Where did the NESTA* Invention & Innovation Programme go wrong?
Date: 26/09/2006
The NESTA Invention & Innovation Programme was a brilliant idea that started well, but was then mishandled and abandoned. Here's our view of what went wrong.
What follows is, we think, a reasonable interpretation of information and opinions received informally from various sources. It therefore can’t be regarded as gospel. We invite more authoritative information from anyone and will be happy to put the record straight if needed.
NESTA’s Invention & Innovation Programme abruptly closed down in April 2006, and the biggest and best-funded programme of public sector support for private inventors ever seen in the UK came to an end.
NESTA’s PR claims that the shutdown is temporary but the rapid disbandment of the I&I team - some redeployed, others taking redundancy - suggests otherwise. While I&I may technically re-emerge, it’s almost certain to be in a form that has nothing to offer the average private inventor.
There has been no noticeable outcry, but this perhaps shouldn’t come as a surprise. Despite having some excellent people running I&I’s day-to-day operations, the suspicion of many in the innovation support community is that NESTA lost interest in private inventors well before I&I closed. With progressively fewer friends, there were never likely to be many mourners.
That’s a shame because the original I&I set-up was potentially brilliant. Free application for any UK resident. A dual application process consisting of a rapid ‘first sift’ followed by a more thorough vetting of the (far fewer) applications deemed worth the effort. As much assessment work as possible done online. Positive discrimination in favour of ideas that conventional investors wouldn’t or couldn’t touch. An award limit of around £50,000. All in all a sensible and sustainable approach.
So what went wrong? Meaningful answers won’t be found on the PR-driven NESTA website but as I&I’s lead external (by 200 miles) assessor team throughout its existence, here’s our take on it all.
- NESTA appeared fairly rapidly to become bureaucratic and self-serving. An increasing amount of I&I effort seemed to go into meeting the internal needs of committees rather than the needs of inventors. For example, we heard of numerous complaints about long and sometimes damaging delays over simple decisions. Tellingly, an ‘improved’ version of the application form was longer and more complicated than the original.
- NESTA preferred to dismiss ideas deficient in what it termed ‘wow factor’. This meant that many ideas which were unexciting (in the God-like view of NESTA) but potential money-makers didn’t get backed. Had NESTA been around in the 1980s, would it have invested in James Dyson’s bagless vac? Probably not.
- Arts projects never likely to make money got funded as innovation, while invention projects had to undergo a much more rigorous appraisal of risk and return on investment. Many inventors and invention support bodies perceived a double standard at work.
- Rather than make lots of smallish initial awards to spread its own investment risk and at the same time encourage more inventors to apply, NESTA chose to throw big money at very few projects. Instead of a £50k award limit, six-figure jackpots became the norm. With so few awards made, many inventors saw little point in applying just to be rejected.
- The high level of rejections also disillusioned at least some invention support bodies. As a result, sources of potential quality applications dried up.
- NESTA wasn’t keen on projects wanting less than £20-30k because of the disproportionate administration cost. We’re not aware that this was ever spelled out to applicants but it disadvantaged the many inventors who initially need only relatively small amounts of funding.
- While I&I had some highly intelligent people on its team, we knew of no one on the NESTA payroll with engineering or manufacturing or even general business experience. (We may be wrong on this, but if they were there they kept very quiet.) [Since posting this we've heard from an ex-I&I staffer that there was indeed an engineer on the I&I team and two others had business experience, so apologies duly rendered.]
- NESTA seemed increasingly to apply conventional (= play it safe) venture capital criteria to its key investment decisions and rarely lived up to its claim to take the risks no one else would. (Though given the size of the awards it chose to dish out, serious risk-taking would indeed have been folly. The smaller the award, the greater the risk you can afford to take.)
- Perhaps because it took such a large stake in projects, NESTA seemed to have difficulty ‘letting go’. Projects that should have been signed off after a year or two of funding seemed to hang about forever, soaking up I&I resources (including more funding - good money after bad?) that ought to have gone into new projects.
Some time reasonably soon, Invention Watch will trawl through NESTA’s portfolio of funded projects to see what degree of success it has had as an investor. The prima facie evidence doesn’t look good, but more detail in due course.
Why does the failure of I&I matter? It matters because without some serious analysis it’s too easy for politicians and mandarins to conclude that if I&I failed despite being well-resourced, it must not be worth supporting private inventors. That’s entirely the wrong message. Good inventions from private sources are worth some public support and I&I could have been world class. It failed not because it was bound to, but because NESTA got too many simple things wrong.
For more on NESTA see also:
Time to blow the final whistle on NESTA?
RESPONSES: We've only had one response so far, posted in full and with permission here. Are there any more of you out there with views?
From John Knowles, Chairman, NanoSight Ltd, www.nanosight.co.uk:
'I have to say that your recent article did not reflect our experience with NESTA. The bureaucracy was less than many VCs and the experience much better than SFLGS, the assessors and mentors had relevant technical and business experience (e.g a PhD running his own business, our next CEO etc), and the support was excellent.
I do agree that it was a major shame closing down the investment side (not just I&I?) and as I understand it the new investment director has concluded that the original strategy was not that bad! It seems more that there was some internal politics.'
Replies
Reply From: Mr Chung
Date: 12/05/2009
The current Nesta should be subject to the Phoenix Treatment - dissolved and a new body installed to the principles that it was founded on.
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