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£1 billion early stage fund for technology start-ups

A £1bn emergency venture capital fund for technology start-up firms is to be launched by the government to help out the sector in the recession.

The fund, conceived by the National Endowment for Science, Technology and the Arts (Nesta), has won the backing of science and innovation minister Lord Drayson.

The plan, conceived by the National Endowment for Science, Technology and the Arts (Nesta), was fleshed out in discussions at Downing Street last Thursday morning between Gordon Brown, Drayson and Lord Sainsbury.

NESTA is warning that many early-stage innovative firms are suffering from the retreat of private venture capital from the sector.

Lord Drayson said: “NESTA’s call for a £1 billion fund is now urgent. We need to do more to kick-start the UK’s venture capital market and to get UK funds and UK institutions investing at scale in promising early stage technology firms. I am working to see how we can use the levers that the government has to kick start and leverage private sector money to invest in this space.

“The small proportion of UK investment going into early stage - at only 4% of total equity investment - is hurting UK spin-outs.” NESTA’s Chief Executive, Jonathan Kestenbaum, said: “High-potential, innovative new firms are central to the UK’s future economic prosperity, and they need equity finance. Lord Drayson is right to make this a priority so that entrepreneurs have the confidence that they are developing technologies for which there will be a long-term future and that the Government is supporting them through these difficult market conditions.”

This was posted in Bdaily's Members' News section by Ruth Mitchell .