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Philip Hammond

The chancellor has today announced proposals for a new National Investment Fund designed to help British technology startups become billion dollar companies.

A government launched consultation seeks to explore the ways in which startups can access the funding required to scale and compete in the global market.

The proposals come after the research showed that there is a £4bn funding gap between American firms and their British counterparts.

Speaking about the plans, the chancellor said: “It’s vital that we make sure our cutting-edge firms have the funding they need to meet their potential and conquer new markets.”

Currently, homegrown technology startups are also dependent on funding from the European Investment Fund (EIF). This reliance sparked concerns a couple of months ago after at least four UK VC firms said they had been affected by a funding freeze from the EIF in the aftermath of the UK’s decision to leave the European Union.

The consultation will also look at how startups could potentially benefit from investment originating from pension funds and how to commercialise research from UK universities and spur investment in companies across the whole country.

“Britain is an innovation powerhouse and it’s vital that we make sure our cutting-edge firms have the funding they need to meet their potential and conquer new markets.

“Meeting this challenge will boost our productivity and enable us to create more well paid jobs across the UK,” the chancellor added.

The proposals are part of the ‘Patient Capital Review’ announced by the Prime Minister in November last year in an attempt to strengthen the UK as a place where innovative firms can obtain the long-term ‘patient’ finance.

The stats

Research has shown that less than one in 10 firms that raise Seed funding in the UK go on to secure a fourth round of investment, compared to nearly a quarter in the US.

Although the UK leads in Europe for the creation of technology unicorns, the data shows it is lagging behind the US, which accounts for 54% of companies valued at more than £1bn.

Well-known UK tech unicorns include Improbable, TransferWise and Skyscanner.

Image via Twitter. Credit: IBM/Daniel