John Macdonald

A few people have asked 'what is to be done' to see greater success for defence startups. A few thoughts: The defence 'innovation ecosystem' is set up to send out stimuli to SMEs and young companies in the form of grants, support through accelerator programmes, offices for small business growth, etc. This is with the view of helping them eventually integrate their products within large programmes run by primes. There is nothing inherently wrong with this, but it creates a limbo state for smaller companies. There are enough opportunities out there to avoid fast failure, but also not enough to allow for radical success. This is undesirable for many investors, in particular VCs, because they are less likely to 'return the fund' on one investment than they would investing in other sectors. It is also a bad structure for leveraging the advantages of startups, which need fast and clear success and failure signals to decide to double down or move on to something else. Directing funding to contracts for cutting edge capability, rather than 'supporting innovation' might mean more young companies fail, but it would also provide an opportunity for the winners to scale rapidly. The DIP's £5bn over 4 years for 'autonomy' should be spent on open competitions and trials - we're already at risk of losing British companies like Skycutter to the US through similar programmes, why not run more of our own?