A new National Investment Fund has been proposed by the Government, to help British start-ups excel despite what happens after Brexit.
In a Government report it said the Investment Fund will help start-ups become ‘world leading Unicorns’ with better investments after innovative firms were reportedly valued at $1bn.
Currently, UK businesses rely on funding from both the UK and European countries. The Treasury set up a new UK based start-up fund to make sure businesses can still receive the funding the need to grow, in case the relationship with the European Investment Fund ends when the UK exits the EU.
The Government outlined a consultation that looked at how businesses start-ups would have access to the funding that they need. The New investment fund could be set up as public-private partnership or fully on the government’s balance sheet.
In order to ensure the growth of British firms, the Government is keen to close to gap in investment funding. Government found that there was a £4bn funding gap between American and British firms, but the Government will use the fund to ‘address this gap and boost British business.’
Julian David, CEO of techUK, said: “The Government is right to look seriously at how we boost patient capital investment. The UK tech industry is the European leader in securing Venture Capital funding, but we still lag behind the USA on the longer term investment that helps businesses scale-up. If we want to continue to compete globally then this has to change.
“However, right now the real priority for Government must be ensuring the UK remains part of the European Investment Fund. The EIF continues to be a key investor into UK tech, and any new post-Brexit system considered as part of this consultation must seek to maintain the UK’s link to this European wide funder. A new national fund would struggle to compete with such an established source of support sitting just across the Channel.”
A consultation, part of the ‘Patient Capital Review’, from the Government looks at ways to strengthen the UK so that innovative firms can retain long-term finance to ensure they can develop and survive.
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The patient capital helps support small and medium sized business grow, allowing them to compete in the UK and internationally. It also looks at different options to ensure that the gap between funding amounts is closed, so that businesses still receive the same amount of funding.
Chancellor of the Exchequer, Phillip Hammond said: “Britain is an innovation powerhouse and it’s vital that we make sure our cutting-edge firms have the funding they need to meet their potential and conquer new markets.”
Whilst the UK leads Europe ‘in the creation of Unicorns’, it severely lags behind the US and China firms with just 4% of £1bn companies being based in the UK.
The Chancellor also added that if the Government achieves its target to close the gap it will also create more well-paid jobs across the UK.