Government could start direct funding to start-ups

According to the Telegraph, the Government could start using the British Business Bank (BBB) to invest directly in tech start-ups as a way of competing against funding support offers from US firms, which are often boosted by wealth venture capitalists.

Although the BBB was set up in 2014 to help increase the supply of capital for start-ups in the UK, it has been doing so via third parties, allocating cash to venture and capital growth funds. However, this might be about to change, with one source there saying that the bank is considering funnelling cash directly into firms instead through its Patient Capital arm.

It is thought that these investments could be as large as £50 million over a series of rounds and would go some way towards closing the gap between the size of capital that US firms can attract compared to UK businesses.

The news comes as the BBB has unveiled its new regional angel programme, forming a £100 million fund to help businesses at an earlier stage. This programme will work with syndicates of angel investors to “amplify” their investments.

Recent research has found that 57 per cent of the UK’s business angels were based in London and the South-East of England, and 35 per cent in London alone. This compares to only five per cent in the East of England, eight per cent in Scotland and four per cent in Wales.

As the new CEO of the BBB’s Patient Capital arm, Catherine Lewis La Torre, said, the initiative is about building the pipeline and giving businesses across various regions the capital they need to grow into successful enterprises.