Startups are set for a boost from the chancellor’s Autumn Statement, as Philip Hammond announced plans to plough £400m into venture capital.
The funds will come via the British Business Bank and it’s expected to unlock as much as £1 billion for startups itching to scale up as it will encourage private investment.
Of particular focus will be the fintech, digital and life sciences sectors and the first investments are expected to kick of in mid-2017.
The move was welcomed by the tech industry as a step in the right direction, but some experts believe it does not go far enough.
Small business reaction
Patrick Imbach, practice co-head of KPMG’s Tech Growth, says, ‘This announcement was a timely acknowledgment that our long-term investment culture in the UK, as far as tech start-ups are concerned at least, is lagging behind the likes of the US and China.
‘Do we think it’s a game-changer? No, we don’t. The reality is £400m is a drop in the ocean when you look at historic levels of investment into the UK start-up community.’
Philip Rhoden, director of discount broker Clubfinance, adds, ‘The additional £400m investment by the British Business Bank to support innovative firms planning to scale up, together with the announcement of changes to Business Investment Relief, are good news for companies benefiting or seeking to benefit from SEIS, EIS and VCT investment.’
Richard Godmon, tax partner at accountancy firm, Menzies LLP, comments that the government wants to encourage talented start-ups to commercialise their activity here in the UK. This means having a long-term strategy backed by the right kind of finance. This funding package to underpin VC investment through the British Business Bank will help to achieve this.
‘Action to support ambitious scale-up businesses needs to be taken now and some of the key initiatives announced today are very encouraging, as British businesses are currently losing out to their US and European counterparts who already have the environment to succeed,’ says Sancho Simmonds, head of the Scale-Up programme at Smith & Williamson.
‘The launch of the Patient Capital Review and additional investment by the British Business Bank of £400m in venture capital funds to unlock further investment is a significant step forward and, as a corporate founder of the ScaleUp Institute, we can only applaud the government in recognising the importance of scale-up businesses to the UK economy.’
John Nelson, managing director of asset based lending at Independent Growth Finance, thinks, ‘£400m injected into venture capital funds via the British Business Bank is great news for SMEs. Philip Hammond’s argument in the Autumn Statement that start-ups need access to funding and resources to grow is correct – but it is important to remember that each business is different, and therefore their financing requirements are likely to be different in turn.’
Aamar Aslam, CEO of Funding Invoice, concludes, ‘The announcement from the Chancellor in the Autumn Statement that £1 billion is due to be invested in the UK’s tech start-ups via the British Business Bank is undoubtedly good news for the London market, but also the growing number of start-ups based across the UK.
‘Giving start-ups the chance to grow at a sustainable pace through expanded venture capital funding is a welcome move.
‘It is also a boost for London’s status as the global fintech centre as start-ups across Tech City and beyond can gain access to much-needed funding and allow this thriving hub to become even stronger. London can now look to build its fintech links on an increasingly global scale, improving the UK’s access to customers, funding, and access to talent.’
Further reading on pension funds
