03 July 2009
There's money for start ups – or is there?
One of the things which has been high up the Electronic Leadership Council's (ELC) list of priorities is the difficulty that start ups have in accessing funding, particularly in today's economy.
But the topic isn't new; there have been discussions on this point for many years. What doesn't seem to change is the lack of funding between early stage investment and the 'full on' backing of the big players.
So the ELC has been pressing Government to do something about it and it appears the pressure has brought results in the shape of the UK Innovation Investment Fund. Money will come from the Department for Business Innovation and Skills, the Department of Energy and Climate Change and the Department of Health, each contributing £150million over an unspecified period.
However, as with everything Government related, all is not quite as it seems. Although pitched as a £1billion fund, that figure is the target and may not be reached for a decade. And it requires an equal contribution from the private sector; again, something that may not be easy to achieve in the short term.
The money is being provided as a 'fund of funds', which means the cash will not be available directly from the Government. Instead, it will invest in specialist funds, which will then invest in start ups.
It's generally accepted that start up technology companies are going to be a significant part of the UK's future economic success. Yet help for these companies is often absent. There are many business angels who can provide the seed funding needed to buy the envelope upon which the breakthrough design will be drawn, but after that, things get harder.
Much of this is to do with the impatience – and sometimes the greed – of investors with the amounts of cash needed to move companies on. Investment in start ups is, inevitably, a longer term process than meets the instant gratification requirements of modern investors.
So we can agree with ELC chairman Harry Tee when he says that it's good to know that Government is listening. But the Government isn't the only body that needs to listen: the financial sector must take a longer term position.
Author
Graham Pitcher
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