In 2019, 9 out of the 10 largest companies globally, defined by market capitalisation, were catalysed by venture capital. They include Apple, Microsoft and Tesla: all major players generating millions of jobs annually and trillions in market value. Another thing all these companies have in common? They are all science, technology, engineering and maths (STEM)-based.
A brief history of STEM and VC
STEM and venture finance have had a close relationship since the start of VC. These include – but are not limited to – the Manhattan Project (1939-1946) and the first modern VC firm: American Research and Development Corporation (ARDC), invested in technologies being developed during World War II. This close relationship originates from STEM and VCs joint mission: to drive innovation and technology.
Now, STEM research and companies look more to venture capital to scale up and commercialise. On top of this, venture capital in the UK has been increasing at an exponential rate. According to a 2021 Tech Nation report, the UK venture capital ecosystem has increased by more than 10 times: from £0.9 billion in 2010 to more than £11 billion in 2020.
The future of STEM in the VC ecosystem
At the core, careers in VC and STEM require many similar skills. These include problem-solving, critical thinking, innovation and communication. Consequently, VCs are focusing on developing a deep talent pool of finance professionals with investment, technical and entrepreneurial experience to support STEM companies to scale up. This has instigated a significant shift away from typical VC profiles predominantly coming from consulting, general finance or investment banking.
Equally, STEM founders must gain experience in investment, finance and negotiation to help bridge the ‘knowledge gap’ between innovators and investors. This will allow investors to better assess the technical and financial viability of companies or ideas.
According to statistics published by UCAS in 2021, the number of students taking STEM subjects at university is at an all-time high in the UK. This includes areas of focus for Deep Tech. There has been a 400% increase in students wishing to study Artificial Intelligence courses. Additionally, acceptances into computer science courses rose by almost 50%, from 20,420 in 2011 to 30,090 in 2020. As a result, there is a strong pipeline of potential talent to create or invest in the STEM unicorns of tomorrow.
Where does the Newton Venture Program come in?
Newton is an investor training and development program for investors who fuel the global innovation ecosystem: VCs, LPs, angels, accelerators, and tech transfer officers worldwide, improving the end-to-end journey through which venture capital flows.
From TTO to IPO, Newton will serve the innovation through bridging network and knowledge gaps between world-leading research at universities and investment institutions – amplifying the impact of R&D and leveraging the expertise of investors and world-leading scientists & researchers.
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This article was written by Tom Stevenson and Lara Pawade,