The first phase of the Government’s new UK Innovation Investment Fund (UK IIF) will be launched tomorrow (Tuesday) to make venture capital available to growing high-tech, low carbon businesses – and ultimately, secure new jobs.
The intention to launch the
fund of funds was originally announced by Prime Minister Gordon Brown last June as part of the Government’s strategy for ‘Building Britain’s Future’.
Speaking on a podcast yesterday, the Prime Minister said the launch of the fund demonstated the Government’s commitment “to the industries and the technologies that will create the skilled jobs of the future”.
The original idea was that the Government would put £150 million into the UK IIF and attract an equal amount from the private sector, but in December, Chancellor Alistair Darling announced that the Government’s £150 million stake had leveraged £175 million in additional
money, creating a pool of funding initially worth £325 million.
It was also in December that the Chancellor announced that the money would be split between a £200 million technology fund of funds – investing in digital/ICT, life sciences and advanced manufacturing – to be managed by the European Investment Fund (EIF), and a £125 million low carbon and
clean tech fund of funds to be managed by Hermes Private Equity.
It is the green tech fund of funds managed by Hermes that goes live tomorrow, though the technology fund will also be up and running “soon”, a spokesperson for the Department for Business, Innovation and Skills (BIS) confirmed today.
Hermes will reveal more details of its investment strategy at a press conference on Tuesday, but it is understood that the fund will invest across all technology sectors and at all stages.
Being a fund of funds, however, it will not invest directly in companies, but rather in a small number of specialist funds that have the expertise and track record to invest in businesses directly.
It is the Government’s intention to secure further private investment before the UK IIF closes for investors in 2011. Its long-term ambition is still to create a £1 billion pound 15 year fund.
Both the Government and the venture capital industry have been pleased by the success of the UK IIF in attracting funds so far.
Speaking last month, Simon Walker, chief executive of The British Private Equity & Venture Capital Association (BVCA) said: “To achieve £325 million in less than six months after the fund was announced is very impressive, particularly in the current climate.
“This will be much needed investment for the young, innovative businesses that will create jobs and opportunity in our future growth areas. It is these venture-backed companies that can be at the vanguard of the UK’s economic recovery.”
Speaking in his podcast yesterday, the Prime Minister also made it clear he believes high-tech, low carbon businesses have a key role to play in the recovery.
By making the right decisions now, he said, Britain will have the opportunity to exploit the potential of globalisation and create 2.5 million more skilled and professional jobs by 2020.