This blog forms part of a series of guest blogs on investment. You can follow the debate on twitter with the hashtag #bizinv
Steve Bates is the Chief Executive Officer of the BioIndustry Association (BIA)
You can follow the BIA's tweets via @BIA_UK
For members of the BioIndustry Association (BIA), particularly small and emerging companies developing innovative products and technologies to treat areas of unmet medical need in cancer and diabetes for example, access to finance remains a core issue. I understand this continues to be the case in other equity based innovative sectors as well – be they cleantech, digital, software, gaming etc – and that is why ahead of Autumn Statement the BIA is urging the government to consider introducing Citizens' Innovation Funds (CIFs).
For our sector and many others bank lending isn't an option. So we have to consider other innovative funding policies to support these high-growth, creative industries that are core to future UK growth.
At the BIA we believe CIFs offers one such policy. The proposal, contained in a detailed report published in September, is a practical and effective investment product that will unlock the patriotic potential of the general public providing the chance to be involved in future UK growth.
CIFs are based on the successful French Fonds Commun de Placement dans I'Innovation (FCPI) scheme that has been running since 1998. Through investments made by the general public, on average around €5,000 to €6,000 per person, over €6 billion has been raised supporting well over 1,000 innovative French companies. The FCPI scheme allows individuals to invest up to €13,000 per year, with the incentive of a tax break, into pooled managed funds which then invest in promising companies. 60% of the funds must be invested in innovative companies.
As we make clear in our report, detailed research has shown the FCPI-backed companies, as compared to non FCPI-backed companies, grow revenues faster, export more, hire more staff, file more patents and are more likely to list.
We propose this readymade blueprint is adopted in the UK in the form of CIFs. These would allow individuals to invest up to £15,000 per annum, with a tax break, and that money would be pooled and used to support innovative UK companies. It would be the first time that the general public are given the chance to invest in high-growth and potentially high-reward sectors, rather than limiting this opportunity just to high-net worth individuals as is currently the case.
We have been encouraged by the response we have received from other sectors and interested parties and are pursuing the proposal with government. Ultimately, we all share the desire to promote growth and at the BIA we are grateful for a number of positive government policies including the R&D Tax Credits and the Patent Box for example. However, adding one or two more pieces to the policy jigsaw could make a real difference.
I look forward to seeing the direction of travel at the upcoming Autumn Statement but, beyond that, to Budget 2013 and seizing the chance to creatively fund innovation.
Please note: these blogs contain the views of the author and are not necessarily those of EEF