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UK startups are getting a different kind of government bailout, in the form of a new government-run venture fund. The initiative is eyeing top-tier innovators in areas like quantum computing, clean tech, and life sciences—anything with the potential to bring global tech glory to the UK.
The man: Rishi Sunak, chancellor (think "CFO") of the UK. He’s a hedge-fund-investor-turned-Treasury-exec who’s always been keen on public-private investment vehicles.
The plan: Launch a new state-run venture fund, “Future Fund: Breakthrough,” to invest up to ~$522 million in “potentially world-beating” UK startups—particularly loss-making ones that need big R&D money to scale up, the FT reports.
How the venture capital Capital stacks up
Instead of a larger, national fund, the US has a network of smaller ones on the state level, says Robert D. Atkinson, president of the Information Technology and Innovation Foundation (ITIF), a nonpartisan think tank.
But, but, but: Cutting-edge tech requires “a boatload of money,” as Atkinson told us, while state-level funds tend to aim for “modest kinds of innovations and companies" with a clear timeline for returns.
That’s why the US’s big-ticket engine is In-Q-Tel, the CIA’s VC fund. Its investments center on technologies useful to the CIA, and smaller investors include the NSA and FBI.
- IQT has a few public successes to its name: funding Keyhole, which became the foundation for Google Earth, as well as two Amazon acquisitions.
Future returns
Over the next few years, Atkinson predicts, we’ll see more countries set up government-run venture funds on the national level.
Who’s leading the way: China, which is backing funds at both the national and provincial level. The country also invests billions in many higher-risk or longer-trajectory US startups.
- The UAE, Saudi Arabia, and Singapore all have national sovereign wealth funds. And in 2017, Taiwan established a national investment company focused on funding biotech, IoT, smart machinery, and more.
Looking ahead: “To get to the scale of the challenge of...these big emerging technologies,” says Atkinson, “we’ve got to go beyond what the smaller, modest state programs are. We need a national initiative.”