UK to launch National Investment Fund

The vehicle, which could be set up either as a public-private partnership or a government venturing fund with a view of being sold off at a later date, will aim to deal with a lack of EIF funding.

The government of the UK today revealed it is considering the creation of a National Investment Fund to support startups that could become unicorns.

The consultation, “Financing growth in innovative firms”, is part of the government’s ongoing Patient Capital Review, which was announced in November 2016 to look into the long-term availability and international best practices around patient capital.

The government has already identified a £4bn ($5.3bn) funding gap between American and British firms – the National Investment Fund will aim to reduce that gap.

The fund will also aim to prevent funding drying up for UK-based startups following the withdrawal from the EU, which is expected to exclude companies from accessing capital from the European Investment Fund (EIF), the EU agency responsible for financing SMEs.

EIF last year injected approximately £800m in equity and £400m in other forms of support such as loan guarantees into the UK ecosystem, according to the New York Times.

The UK government has not yet decided on a target size for the fund, which will either be set up as a public-private partnership or as a government venturing fund with a view of selling the vehicle once it has established “a sufficient track record”.

Philip Hammond, chancellor of the exchequer, said: “Britain is an innovation powerhouse and it is vital that we make sure our cutting-edge firms have the funding they need to meet their potential and conquer new markets.

“Meeting this challenge will boost our productivity and enable us to create more well paid jobs across the UK.”

See more from this Government Report: UK

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