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Cash promises boosts UK hi-tech start-ups

Small technology businesses with big ideas but lacking funding can cash in on a new £150 million UK government fund and backing from business angels.

The new Innovation Investment Fund has money to invest in business 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 investment on a pound-for-pound basis.

The government believes this seed could deliver £1 billion of funding over the next decade.

 “This fund will help build Britain’s future by investing in key sectors. It will provide crucial support for our most promising start-ups and existing small companies just when they need it most, said Prime Minister Gordon Brown on announcing the fund.

“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.”

The UK Innovation Investment Fund will be one of the largest ever technology funds in Europe.

The UK technology sector has about 1,093 companies backed by venture capital – or business angels - employing over 40,000 highly skilled people.

Companies funded by business angels tend to significantly outperform other companies as the latest year-on-year comparison figures show:

# UK employment increased by 6% compared to a national average of 1%

# Sales grew by 12% compared to 5% for FTSE Mid-250 companies

# Increased research and development expenditure of 12% compared to 1%

# Value of exports from the UK increased by 14% compared with 4% nationally

# 69% of venture backed companies introduced new products or services

Household names such as Google, Vodafone, eBay, Skype, Amazon, Microsoft and Apple were backed at an early stage by venture capital.

Simon Walker, CEO of the British Venture Capital Association, said:

“The BVCA is immensely encouraged by this venture capital initiative. The model that has been adopted is one that we have championed in our work with the Government leading up to this announcement. The UK Innovation Investment Fund offers an exciting economic incentive for more than a thousand young venture-backed companies and the ideas and jobs which they represent.”


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