Ahead of the inaugural Cambridge Independent Business Awards, being hung on 26 September, editor Paul Brackley speaks with Paul Hughes, taking care of supervisor, life scientific research and innovation, at BDO, which is funding the Scale- up of the Year group.
Paul Hughes was attracted to BDO by its wish to purchase the life scientific research and innovation area in Cambridge.
And, after a job invested in these industries, he recognizes a point or 2 concerning the obstacles and chances prior to them.
Paul got to the book-keeping and company consultatory company in June complying with greater than 5 years at BIOS Health, the Cambridge- based neural design therapies leader, where he was primary running police officer and primary monetary police officer and assisted the firm protect considerable financing, range and increase right into the United States.
Prior to that, he invested greater than 6 years at Allia, encouraging companies and supplying its Serious Impact assistance program for effect business owners and endeavors.
“I’ve always worked in the tech and life science sector and I love that it’s a very dynamic set of industries. They are constantly evolving,” claims Paul.
“And I’ve always really liked working with a variety of businesses simultaneously.
“At BIOS I loved every second of being in the depths of the start-up world. One thing I maintained was always working with others – Cambridge Enterprise, the Judge Business School and other start-ups.
“BDO wanted to invest in Cambridge and create a focused activity on the life science and tech sector. They were making significant investments like bringing Richard Watson on board who had been a partner and head of tax at one of the ‘Big 4’ in Cambridge and who himself has been working with many leading tech and life sciences businesses in the city for a number of years. And for me it was very clear that they were committed to doing this long term.
“So for me it was about how I can help BDO build the support for those kinds of businesses, which I love working with.”
That assistance takes numerous semblances.
“Most people will think of us as accountants,” recognizesPaul “And we do have a lot of accountants. But we have five core areas of our business.”
In enhancement to tax obligation, audit and guarantee, the company provides company outsourcing solutions, offering sources such as pay-roll and accounts prep work for those that can not pay for, or do not want, to deal with that in-house.
“The fifth area is ‘advisory’ and this is everything else,” describesPaul “What we’re here to do is help you understand your business and make the right decisions to help you grow it.”
This can consist of assistance for mergings and procurements, fundraising assistance, due persistance and ESG (ecological, social and administration) issues. BDO likewise deals with companies on their individuals and ability– their framework, exactly how to make up and exactly how to examine boards.
“It’s about advising a business and their key stakeholders on how they can optimise and grow in a strategic and tactical manner,” claims Paul, whose function is taking care of supervisor of life scientific research and innovation.
“BDO is full of experts. I don’t consider myself to be an expert. But I am highly experienced. Having a level of experience over – I hate to say this – decades, across multiple life science and tech sectors, puts me in a fairly small group of people. And I understand the challenges that come through,” he claims.
Paul began his profession as an accounting professional in your home computer leader Sinclair, which he recognizes “lots of people today won’t even have heard of”, prior to relocating right into agritech financial investment financial inNew York In 2002– lengthy prior to there was such concentrate on the area– he co-founded TMO Renewables, a cleantech and biofuels innovation programmer.
“Start-ups and scaling business go through very similar growth trajectories and understanding that, and being able to apply that to different industry sectors, comes from experience,” observes Paul.
“We’re trying to match experience from people like me, coming from industry, with businesses in the ecosystem rather than trying to sell services.”
While firms at their earliest phases are not likely to use the solution of a huge book-keeping company like BDO, Paul claims his door is significantly available to all.
“What I’m really interested in doing is establishing relationships,” he claims. “I’m very happy to invest my time and our experts’ time into those businesses in the hope that they may want to continue to work with us as they grow. I’m always hungry to learn about new businesses and if I can help them, I will.”
Here’s a fact that might shock you: BDO has 8,000 individuals in the UK, throughout 18 workplaces, including its website on Cambridge Business Park.
“In all of our locations, there are experts in their fields and people like me who are sector experienced and focused.
“We have all kinds of expertise. It means I can work with clients and look at, for example, how you price a product. I can get someone from our commercial due diligence team to have a chat.
“We have lots of scientists and engineers to assist people. If someone wants to us to help with R&D tax, we have PhDs in physics and computer science who can help evaluate and optimise that work.
“And we have people who have worked in industry who bring that experience across. If, for example, you are thinking of expanding globally, what are the 15 things you need to know that you don’t know today?”
From neighborhood sources on the ground, to a worldwide network, Paul claims BDO has the ability to make links.
“For a lot of Cambridge technology and life science businesses, the holy grail is to expand in the US and go public in the US if they are that kind of business.
“We are an affiliate of a global business that has more than 115,000 people and we are in 166 countries, with 1,776 offices. If someone is interested in an IPO in the US, we have a Boston team that can work with life science companies. We have a UK team that can help with all the preparation, so we have real breadth and depth.
“If you want to start selling your medical device in Australia, we have a team that can help you with that. We are able to connect people on very focused pieces of work but also very large strategic pieces of work, that require not only multiple sets of expertise, but require geographic diversity as well.”
That international network of experience might verify very useful to a scaling Cambridge company.
But are the city’s life scientific research and innovation industries in the good condition we presume them to be?
“In the broadest sense, yes,” responds Paul, reassuringly. “But they have a number of challenges. It used to be known as the valley of death because of the dearth of funding around for A-round businesses.
“Covid retracted a lot of capital and we haven’t come out of that yet. In life science, unless you have real traction, then it is really difficult to raise an A round at the moment. There have been exceptions, like Healx, but they’ve already got products in the clinic.
“If you are slightly earlier stage and your runway is quite short, if you go out to market now you’ll find there are a lot of VCs with capital, but they are sitting on a lot of dry powder – meaning capital they haven’t yet deployed out of their venture funds.
