Encouraging larger businesses to invest in smaller companies through corporate venture capital programmes has led a series of proposals ahead of the upcoming Budget address in March.
The British Private Equity and Venture Capital Association (BVCA) has laid out its Budget 2014 submission under the three headings of finance, skills and innovation.
For finance, the BVCA is calling for tax relief and loss relief to be introduced for bigger businesses engaging in corporate venture capital programmes. It would also like to see the 5 per cent Entrepreneurs Relief removed, alongside the employment test and £10 million lifetime limit, so that entrepreneurs are able to hold onto the proceeds of their businesses.
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Ahead of chancellor George Osborne’s speech on 19 March to parliament, the BVCA suggests that the government produce an apprenticeship tax credit which would allow employers to secure control over skills policy to bring in people needed. Local Enterprise Partnerships, the industry body says, should gain greater control over the skills budget so that fit for purpose regional employment strategies can be created.
On the innovation front, supplementing Catapult Centres‘ support for early stage research plans would mean that research would move close to commercialisation.
Citing findings from Deloitte which shows that £488 billion in cash and equivalents are sitting on the balance sheets of UK corporates, the BVCA believes that corporates represent an ‘untapped and potentially huge source’ of finance for smaller businesses.
‘Whilst policymakers have made great strides in recent years to understand and accommodate the needs of early-stage investors like angels and venture capitalists, equally we need an appreciation for the role of CVC [corporate venturing capital] as a source of equity investment,’ the BVCA says in its Budget submission.
‘CVC’s remarkable diversity of models and styles of investment behaviour and structure may represent “the missing piece” the government is seeking to improve and expand SME financing.’
In light of other nations exploring the benefits of incentivising corporate investing, the BVCA says that now is the time to act.