Intellect has called on the government to support IT startups as part of Whitehall’s £750 million strategic investment fund.
In a letter seen by Computerworld UK, the IT industry association said the fund should aid the venture capital industry, which is vital to supporting new technology companies. Such an investment would also help the country achieve the goals set out in the Digital Britain report, it added.
The letter, sent to business secretary Lord Mandelson, was also signed by seven other trade and VC bodies, as new companies in other sectors looked for similar support. These bodies included the British Private Equity and Venture Capital Association, the BioIndustry Association, the Association of British Healthcare Industries and government-backed VC fund Nesta.
It remains unclear how the fund, announced in last month’s Budget, will be spent.
The signatories called for VC support so that new businesses receive continued injections of cash from private equity firms. New businesses often received early funding but struggled to gain continued support, they said.
Many companies “have received initial funding rounds ... but are now struggling to access ‘follow on’ funding rounds in order to survive the downturn,” said the letter.
“The US has tens of funds of over $1bn able to finance a company through all stages of its development from start-up to exit. The UK has very few investors with the firepower to do the same.”
The call echoes a report, issued by Intellect last week, that said it was “the innovative tech start-ups who are perishing in the cold climate due to a lack of venture financing who require immediate help”.
Companies were finding inventive ways to capitalise on niche opportunities, and they required backing to make it work, said John Higgins, Intellect director general. “These seedlings, unable to survive without support, could be the Googles of the future."