“First-time funds that have recently raised are really challenged by the issue of not being able to raise a second fund, because they haven’t exited enough businesses to prove their thesis on why the fund should be working.
“So a lot of newer funds are not deploying into new businesses, only supporting their current ones. It’s becoming a real problem.
“But there is plenty of early-stage capital – seed funds, for example.
“Overall, there are plenty of great businesses in Cambridge and there is a pipeline of great science coming out of the university, and a pipeline of second, third and fourth-time founders that really helps validate those newer businesses. But the challenge is around the A-round.
“A lot of money is focusing on artificial intelligence, quantum and, to a lesser extent, on climate – there’s still a lot of early capital there. It means there is less capital to go around other businesses.”
The previous federal government recognized a few of these obstacles when it revealed the Mansion House reforms in July 2023. Those reforms are still waited for however are planned to assist the monetary solutions market to open funding for our most encouraging sectors and enhance returns for savers.
The steps will certainly be targeted at enhancing financing liquidity for high-growth firms by changing the UK’s pension plan market, and enhancing the UK’s setting as a listing location.
“The problem with pension funds investing is they still have the same objectives – they are risk-averse and want returns of 5, 6 or 7 per cent. They are not looking to take wild bets on early-stage businesses,” observesPaul “So in my mind, there is a question on how much that will really benefit particularly the early-stage technology businesses.”
But there was some favorable information last Thursday, when the federal government revealed the expansion of the Enterprise Investment Scheme (EIS) and the Venture Capital Trust (VCT) plan from 6 April 2025 by one decade to 5 April 2035, to urge financial investment right into brand-new or young firms with tax-relief rewards. There continue to be various other obstacles though.
“People are still concerned about the tax situation. There are a lot of challenges on initiatives like R&D tax refund, which many early-stage businesses really rely on.
“There was a point about two years ago where capital was just being thrown at stuff, and there was a bit of an AI bubble. What we don’t want to see is a boom and bust. We want a steady stream of suitable capital.
“Deals are out there for sure. But we will see some more failures because companies are running out of capital and their normal sources won’t invest. So it’s on an edge. I don’t see a decline coming any more but I haven’t seen that real uptick.”
Paul want to see the London Stock Exchange and its junior Alternative Investment Market (OBJECTIVE) open much more.
“We need to see that because people need the exit,” he claims. “I’m sorry to say the AIM market and the LSE itself is not really a route for many, particularly in the life sciences. They can be for some tech businesses. But the markets are not freely open yet, so they’ll have to raise more capital on a private basis.”
The stats back that up, with the variety of companies provided on objective going down 30 percent considering that 2015, with 78 terminations in 2015 alone.
The approximate ₤ 500,000 expense of an IPO on objective, in addition to approximated ₤ 200,000 a year in charges and prices, placed it unreachable for numerous.
And the 44 percent decrease in ordinary everyday trading considering that 2021-22 suggests numerous capitalists are placing their cash in other places– not the very least in innovation supplies overseas.
So are we doing sufficient to maintain high-growth Cambridge firms below and out of United States possession?
“The brain drain has always existed – back in the 70s there were academics going to the US for great opportunities,” notesPaul “We’ll always have that challenge.
“As a starting point for many of these businesses, it’s important that we have the funding and resources within the academic system, not only to keep the ones we have but to encourage global academics to come here. Cambridge itself has always been incredibly good at that.
“But they need funding to do that and we know that’s been challenging over the last few years. Hopefully the government will do something to address that.
“We should never say to an entrepreneur ‘You shouldn’t sell your company. You should stay a Cambridge company’. I think that’s unfair. They have to do what’s right for them, for their team, their stakeholders, their investors.
“The challenge is what we can do to keep them here.”
What would certainly Paul’s dish for that be?
“Firstly, we need to ensure the tax system is the number one in the world for supporting entrepreneurial ventures. We need to make sure our ability to compensate people to remain here is equally as attractive, so that means making sure our EMI scheme remains super positive, and Business Asset Disposal relief – all these kinds of things.
“A better capital market here would encourage people to stay – and making sure that we have more investors capable of larger transactions.”
But the appeal of the United States market, and its 345 million-plus populace, will certainly constantly be eye-catching, Paul includes.
“If you have a product applicable to US government contracts you have to have a US company. The US is incredibly good at enforcing that. But do we want to force people to stay here under regulatory pressures? We should be incentivising rather than using a threat.”
BDO is recognized as a scale-up professional and, properly, is funding the Scale- up of the Year group at this month’s Cambridge Independent Business Awards.
For Paul, scaling is not concerning expanding profits– that’s a “result of scaling”, he claims.
“Scaling in its core sense is about how you change your business’ attitude from a one-to-one process – that is one salesperson to one customer – to selling widely to numerous customers. It might be one salesperson to 500 customers. A lot of that is process development, manufacturing and distribution.
“At BDO, when I talk to people about scaling, the conversation I really want to have is ‘Where are you going in the next two or three years and what do we want to think about so the growth is smooth?’.
“You can’t keep looking at tomorrow – you have to look further down the road.”
BDO currently has a significant company in Cambridge, however a lot more individuals will certainly be signing up with the similarity Paul and tax obligation companion Richard Watson at the Cambridge workplace.
“We are trying to take a different approach, which is helping people to look long-term at the growth of their businesses and address future challenges in advance rather than being reactive.
“For anybody that always wants to talk to me, it’s always confidential. I want to engage as early as possible – and not just because somebody needs us for a problem.”
If you wish to talk with Paul, you can locate information at bdo.co.uk/en-gb/locations/cambridge.
BDO is funding Scale- up of the Year at the 2024 Cambridge Independent Business Awards, being hung on 26 September at King’sCollege Visit cambridgeindependentbusinessawards.co.uk for even more.
