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I know this sounds crazy, but did you know that the UK has more Unicorns than almost any other European country? No, neither did I; in fact, I didn’t realise Unicorns existed other than in mythical tales.
Most people would define a Unicorn along the lines of a ‘mythical animal typically represented as a horse with a single straight horn projecting from its forehead.’ However, in the financial world a Unicorn is ‘a start-up company valued at more than a billion dollars, typically in the software or technology sectors.’ And so now you can understand why the government is keen to find them!
The hunt for Unicorns is one of the main drivers behind the Government’s proposed National Investment Fund (NIF), the purpose of which is to back innovative UK firms – click here to the consultation paper. When announcing the consultation period for the fund the Chancellor of the Exchequer, Philip Hammond, explained that it is ‘vital that we make sure our cutting edge firms have the funding they need to meet their potential and conquer new markets.’
Although the UK has more Unicorns (the financial rather than mythical version) than elsewhere in Europe, it is far behind the likes of the US, China and India according to the consultation paper.
The proposed Fund is one of the ideas emanating from the Government’s ‘Patient Capital Review’ whose aim is to strengthen the UK as a place where innovative firms and ambitious entrepreneurs can obtain the long term funding they need to build large scale businesses (or Unicorns). The Fund is also being mooted as a potential replacement for the European Investment Fund should Brexit mean UK businesses no longer have access to this fund.
It is still early days so details on what the Fund will look like, how it will operate, the size and the type of investments it will make are still very sketchy. The likely structure is the creation of a public/private partnership, with some funding being channelled through University Investment Funds to support the commercialisation of intellectual property for the UK universities.
As other commentators have remarked, the UK has been down this route before with similar initiatives such as the creation of 3i in the 1940s and the Enterprise Capital Funds in 2006. Therefore, we look forward to the results and conclusions from the consultation which are planned to be announced within the Autumn Budget 2017.
We will do an update blog when the further details are announced. In the meantime, don’t hesitate to contact us if you would like to know what funding is currently available to help you create your own Unicorn!