Insight 2

Capital is king — and the bottleneck

Laura Citron said London already ranks as the third-largest global life sciences hub behind Boston and San Francisco – and the primary constraint facing London's life sciences sector has shifted.

Five years ago, it was lab space. Today, over 6.2 million square feet of lab and office space is already consented for development and expected to be built in the next six years— a remarkable shift, which means the capital will have more than twice the combined space of Oxford and Cambridge.

“The new bottleneck is growth capital,”

Laura Citron said.

We can spin out brilliant companies, but we struggle to scale them. We even have constraints at early stage. In London, if you look at something like FinTech, there's a lot less early stage funding constraint. They still have a late stage funding challenge. In life sciences, we have capital constraints at every stage of that journey.”

Ellie Junod from UBS reinforced the point. UBS’s development portfolio spans Stevenage, Oxford, and Cambridge, with £3.2 billion in gross development value. Despite long-term confidence in the sector's fundamentals, there are serious capital gaps—especially for early- to mid-stage scale-ups.

George Freeman called for bold government implementation of the Mansion House Mandate, a commitment by pension funds to invest more in UK assets. He spoke of a “catastrophic haemorrhaging” of the UK pension pot over the last 15 years.

In 2000 about 50% of the UK pension pot was invested back into the UK. Today? It’s 3.6 percent. There are reasons why that’s happened - digitalisation, commodification, globalisation and government selling debt. We made it easy for City investors to basically buy gilts and invest in global growth. We don’t need 50% of pension capital to go into biotech, but 5% could transform the sector," he said. ‘’It’s time to back British science for global good.‘’

As a Trade Envoy – and the only Conversative MP to hold a post within the Labour government – he also stressed the UK’s investment potential.

There’s a lot of money out there. I'd love to be able to go and say, ‘If you'd like to deploy 10 billion in the next 10 years into one of the world's great discovery engines, come to this Golden Triangle, and you could fund institutes, fellowships, roads, science parks’ and so on. But as a country we are not very good at offering that proposition.”

Laura Citron spoke of the importance of the London Growth Plan.

I think we’re very clear that the government can't be the answer to all of our problems - and we need to take that into our own hands and fix the things that we can fix. We just set out our 10-year Growth Plan, which [has a major focus on] Frontier Innovation, which is life science and deep tech. We're calling that our new superpower. Financial and Professional services, and the Creative industries are our existing superpowers. We see Frontier Innovation as the next one.”

What’s happening now, she added, is working out the spatial requirements of Fronter Innovation.

We have our basic science and early stage spin-out that happens in our very tight-knit Innovation Districts of 5-10 minute walkable places. But then we need the scale up space. That's using our industrial land that's close to, but not in our Innovation Districts to be doing prototyping and small batch manufacturing research and testing. [We need that] because there's a very long way from ‘I've discovered a molecule’ to ‘I'm going to manufacture at scale in Stevenage or somewhere else. We’re just starting to articulate the requirements: what are those activities - and what do they need, from a built environment perspective? It's about maker spaces, dry labs, testing and clean rooms. It has platform technologies that lots of small businesses can use - very expensive kit that none of them could afford on their own. We're now working with our university partners and others to define what that innovation infrastructure looks like so that we can feed into the New London Plan, which will be our new Spatial Plan.”