Responding to a call from NESTA, the National Endowment for Science, Technology and the Arts, Drayson, agreed there was an urgent requirement for such a fund. “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,” he told a meeting convened by NESTA in London last week.
NESTA called for the fund after warning that the UK’s next generation of technology companies are at crisis point, with early-stage innovative firms suffering from the retreat of private venture capital from the sector. Over half of all venture start-ups are forced to rely on public sector funding. In addition, early-stage investments slumped from 11 per cent of total equity value invested in 2000 to less than 4 per cent in 2007 – compared with the US where 33 per cent of total investment goes into the early stage market.
Drayson said, “The small proportion of UK investment going into early stage – at only 4 percent of total equity investment – is hurting UK spin-outs.” He also announced the government will continue to increase investment in science spending through the recession.
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