The Prime Minister has today 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 Â£150 million alongside private sector investment on an equal basis known as pari-passu.
OK, so Â£150 million is coming from the government on an equal basis with private sector investment which, by my calculations, should create a Â£300 million fund.
It is the Government’s belief that this could leverage enough private investment to build a fund of up to Â£1 billion over the next 10 years. The UK Innovation Investment Fund forms part of the Governmentâ€™s strategy for Building Britainâ€™s Future.
We’re obviously not in receipt of the facts (and this sort of addition might be responsible for MP allowances scandals). Â£150 million of public money plus equal participation from the private sector equals Â£300 million and not Â£1 billion. Now – we can make allowances that this is over 10 years so the revenue gained from licensing and exits of companies funded might contribute sufficient back to increase the value of the fund. Might.
Either way, the Â£150 million will barely cover the administration fees of the various private VC funds that will be needed to make up the other Â£850 million to make this into a Â£1 billion fund.