Rishi Sunak is to announce a £375m Future Fund: Breakthrough initiative, which will take stakes in scale-up tech companies as part of the Budget.
Future Fund: Breakthrough would see private venture capital matching Government money, taking equity in scale-ups.
The Treasury is keen to target life sciences, quantum technology and clean tech, according to the Financial Times.
Although the UK is a world leader when it comes to technology start-ups, all too often nascent potentially world-beating companies are gobbled up by foreign companies with deeper pockets.
Last year, tech VC fund Parkwalk Advisors told GrowthBusiness there was a dearth of Series C funding in the UK, which meant tech start-ups were all too often bought by overseas rivals.
For example, in 2006 US DNA sequencing giant Illumina bought Cambridge university start-up Solexa for £600m; today, the American company has a market cap of $45bn and employs 11,000 people in California.
And AI developer DeepMind, which sprang out of University College London – was bought by Google for $500m in 2014 – a price ex-Google CFO Patrick Pichette later admitted was “a steal”.
Future Fund: Breakthrough follows on from last year’s £1bn Future Fund initiative, which saw the Government invest in 1,000 technology start-ups blindsided by the pandemic, with the possibility of the state taking equity stakes in lossmaking companies.
According to the Financial Times, Mr Sunak has also been in talks with Mubadala Investment Company, the United Arab Emirates-based sovereign wealth fund, about backing a new UK life sciences investment vehicle.
Last Friday, the Government published a report on the financial technology sector, which recommended a £1bn fintech growth fund. This growth fund could be backed by pension funds and would allow fintech start-ups to grow independently rather than again being taken over by foreign rivals.