Feeds

VCs snaffle £200m of UK taxpayer gold ... to bet on high-risk biz

All systems are BONG!

Secure remote control for conventional and virtual desktops

The UK government has showered venture capitalists with £200m of taxpayers' money for high-risk investments, the science and universities minister David Willetts told MPs today.

Willetts said £50m of this cash has already been set aside as an angel investment pot. “For the first time, we’ve said we’ll co-invest,” he said.

Altogether, more than £1bn has been directed towards the venture-capitalist industry, according to Capital for Enterprise (CfEL), the fund established in 2008 that's wholly owned by the government's Department for Business, Innovation and Skills.

Willetts' £200m refers to a portion of this: the ECFs or Enterprise Capital Funds, which make investments in small and medium businesses.

Willetts was being grilled by the House of Commons Select Science and Technology Committee, which is conducting an inquiry into innovation, and how ideas can be commercialised.

Earlier witnesses to the committee have included inventor and entrepreneur James Dyson. He said the escalation of tuition fees may deter prospective engineering graduates from higher education – something Willetts refuted. Dyson had also called for clarity over patents, with the enforcement process made simpler and stronger. Here Willetts didn’t have such a strong story – he mentioned Patent County Courts, but couldn’t give a specific progress update, and mentioned the IPO’s arbitration procedures.

“We have tried to make our departmental responsibilities a little easier,” he told MPs, which sounds like he’s keen to wash his hands of it altogether.

The introduction of punitive damages for patents may help tackle infringement, deterring opportunistic copycats from chancing their luck in expensive court cases. Last week Dyson wrote in the FT that inconsistent court rulings were bad news for inventors, as they increased the risk. MPs enquired whether Willetts had a view. He didn’t appear to be up to speed. Ian Hargreaves' "Google Review" had done little to address this.

“We’re believers of innovation,” said Willetts, resurrecting the New Labour buzzword that’s spawned an army of jargon-touting consultants.

The TSB: jargon rich

Two-and-a-half a years into the Coalition, most of Labour’s interventionist policies remain intact. Gordon Brown’s Technology Strategy Board quango, which styles itself "the UK’s innovation agency", has a £390m budget this year.

Yet the most promising is a fillip to the patent system. The "patent box" allows profits derived from patents to be taxed at a 10 per cent rate, and it was introduced in the 2012 budget. It hasn’t come into effect yet, but it’s very good news for companies such as Cambridge-based ARM.

Bong logic

Venture capital traditionally draws money from high-worth individuals and directs it to long-term, high-risk ventures. Most ventures fail.

The Conservatives' enthusiasm for throwing taxpayers' money at such speculative investments is curious, as it echoes the free spending Labour administrations. Conservatives traditionally only support state intervention in cases of market failure. Yet there's no indication that the wholesale venture capital market is failing - there are always more bad ideas than there is funding for them.

It logically follows, therefore, that the taxpayer is providing a subsidy for bad ideas. It may be the oddest use of public funds ever made by a Conservative minister. ®

Intelligent flash storage arrays

More from The Register

next story
Bladerunner sequel might actually be good. Harrison Ford is in it
Go ahead, you're all clear, kid... Sorry, wrong film
Euro Parliament VOTES to BREAK UP GOOGLE. Er, OK then
It CANNA do it, captain.They DON'T have the POWER!
Musicians sue UK.gov over 'zero pay' copyright fix
Everyone else in Europe compensates us - why can't you?
I'll be back (and forward): Hollywood's time travel tribulations
Quick, call the Time Cops to sort out this paradox!
Megaupload overlord Kim Dotcom: The US HAS RADICALISED ME!
Now my lawyers have bailed 'cos I'm 'OFFICIALLY' BROKE
Forget Hillary, HP's ex CARLY FIORINA 'wants to be next US Prez'
Former CEO has political ambitions again, according to Washington DC sources
prev story

Whitepapers

Seattle children’s accelerates Citrix login times by 500% with cross-tier insight
Seattle Children’s is a leading research hospital with a large and growing Citrix XenDesktop deployment. See how they used ExtraHop to accelerate launch times.
Getting started with customer-focused identity management
Learn why identity is a fundamental requirement to digital growth, and how without it there is no way to identify and engage customers in a meaningful way.
Why CIOs should rethink endpoint data protection in the age of mobility
Assessing trends in data protection, specifically with respect to mobile devices, BYOD, and remote employees.
Reg Reader Research: SaaS based Email and Office Productivity Tools
Read this Reg reader report which provides advice and guidance for SMBs towards the use of SaaS based email and Office productivity tools.
Website security in corporate America
Find out how you rank among other IT managers testing your website's vulnerabilities.