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Tech startups ignore the value of R&D at their peril

Written by Sarah McVittie on Thursday, 29 October 2015. Posted in Start-up Diaries

The success of a tech startup hinges on the quality of its technology, which is why R&D support should be welcomed with open arms

Tech startups ignore the value of R&D at their peril

If you're a technology-led business like ours, you soon realise how essential research and development (R&D) is to the fortunes of your company. We're at the sharp end of this here at Dressipi, trying to make recommendation and personalisation services work for fashion retail business. And we've learned over the past few years that you have to learn fast, implement fast and, if you're going to fail, do it quickly and move on.

For a small company like us, R&D is exciting and scary in equal measure. We know that it's the only way for us to develop the technologies our customers need but by definition each project is a leap into the unknown. We know there's the potential to create something great but also that we could spend a lot of time and resource on a technology that doesn't work or has limited practical applications. Thankfully, however, this is one area where we as a startup access help from the UK government. R&D tax credits and the regular sector-specific competitions run by Innovate UK, the technology development body, give small companies the financial incentive to run real R&D projects. And it's thanks to this that we're just about to embark on a research project that under other circumstances would have been physically and financially impossible for us to pull off. 

Earlier this year we entered an Innovate UK competition that invited companies to put forward proposals for how data could be used to improve the online shopping experience and we won a grant to carry out our project. Essentially, the project sets out to prove that we can improve the quality of recommendations that our algorithms deliver to customers by pulling in data from across other shopping channels – namely mobile and in-store – and combining data from multiple retailers. This would represent a big step forward for us, as previously our recommendations have all been drawn from customers' desktop browsing behaviour and it's proved difficult to 'share' data and recommendations between retailers.

The R&D grant from Innovate UK has enabled us to do something really radical: form a consortium of our retail partners in the UK who have agreed to let us use and share their data from the customer's point of view. There are some very real benefits to this approach. Firstly it gives a group of UK retailers the opportunity to develop a new global-leading technology with the potential to travel across into other business sectors. Secondly, the fact retailers have agreed to work together means we don't have to go through the slow process of starting the project off with just one retailer and going from there. Thirdly, the consortium itself is a signal that retailers have collectively decided that personalisation is an important focus for them, which helps to push our project up the list of a retailer's internal priorities. And finally, by participating, the retailers in the consortium have the opportunity to test the hypothesis that better recommendation delivers more sales in an environment where the commercial risks to them are fairly limited.

This is a hugely exciting project for us and the retailers we work with and I think we're uniquely placed to deliver it. But we just wouldn't be able to explore it without seeking additional funding. The grant from Innovate UK guarantees better and faster R&D within Dressipi and will, we hope, give our consortium of UK fashion retailers a competitive edge in the global market place. It gives our partners the comfort of being able to test what is the right approach for the customer and the retailer, with much of the cost covered by the grant.

Of course, success is far from guaranteed in business; R&D is never simple and often takes a few times to get right. But without it, it would certainly be impossible for us to do what we're doing. Over the past few years we've really grown to appreciate the important role that grants and R&D tax credits play in plugging the gap between developing an exciting new technology and finding a way to make money from it. It wouldn't stop us from innovating if they didn't exist but they do mean companies like us can move faster and develop the ideas and technologies that will give the UK economy an edge in the 21st century. 

About the Author

Sarah McVittie

Sarah McVittie

McVittie is one half of the talented team behind Dressipi, the fashion tech startup that's stirring up the world of retail. McVittie and co-founder Donna Kelly evenly balance each other out, with product- and detail-focused Kelly packing the corporate capability and McVittie bringing the start-up skills with her sales and shareholding expertise.

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