory just did not exist for us from the UK Government or the National Wealth Fund.

Doug Brion: That has sparked a couple of ideas. The British Business Bank and National Wealth Fund could play a role in helping VCs to raise new funds, potentially matching contributions coming in from pension funds, family offices and so on. Could the British Business Bank underwrite it and say, “For these new VCs we’ll take 30% of the fund allocation”, and then use that to springboard the creation of VCs from general partners at existing firms with lots of experience? That could be something.

It is not just about capital. In the AI world, compute costs a lot of money. Most of Microsoft’s billions of dollars’ worth of investment in OpenAI came just as free compute to use its platform. I know the UK is trying to do a lot here: Keir Starmer announced £1 billion more investment to increase the UK’s AI compute by 20 times. On US scale that is still tiny, but if there is a way that start-ups like us could get access to free government or subsidised compute to compete—training some large models costs millions that you have to pay to AWS, Google Cloud or whoever, and if that could be subsidised by the Government, that would be really helpful.

Q180 Baroness Neuberger: I need to declare an interest regarding Autolus: I chair University College London Hospitals NHS Foundation Trust, so rather obviously we have a link, particularly around CAR-T cells, the Lupus trial and so on.

As you know, our committee is going to write a report trying to encourage the Government to improve their innovation policy and help companies to scale up. Each of you gets three recommendations to give to the Government. Some of it you have already talked about but, if you had to pick three, what would they be?

Chris Vann: The two that are far and away the most important for us at this time are obviously access to the UK market and NICE adopting a method that is more suited to assessing the value of single-arm studies in particular. The second one that is really important is a stable tax environment, bearing in mind the implications that may come from other countries. I mentioned a third one, but I am drawing a blank so I will let Doug do this.

Baroness Neuberger: Let Doug come in and have a think.

Doug Brion: Everyone knows this, but I am just going to say that the obvious one, for our customers and the AI space, is energy. Everyone hears that but still it feels like we have had delays and delays, and I am very sceptical that anything major is going to happen.

Secondly, in my space, on infrastructure and data centres, the Government like to talk the talk on being an AI superpower but let us walk the walk. At the moment, looking at energy demand for certain areas, like around Slough, we are talking about a plan to be connected to the grid in 10 years or whatever. So how the hell can we build these data centres faster? Our near competitors, like the French Government, are throwing a lot at trying to be the European AI hub. We have a head start, but we need to move faster.

Thirdly, on the talent side, we need to be able to bring in world-class researchers to universities, start-ups and so on, and then keep our talent here. Along with the talent side is the network that comes with it and whether we can build hubs to attract that talent. With everything that is going to happen with the HS2 development at Euston, is there an opportunity to say, “We’re going to build a massive campus here that is just built around start-ups and have government investment in that”? We need some high-level strategy there.

Baroness Neuberger: On the point about bringing in talent, would you recommend to the Government that they have to look at their visa system, because it is hopeless?

Doug Brion: They need to look at their visa system. We sponsor some people on the standard work visa, and it took us six to eight months to get through the process. Again, at the time that was half the lifetime of a company.

Viscount Stansgate: I wanted to make the same point about visas but it has been made. Obviously you have come across the problem. We are of the view that this is a disaster area that is holding us back, and I am glad that it has been raised because it is going to matter. It looks as though it is nothing that impresses you very much at the moment.

Chris Vann: The third thing that I was going to mention was manufacturing and support for skills, and we have the same visa issue because we are a global company. It is important to ask yourself why it matters, and it is because a number of these new technologies are on the cusp of taking off. For example, cell and gene therapy is $8 billion a year globally now, and is anticipated to be $55 billion by 2030, so this is really the time to engage.

Viscount Stansgate: In respect of your third point, have you come across any impediment caused in Britain by the planning system?

Chris Vann: We have been extremely fortunate in terms of planning support. We cannot say enough about Stevenage Borough Council, which has been brilliant.

The Chair: Thank you both very much. It has been extremely valuable for us to hear the perspective of two very successful entrepreneurs, and we are delighted that you came to give evidence to us. We wish you well in your enterprises.