Universities have vital research and development role in helping economic recovery

It has now been several weeks since we were effectively ‘sent home’ by the Government. Working from home has become the new norm, but the novelty has quickly worn off.

Claudia Cavalluzzo, Director, Converge

Like many, I have tried to make the most out of my time at home, signing up to webinars (the ones organised by the Scottish Business Resilience Centre have been great), skills development sites (like Skillshare) and Facebook sourdough tutorials. Until before the lockdown, I didn’t know I could make my own bread starter, use Instagram for business and sit still for so many hours. I also had never heard of the concept of ‘dry powder’.

This expression seems to be very popular amongst investors. It refers to liquid assets that an investor or a fund manager has set aside and is looking to deploy. It means that some investors, despite the stock market volatility, have still got the opportunity of making new deals rather than solely focusing on their existing portfolio companies.

Where did I hear it? At an online workshop obviously!

Converge has been riding the wave of digital engagement and we have had the opportunity to interview many angel investors, business veterans, and sector experts, searching for reassurance that those early stage entrepreneurs who are looking for funding will still be in a position to raise vital capital to grow and generate value for the economy.

We have asked our interviewees many questions, opinions, predictions… but really what everybody wants to know is: are we going to be OK?

Through Converge, we rely on the creativity, research skills and innovation of students and academic staff and their ability to look for alternative solutions to old and new problems. And undoubtedly these people are responding to the call to arms. Necessity is the mother of all inventions after all.

We all understand the importance of research and innovation and therefore the essential role that universities play in the fight against Covid-19, but also other life-threatening conditions like cancer, and heart failure, to name a few.

But the question remains – can Research & Innovation also help us with economic recovery? Innovation is key to economic growth and it is students still at university or PhD candidates in a laboratory that come up with the cleverest ideas that form the basis of very successful, global businesses.

For instance, Facebook, the multibillion company that so many of us love (or hate) was founded by Mark Zuckerberg when he was a Harvard undergraduate. Closer to home, in 2016, a spin-out from the University of Strathclyde, mLed, was acquired for a double-digit multiple of their value by the social network giant.

Universities remain a hotbed of innovation and our Scottish institutions have reputations across the globe.

They attract thousands of international students every year because of their teaching and research excellence and also for the entrepreneurial culture they promote. It remains to be seen how the Covid-19 crisis plays out in the short to medium term regarding our overseas cohort, but it does not diminish in any way Scotland’s prowess as a ‘magnet’ of opportunity.

What I have seen in the last few months has given me plenty confidence that our universities, be it the ancient institutions or the modern ones, have never stopped innovating.

From novel ways of teaching, to novel research projects to tackle Covid-19 infections, Scotland’s academia is still playing a key part in the society and economy. These activities are essential to guarantee a pipeline of innovative businesses, such as the ones that are supported by Converge every year.

These emerging businesses will go on to raise equity funding and therefore put the ‘dry powder’ to good use. Knowing that investment deals are still likely to happen, albeit under slightly different rules, provides huge reassurance to aspiring entrepreneurs who are creating a completely new generation of innovative, resilient and creative enterprises.

Despite the challenges, keeping the pipeline of new businesses healthy is vital for the economic recovery, especially when so many companies are on the cusp of closure.

As we embark on another Converge programme, one that sets out to be most successful yet despite the coronavirus outbreak, I reflect on all I have learned in the last few months from the many conversations I had with Scottish investors.

There are, however, many things I will stop doing after the pandemic is over but calling yeast dry powder won’t be one of them!

Claudia Cavalluzzo, director, 
Converge