Binding commitments needed to keep innovation in the UK

Such a negotiated commitment, which would be voluntary but binding and enforceable once undertaken, can be implemented without difficult and time-consuming legislation, says the paper, entitled Should I Stay or Should I Go? A Pragmatic Path to Keeping UK Innovation at Home. 

The paper, which is the subject of a panel at the Innovate Cambridge Summit is authored by Pascal Levensohn, founder of Levensohn Venture Partners LLC, Executive Chairman of Dolby Family Ventures, Chair of the Cambridge Innovation Hub Global Advisory Board and Fellow of Cambridge Judge Business School. 

The paper argues that the debate over world-beating firms leaving the UK has conflated 2 distinct questions – the health of the UK’s capital markets and the robustness of its innovation ecosystem – and has therefore misdiagnosed the problem. The commercial, rather than legislative, solution it proposes is a practical approach that can keep investment and high-quality jobs in the UK while the larger capital-markets debate proceeds. 

Migration of productive capability, not foreign ownership, is the real problem 

“Foreign acquisition is not the problem – and neither is foreign ownership,” says the paper. “A central problem is the failure to distinguish between three different forms of migration – of ownership and financial returns, of domicile and listing venue, and of productive capability.  

“Treated as a single, inevitable sequence, they obscure the opportunities for targeted intervention and invite the assumption that the first or second must lead to the third. It is the third that constitutes the avoidable national loss: a listing or an acquisition followed by the migration or erosion of substantive UK productive capability.” 

The solution proposed in the paper: “The UK – government, universities, founders and the investment community together – should far more forcefully seek commitments from international investors and acquirers to create jobs and maintain a meaningful UK footprint for companies born in the UK, nourished by UK taxpayer investment, and first taking root in UK soil. The fruits from the UK’s innovation orchard can be harvested – ownership can change, returns can flow abroad – without pulling up the tree.” 

The paper quantifies what is at stake. Between 2015 and 2025, on average 40 UK deep-tech companies were acquired each year. If just 20 of them negotiated a binding commitment resulting in 25 net new UK-based jobs, sustained for the five-year life of the commitment, the programme would generate £312.5 million of additional gross value added a year by the fifth year and would cumulate to £2.5 billion over 10 years.

The decline in London listings, liquidity and institutional support has persisted for 2 decades.

Pascal Levensohn, author of the paper

Levensohn adds: “The paper supports the Government’s ongoing capital-markets reform programme while noting that the markets have already spoken: the decline in London listings, liquidity and institutional support has persisted for 2 decades. And while it acknowledges the problems caused by Britain’s exit from the European Union, it argues that the issues examined long predate the 2016 vote and that its proposals can operate entirely within the post-Brexit settlement.” 

The paper cites precedents showing the feasibility (though not yet the lasting nature) of the approach, including the binding undertakings Japan’s SoftBank gave when it acquired Cambridge-based chip designer ARM in 2016 – to at least double ARM’s UK headcount within 5 years and keep its global headquarters in Cambridge – which the Takeover Panel’s independent supervisor later verified were honoured. ARM’s subsequent 2023 Nasdaq listing illustrates the paper’s distinction: a change of listing venue is not, in itself, the loss of UK productive capability. 

Addressing objections to the proposal upfront 

The paper addresses 3 key objections to its approach:

Retention of UK jobs and assets can be made a condition of responsible stewardship

We should welcome global capital and negotiate harder to keep research, skills and high-value jobs at home.

Professor Gishan Dissanaike, Dean of Cambridge Judge Business School

The paper concludes with a call to action for UK leaders to convene a small, authoritative task force – drawing on founders, UK and international investors, strategic acquirers, M&A counsel, universities, public-policy experts and innovation clusters beyond the Oxford-Cambridge-London triangle – with one mandate: to turn footprint retention from an episodic plea into standard market practice. 

“The UK can continue to celebrate the companies it creates after their jobs, laboratories, compute, and manufacturing capacity have moved elsewhere. Or it can make retention a condition of serious stewardship: a standard board question, a standard investor expectation, and a standard term of doing business with the country’s most promising technologies. The UK does not need to close itself to global capital to keep more of what it creates. It needs to ask earlier, draft better, measure honestly, and then insist that the roots remain.” 

Professor Gishan Dissanaike, Dean of Cambridge Judge Business School commented: “Too many businesses are born in Britain but build their futures elsewhere. We should welcome global capital and negotiate harder to keep research, skills and high-value jobs at home. This timely whitepaper offers a practical way to do both.”