HISTORIC PRESS RELEASE : 240 million pounds venture capital funding for small businesses [June 1998]

The press release issued by HM Treasury on 2 June 1998.

Three new venture capital funds totalling 240 million pounds to support small and medium size businesses – particularly in high-tech sectors such as computers, biotechnology, electronics and communications – were announced by Chancellor of the Exchequer Gordon Brown today.

The announcement was made at a major conference on venture capital, growth and employment, hosted by the Chancellor as part of the UK Presidency of the EU. Commenting on the announcement, Mr Brown said :

“The UK has made the creation of prosperity and jobs a keystone of its Presidency of the EU.

“Encouraging entrepreneurs to start up new businesses and helping dynamic and innovative small businesses to grow is vital to achieving the high levels of growth and employment we all want to see.

“The funding announced today is an important addition to the steps already taken to encourage UK businesses to prosper. It will do much to encourage initiative among businesses seeking to launch new ideas and new products, supporting them in the vital early stages of development and giving them greater confidence to enter highly competitive market places where they can make their mark.” The funds announced today are:

120 million pounds regional development fund set up by Baring Private Equity Partners, in collaboration with the parent company, ING Bank, and the European Investment Bank.

100 million pounds fund established by British venture capital company Advent, aimed specifically at start-up and early stage high tech firms. The fund, including 7.5 million pounds from the European Investment Fund, will invest 80 per cent of its funds in the UK and the remainder in the rest of Europe.

20 million pounds support for the network of Midland Enterprise Funds, to be raised by the Midland Bank and the European Investment Bank.

Today’s conference was addressed by a range of international speakers, including Dominique Strauss-Kahn, the French Minister for Finance, Economics and Industry, EU Commissioner Mario Monti and representatives of US and European venture capital and entrepreneurial sectors. It was attended by experts from the UK, other EU Member States and Eastern Europe.

It is seen as a vital opportunity to share lessons from those who have already succeeded in developing a vigorous venture capital sector, particularly to hear the views of entrepreneurs and investors from the United States and from other EU countries.

The conference will raise the profile of venture capital and to underline its importance across the EU in supporting small and medium-sized enterprises (SMEs), particularly in high tech, high growth areas such as IT and biotechnology. It will promote venture capital finance for innovative SMEs with high growth potential, focussing on start-up and early stage finance.

Gordon Brown’s invitation to French Finance, Economics and Industry Minister Dominique Strauss-Kahn to address the conference reflects cooperation under the Franco-British Taskforce on Entrepreneurship, announced by the Prime Minister in his speech to the French National Assembly in March 1998, and subsequent progress in paving the way for effective assistance to developing companies.

The Taskforce has already met once, chaired by Christian Pierret, Minister for Industry in the French Finance Ministry and his UK counterpart, Lord Simon. The countries share the enthusiasm to develop an agenda to encourage entrepreneurship, looking at areas of public policy which impact on entrepreneurs – taxation, regulatory structures, quality of labour and access to venture capital.

The UK is keen to learn from the French about their system of tax credits for research and development, and to share experience of trying to reduce red tape, making the tax system more entrepreneur-friendly, and to hear about progress in changes initiated by Mr Strauss-Kahn to French research and development funding which facilitates the move from hi-tech research into commercial development.