The security services have dramatically increased the amount they invest into British technology companies by backing seven venture capital funds with £100m.
The National Security Strategic Investment Fund (NSSIF), which invests on behalf of spy agencies as well as the armed forces, has upped the number of funds it backs from a single known fund last year to a total of seven investment firms.
NSSIF was a key backer of the Government’s £400m purchase of a stake in collapsed satellite business OneWeb and has begun making its own direct investments into British start-ups in recent years.
The seven venture capital funds will invest more than £10m each on behalf of the security services into start-ups in fields such as quantum computing as well as chip production and encryption.
“We’ve gone through the approval process and are now working with them closely to identify investments that we’re making that might fall within their focus, from obvious things like AI through to semiconductors and quantum computing,” said Ed Lascelles, a partner at Albion VC.
“These are all areas that we invest in anyway and so far, early on, it’s been an excellent partnership,” Mr Lascelles added.
The Sunday Telegraph revealed last year that Amadeus Capital, the investment fund co-founded by veteran technology entrepreneur Hermann Hauser, was an NSSIF partner and had been handed around £25m in funding to invest on behalf of the Government.
Insiders say the six other funds are likely to have received smaller amounts that are in relation to the size of their existing funds.
A spokesman for the British Business Bank, which manages NSSIF, said that “we invest alongside leading venture investment funds with strong track records in supporting innovation, with the aim of developing dual-use capabilities or strengthening the UK’s technology ecosystem.”
NSSIF’s links with the UK’s venture capital are likely to deepen in the coming months with a partnership with an eighth firm due to be announced in the future, insiders said.
So far only a single direct investment made by NSSIF through its British Technology Investments wing has been made public.
Last year, the fund took a 3.1pc stake in quantum computing business Quantum Motion which is hoping to reduce the size of the breakthrough computers using existing chips rather than specialist hardware.
NSSIF has also disclosed that it has worked with three other British start-ups since its launch in 2018.
The fund introduced Hazy, a Kent start-up that creates synthetic data that can be used and analysed instead of sensitive information, to an unnamed “Government customer,” NSSIF wrote on its website.
NSSIF also worked with secure messaging system Element as well as online training service Codility, the fund has said.
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