Government proposes post-Brexit start-up fund

The consultation is part of the ‘Patient Capital Review’ announced by the prime minister in November 2016 to strengthen the UK as a place where innovative firms can obtain the long-term — patient — finance they need to scale up and become £1bn unicorn companies.

According to the chancellor of the exchequer, Philip Hammond, the new fund could be set up as a public-private partnership or be placed on the government’s balance sheet and sold off once it has established a sufficient track record.

The European Investment Fund is one source of finance that could be cut off once the UK leaves the EU. According to Reuters, British companies received around £800m in equity finance and £400m of other assistance from the European Investment Fund in 2016.

The consultation suggests that investments from pension funds could help make up the shortfall in funding if access to EIF funding is removed.

“Right now the real priority for government must be ensuring the UK remains part of the European Investment Fund,” said Julian David, CEO of techUK. “The EIF continues to be a key investor into UK tech, and any new post-Brexit system considered as part of this consultation must seek to maintain the UK's link to this European wide funder.  A new national fund would struggle to compete with such an established source of support sitting just across the Channel.”