West Midlands holds England's biggest untapped innovation opportunity – report

The West Midlands is home to England's biggest untapped innovation opportunity, according to new NatWest research, which suggests hundreds of innovative businesses across the region could help drive the next wave of jobs, investment and economic growth.

Analysis published in From Innovation to Impact found the West Midlands has the highest share of innovation-backed businesses yet to achieve a recognised commercialisation outcome of any major English region.

Almost half (47.4 per cent) of grant-backed firms remain active and trading but have not yet secured follow-on investment, achieved an exit or demonstrated recognised scale-up growth, compared with a UK average of 38.1 per cent.

The findings come as the West Midlands continues to strengthen its innovation ecosystem through investment in research, commercialisation and business support.

Home to 1,743 innovative businesses and 838 recipients of public innovation grants, the region has established strengths in advanced manufacturing, transport technologies, engineering, clean energy and health innovation.

While many businesses successfully convert innovation into commercial growth, NatWest's analysis identified a substantial cohort that continue to innovate and trade but have yet to achieve a recognised commercialisation outcome.

Only 15.4 per cent of grant-backed businesses in the West Midlands have secured follow-on equity investment, compared with a UK average of 26.4 per cent.

The report suggests helping more businesses access finance, expertise, networks and routes to market could unlock significant new jobs, investment and productivity growth across the region.

NatWest argues that the West Midlands' next economic prize lies not in creating more innovation, but in helping more innovative businesses scale successfully and create long-term value in the region where they were founded.

 Dipesh Mistry (pictured), chair of the NatWest Midlands and East of England Regional Board, said: "The West Midlands has no shortage of innovation. What this report shows is the scale of the opportunity still ahead of us.

"Across the region we see ambitious businesses developing world-class technologies and ideas. The challenge is helping more of those businesses access the finance, expertise and commercial connections they need to scale.

"If we can do that, the prize for the West Midlands could be significant in terms of jobs, investment and long-term economic growth."

One business highlighted in the report is University of Birmingham spinout HyProMag, which is developing technology to recover and recycle rare-earth magnets from end-of-life products.

Based at Tyseley Energy Park, where NatWest recently launched a new Accelerator, the company has grown from five employees in 2022 to around 17 today and expanded internationally through operations in Germany and a joint venture in the United States.

The report concludes that the West Midlands already possesses many of the ingredients required for innovation-led growth. Building on the region's strong innovation foundations, the opportunity now is to help more businesses convert innovation into commercial success, strengthening the region's contribution to jobs, investment and long-term economic prosperity.