The Prime Minister has announced the creation of the UK Innovation Investment Fund to invest in technology-based businesses with high growth potential.
The new fund will focus on investing in growing small businesses, start-ups and spin-outs, in digital and life sciences, clean technology and advanced manufacturing.
The Department for Business, Innovation and Skills, with the Department of Energy and Climate Change and the Department of Health, will invest £150 million alongside private sector investments.
It is the Government’s belief that it could leverage enough private investment to build a fund of up to £1 billion over the next 10 years. The UK Innovation Investment Fund forms part of the Government’s strategy for Building Britain’s Future.
“This fund will help build Britain’s future by investing in key sectors,” Gordon Brown said. “It will provide crucial support for our most promising start-ups and existing small companies just when they need it most. Venture capital finance is the lifeblood of innovation and crucial to ensuring the commercialisation of the discoveries coming out of our research base. The fund will boost future UK competitiveness.”
Science and innovation minister, Lord Drayson, who has been a champion for the fund, said the new fund was an essential contribution to future economic prosperity. “We must safeguard the Government’s record investment in the science and research base over the past decade. We cannot afford to lose out on the wealth this investment can yield and we will need this wealth to continue our sustained investment in research.”
Lord Mandelson, Secretary of State for Business said that the investment in venture capital also formed a vital part of the Government’s New Industry New Jobs strategy and was a critical factor in developing innovative new companies in Britain. “The UK Innovation Investment Fund will be a shot in the arm for the British venture capital industry,” said Mandelson. “It is also a challenge to UK venture capitalists to follow the Government’s lead in backing British entrepreneurs in building exciting new companies, investing in new technologies and creating jobs.”
There are about 1,093 venture capital backed technology companies in the UK employing over 40,000 highly skilled people. According to the Government, venture capital backed companies significantly outperform other companies with venture capital sales growing by an average of 12% pa compared to 5% for FTSE Mid-250 companies.