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Building future markets

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In their guidance for applicants, TSB mention clearly that they’re looking to fund ventures that will somehow help “future markets”

Working across government, business and the research community, the Technology Strategy Board removes barriers to innovation, bringing organisations together to focus on opportunities, and investing in the development of new technology-based products and services for future markets.

This can be a bit hard to decipher. Here’s our interpretation, based on discussions with TSB officials.

A matter of objectives

The TSB’s objective is, fundamentally, to generate economic growth. The reason they don’t take any equity is because their equity is effectively the whole of the UK economy. In the ideal scenario, TSB invests, say, £100k one year, and ten years down the line, this £100k is generating £100m of economic activity. A great example of that would be eBay. If one could see the future, eBay would be a no-brainer investment for a government body, given the huge amounts of economic activities that are now driven by eBay.

What this means for digital startups is that their product needs to make money for more than themselves to be attractive to TSB. For example, a simple Software-as-a-Service app like Basecamp, however successful, would probably struggle to get TSB funding, because it has fairly limited economic, social and environmental impact outside of the company itself. On the other hand, a product that helps other companies to make more money (for example by building a new marketplace, like eBay or Etsy), would be naturally very attractive.

What about non-digital projects?

This is clear, I hope, for digital projects, but what about other industries? For example, what about Biotech? If you design a cure for cancer, can this be said to “create a future market”?

The answer, as always, is “it depends”. In the case of a cure for cancer, assuming that doctors and hospitals will need to be trained and gear up to administer this new cure, or that it changes the “cancer care” landscape in some significant way, then the TSB would feel that yes, it does create a new market.

In short, the question comes down to whether your product will enable people and companies outside your companies to generate more trade. If you’re developing something that will allow others to make money too, chances are it qualifies.

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