PM seeks Brownie points with hi-tech fund

Entrepreneurs give a cautious welcome to the Government's new £150m high-tech venture fund.

by
Last Updated: 31 Aug 2010

This week the Government launched a new £150m ‘UK Innovation Investment Fund’ for high-growth technology businesses. Rather than investing directly, the fund will pump money into other specialist high-tech funds, which will then distribute the bounty to the businesses. Reaction has been broadly positive – but will it be enough for Gordon Brown and co to win back the hearts and minds of the start-up community?

Hopes were raised by the Chancellor’s Budget promise to create a £750m ‘Strategic Investment Fund’, which would focus on emerging technologies and ‘regionally important sectors’ such as digital and biotechnology. This fund’s a little smaller – but the Government says it expects the fund to be matched by private investment, and could eventually add up to £1bn over the next 10 years (sounds like classic PPP maths to us).

'This fund will help build Britain’s future by investing in key sectors,' boasted PM Gordon Brown. 'It will provide crucial support for our most promising start-ups and existing small companies just when they need it most.' Indeed – although owner/ managers might argue that the Budget’s failure to cut small business corporation tax, postpone the hike in employers NI or freeze redundancy pay wasn’t exactly a big show of support for SMEs…

Michael Smith, founder of Mind Candy, which has recently closed a round of funding, told MT that the news was largely positive for the entrepreneurial community. 'This is good news for start-ups because it helps put extra cash into the VCs in London - some of which have struggled - so they can make more investments,' he said.

The Government has come under fire for not acting quickly enough, but arguably something is better than nothing. 'A lot of people thought the billion dollar announcement that’s been bubbling away was just a lot of hot air, so this is a positive step in the right direction,’ says Smith. ‘However, there are still a few question marks in terms of exactly how it will play out.' The (possibly optimistic) hope is that since the investment decisions will be left to professionals, there should be a better chance of backing winners.

But while the fund has been largely welcomed by the entrepreneur community, the feeling is that more could still be done to help early-stage businesses. Like additional tax breaks, for example - in France, a law recently brought in by President Nicholas Sarkozy to make it easier for private individuals to invest in start-ups has been a huge success.' That is what’s still missing,' says Smith. 'More clever tax breaks from the government to help angels could be very beneficial.' But we're not sure the Treasury can really afford to be doling out tax breaks at the moment...

 

In today's bulletin:
Phoney war looms as O2 linked with T-Mobile bid
Judgement Day for Arnie as California suffers 'fiscal emergency'
Editor's blog: Goldman Sachs, the 'great vampire squid'
PM seeks Brownie points with hi-tech fund
'35 Under 35' in focus: Maternity matters

Find this article useful?

Get more great articles like this in your inbox every lunchtime

Social responsibility may no longer be a choice

Editorial: Having securitised businesses’ loans and paid their wage bills, it’s not inconceivable the government...

What went wrong at Wirecard

And how to stop it happening to you.

Leadership lessons from Jürgen Klopp

The Liverpool manager exemplifies ‘the long win’, based not on results but on clarity of...

How to get a grip on stress

Once a zebra escapes the lion's jaws, it goes back to grazing peacefully. There's a...

A leadership thought: Treat your colleagues like customers

One minute briefing: Create a platform where others can see their success, says AVEVA CEO...

The ignominious death of Gordon Gekko

Profit at all costs is a defunct philosophy, and purpose a corporate superpower, argues this...