Boosting finance for the UK’s Industrial Strategy

| Beauhurst

Back in November, the government published the white paper “Industrial Strategy: Building a Britain Fit for the Future”. Working with the ICAEW, our consultancy team, led by Henry Whorwood, has co-produced a report highlighting the different ways that venture capital can contribute to this initiative. You can read this report here. We wrote the report to show how the various strands of the Industrial Strategy interact and to establish the extent to which private investors are supporting its aims.

Key Points

  • The government’s Industrial Strategy focusses on four “Grand Challenges”:
1. AI and Data Economy – “Putting the UK at the forefront of the artificial intelligence and data revolution.”

2. Clean Growth – “We will maximise the advantages for UK industry from the global shift to clean growth.”

3. Future of Mobility – “We will become a world leader in the way people, goods and services move.”

4. Ageing Society – “We will harness the power of innovation to help meet the needs of an ageing society.” 

Private sector growth capital investment in AI and data economy ventures reached £3b from 2011 to 2017. £2b was invested in clean growth in the same period, whilst £0.7b went to the future of mobility, and £1.4b went to ventures relating to an ageing society. 

Government funding for three of the four challenges sat at a level several times smaller than the contribution from private investors. However, the ‘Future of mobility’ is being funded by about two thirds by public money. This suggests this sector has yet to convince investors of its commercial viability. This could mean it is the most appropriate area for the government to fund the commercialisation of research, but equally it currently looks to be one of its riskier allocations.

Public funding is only one piece of the puzzle of funding research-intensive innovation. Private investment from angels and venture capitalists is just as important. It is pleasing therefore to see significant flows of capital going to innovative businesses in these sectors.

ICAEW Industrial Strategy

What role will venture capital play in the government's industrial strategy?

Read the report