Drayson defends £1bn venture target

Lord Drayson, the Minister for Science and Innovation in the UK, yesterday defended the government’s ambitious £1 billion (€1.1 billion; $1.6 billion) fundraising target for the UK Innovation Investment Fund (UK IIF).

“Can it be done? I am confident it can,” Drayson told reporters at a press conference at the Department of Business, Innovation and Skills yesterday. “I say that from the perspective of someone with a track record and from the perspective of someone who has had conversations with people not just in the UK but throughout the world.”

Lord Drayson

The UK IIF is an initiative to channel greater levels of investment into UK venture capital. It will take the form of a fund of funds, seeded by a cornerstone investment of £150 million from the government. It is hoped that whichever firm is appointed to manage the vehicle will be able to garner as much as £850 million in further commitments from institutional investors.

However, while the initiative has been welcomed by the venture capital industry, some have expressed doubts as to whether the target is realistic. “Raising £1 billion is a relatively steep task. If they raise even half the total amount it will be a significant achievement,” said Patrick Reeve, managing partner of UK venture capital firm Albion Ventures, in an interview when details of the fund were announced in August.

Drayson stressed the importance of the fund’s size: “They key problem we are trying to solve with this fund is to create a vehicle big enough such that it can follow through the portfolio of investments it makes, and grow companies to have a real global impact.”

He added that following a period of sustained public investment in science and technology, there is now “a better crop of companies in this country than we have ever seen”.

When asked how the initiative would ensure that all the government money was channelled exclusively into UK businesses, Drayson said that it was in the hands of the prospective fund manager – due to be selected by December – to propose the structure. “We are being clear with the fund of fund managers that we want them to tell us what they believe in their view will be the best way to manage this fund,” he said.

Drayson declined to comment on the confidential consultation process currently underway with prospective managers for the fund, instead restating his confidence that the initiative would be a success: “I am putting my entrepreneurial reputation on it,” he said.