Innovation is a key driver of productivity and economic growth and a critical enabler in the transition to a more sustainable economy. Perhaps surprisingly to some, research published recently by the British Business Bank1 on SMEs indicated only 11% of classic new-to-market innovations were introduced by young companies – businesses formed within the last five years – with over 70% of innovations coming from established SMEs which were more than 10 years old.2 This highlights the important role growth equity and private equity can play in supporting innovation in these more established companies, in addition to the vital role venture capital plays in supporting earlier stage innovators. Access to the right funding from the right investors at the right time is essential for a healthy innovation economy.

While the productivity and efficiency gains from adopting innovative technologies are core to the sustainable growth plans of many companies, many compelling business and investment opportunities are emerging at the intersection of innovation and sustainability. Innovation can also have a range of wider societal benefits. By solving complex challenges and creating new opportunities, it can improve the quality of life for individuals and communities, promote social inclusion, and foster greater equality and diversity.

We are fortunate to have the opportunity to meet many innovative companies with impressive growth stories and increasingly we see sustainability as an emerging theme for core competitive advantage. It was a theme that also came through strongly in the BVCA’s Vision 2022 initiative. Whether new-to-market innovators or adopters of innovative technology, most of the companies recognised by the BVCA offered products and solutions with a direct positive impact on the environment, health or society more broadly.

As a returning judge for Vision 2023, I look forward to seeing more management teams backed by BVCA member firms seizing the opportunities at the intersection of innovation and sustainability.
 

Authored by Jan Rutherford
Partner, Scottish Equity Partners,
and Chair of the BVCA Vision 2023 judging advisory panel

This article was originally published in 2023 as part of the BVCA's Vision Awards, and some of content may now be out of date. Please contact the BVCA if you have any queries or need further assistance. 

1 Small Business Finance Markets 2022/23 Report
2 The BEIS Longitudinal Small Business Survey (LSBS) 2021