UK startups are getting a different kind of government bailout, in the form of a new government-run venture fund. The initiative is eyeing top-tier innovators in areas like quantum computing, clean tech, and life sciences—anything with the potential to bring global tech glory to the UK.
The man: Rishi Sunak, chancellor (think “CFO”) of the UK. He’s a hedge-fund-investor-turned-Treasury-exec who’s always been keen on public-private investment vehicles.
The plan: Launch a new state-run venture fund, “Future Fund: Breakthrough,” to invest up to ~$522 million in “potentially world-beating” UK startups—particularly loss-making ones that need big R&D money to scale up, the FT reports.
How the venture capital Capital stacks up
Instead of a larger, national fund, the US has a network of smaller ones on the state level, says Robert D. Atkinson, president of the Information Technology and Innovation Foundation (ITIF), a nonpartisan think tank.
But, but, but: Cutting-edge tech requires “a boatload of money,” as Atkinson told us, while state-level funds tend to aim for “modest kinds of innovations and companies” with a clear timeline for returns.
That’s why the US’s big-ticket engine is In-Q-Tel, the CIA’s VC fund. Its investments center on technologies useful to the CIA, and smaller investors include the NSA and FBI.
- IQT has a few public successes to its name: funding Keyhole, which became the foundation for Google Earth, as well as two Amazon acquisitions.
Over the next few years, Atkinson predicts, we’ll see more countries set up government-run venture funds on the national level.
Who’s leading the way: China, which is backing funds at both the national and provincial level. The country also invests billions in many higher-risk or longer-trajectory US startups.
- The UAE, Saudi Arabia, and Singapore all have national sovereign wealth funds. And in 2017, Taiwan established a national investment company focused on funding biotech, IoT, smart machinery, and more.
Looking ahead: “To get to the scale of the challenge of…these big emerging technologies,” says Atkinson, “we’ve got to go beyond what the smaller, modest state programs are. We need a national initiative.”
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