SoS hits out at VCs

No time to be cautious, says Mandelson

Peter Mandelson has slammed venture capitalists and pension funds for not investing more in hi-tech start-ups. The Secretary of State for Trade and Industry said unless more cash is pumped into these services it could jeopardise the UK's future economic prosperity. Speaking at the British Venture Capital Association (BVCA) annual dinner, Mandelson called for more finance to be invested in high-tech start-up companies. "It is clear that we need to finance more of these innovative, high-tech start ups and see them grow into the dynamic, world beating companies of the future," he said. "But I am particularly concerned that the pension funds and others maybe overly cautious when it comes to venture capital and investing in innovative, early stage companies." In the US, more than five per cent of pension fund money goes into venture capital. In the UK, that figure is just 0.75 per cent. As a result, around 60 per cent of the money raised by UK-based venture capital comes from America. BVCA chairman Clive Sherling said the minister was right to draw attention to the problem. And he agreed with Mandelson that pension funds should do more to help new companies. While the rhetoric from the secretary of state is broadly welcomed, some industry insiders have said that if the government is serious about this, it should offer tax breaks to investors. Mandelson has suggested that he is looking into the issue. ®

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