Throughout history, some of the world’s most innovative ideas have come from the UK. From Newton, to Logie Baird, to Berners-Lee; we have been at the forefront of solving the world’s problems through the most creative and efficient means possible. And companies across the UK have continued this trend to this very day. Whether it is DeepMind in London, BigChange in Leeds or Skyscanner in Edinburgh, the UK continues to spearhead the world’s innovation.
We are living in unprecedented times and it is these times that have required the government to enact unprecedented economic measures.
Our support package has protected millions of jobs and businesses so far, but we know that we must manage our economy carefully as it reopens, and support the companies that we will rely on to power us through. The digital sector, for example, will be vital for the recovery.
It grew 7.9% from 2017 to 2018, nearly six times faster than the economy as a whole. Alone, the sector added £149bn to the UK economy in 2018 — 7.7% of the UK economy. We need firms in our most innovative sectors — from tech to life sciences — to have the confidence that they can thrive again.
That’s why we have launched our £500m Future Fund, which opened yesterday and will help companies driving innovation in UK. Companies will be able to access between £125,000 and £5m in government investment in the form of convertible loans, with that investment at least matched by third party investors.
“We have made £250m available for match-funded investment initially and will consider increasing this if needed.”
We have made £250m available for match-funded investment initially and will consider increasing this if needed.
We recognise that the businesses we are aiming for here are high risk, where failure is common even in normal times. However we know that it is precisely this risk which can also deliver high returns and drives the disruption and creativity we see in our most innovative sectors.
We have designed the Future Fund in so much that it harnesses the entrepreneurial spirit need for success, whilst we also protecting taxpayers’ money.
But how will funds reach firms and founders from all backgrounds?
The diversity dilemma
We have listened carefully to concerns that the scheme might benefit a narrow cohort: established, male-dominated, London-based businesses.
“We have listened carefully to concerns that the scheme might benefit a narrow cohort: established, male-dominated, London-based businesses.”
We are determined that founders and investors from backgrounds and communities across the UK will benefit from the Fund. We will regularly publish data weekly on the take-up of the loans, and will closely monitor who is benefitting and where they are based. The Future Fund will also provide monthly reporting on the diversity of recipients, including regional spread.
The Future Fund will support our female founders too, as it will become a signatory of the government’s Investing in Women Code, and we will encourage co-investors to do the same. The Code aims to increase female representation across our innovative sectors by improving access to tools, resources and finance.
Beyond the Future Fund, the Tech Talent Charter continues to make the UK’s tech sector more inclusive by addressing inequality, increasing inclusion and improving diversity through hiring and job retention. The charter is signed by nearly 400 organisations, including government departments.
We have funded a network of regional business support hubs through Tech Nation and supported regional investment funds through the British Business Bank (BBB); however, we know we still have a long way to go.
In order to ensure that investment from the Future Fund reaches those companies who need it most, the scheme is open to a wide range of investors, including venture capital funds, angel investors and those backed by regional funds like the Northern Powerhouse Investment Fund.
We are also amending our tax rules so that individuals can invest through the Future Fund without it affecting the status of their prior investments through the Enterprise Investment Scheme (EIS).
“A diverse and inclusive ecosystem is good for entrepreneurs, companies, investors and society.”
The government is clear that the success of our most innovative sectors success depends on drawing on the broadest range of talent. A diverse and inclusive ecosystem is good for entrepreneurs, companies, investors and society. And we recognise there is a particular challenge in venture capital and sectors like tech where personal connections can be very important.
An emergency scheme cannot solve existing inequalities in these sectors. But we have taken action to ensure founders and investors from all backgrounds will benefit. If you meet the eligibility criteria and can raise match funding, you should definitely apply.
John Glen is economic secretary to the UK Treasury.