White paper sets out blueprint for keeping innovation in the UK

In Should I stay or should I go? A Pragmatic Path to Keeping UK Innovation at Home, 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) says such a commitment can be implemented without difficult and time-consuming legislation. 

He argues that the debate over world-beating firms leaving the UK has conflated two separate 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 he proposes is a practical approach that can keep investment and high-quality jobs in the UK while the larger capital-markets debate proceeds.

Foreign ownership is not the problem

“Foreign acquisition is not the problem – and neither is foreign ownership,” says Levensohn. “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 he proposes in the paper is that: “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 ten years.

Levensohn cites precedents showing the feasibility of the approach, including the undertakings Japan’s SoftBank gave when it acquired Cambridge-based chip designer Arm in 2016 – to at least double Arm’s UK headcount within five 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 that a change of listing venue is not, in itself, the loss of UK productive capability.

The paper ends 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 – with one mandate: to turn footprint retention 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.”

Adapted from an article first published by Cambridge Judge Business School.