The British Venture Capital Association (BVCA) is advocating for a “government champion” of venture capital to help drive investment in the asset class.
In its UK budget wish list, the BVCA praised state-backed venture capital initiatives such as the UK Innovation Investment Fund and Business Growth Fund. However, against a backdrop of budget cuts and a still fragile economy, the BVCA added it recognised the constraints the government was operating under.
“Instead of more capital, a government ‘venture czar’ should be appointed to seek out new investors into schemes and funds to complement the public money in place,” said the BVCA in a statement.
Too often Britain has failed to create the next Google…
A public representative of venture capital could help convince investors—such as sovereign wealth funds which currently do not invest in the asset class—to increase their exposure to venture capital, argues the BVCA.
The industry group is also calling for greater tax incentives toward seed and start-up funding, which has struggled as investors have flocked to safer assets in recent years. Between 2007 and 2009, seed investments have fallen by around two-thirds, while start-up investments have plummeted over 90 percent, according to BVCA statistics.
“Too often Britain has failed to create the next Google because the funding is not there on subsequent rounds and companies are acquired by foreign competitors instead of growing organically.”
Among other measures, the BVCA called for the government to relax “Entrepreneurs Relief” tax benefits to encompass more investors who contribute capital to entrepreneurs; and to raise the minimum thresholds with respect to which companies venture capital trusts (VCT) and Enterprise Investment Schemes (EIS) are able to invest in.