Stephen Byers, Secretary of State for Trade and Industry, has
unveiled proposals to help innovative, knowledge-intensive
businesses with no tangible assets behind them to secure
finance.
Speaking at a UK/US Investment Conference, Mr Byers said:
"New knowledge-based businesses can often find it difficult to raise finance. They are often too young and small, and do not offer the growth potential to attract classic venture capital. Yet these are the very firms we need to encourage in order to prosper fully in the knowledge driven economy."
"The Government's aim must be to ensure that people with bright ideas can get the advice and finance they need to turn them into successful growth businesses."
In order to implement this initiative the government has produced a consultation document entitled ‘Knowledge Funding’. The document considers the following three alternatives for carrying out the proposal:
- A Public/Private Partnership fund attracting investment from private sector institutions. The fund would then be used to make loans to or investments in eligible businesses either through a fund manager, central institution or using local agents.
- A Challenge Process inviting banks and other institutions to bid for Government funding to create and support new schemes for lending to and/or investing in knowledge-intensive businesses.
- Loan or Equity Guarantees provided by the Government to financiers of knowledge-intensive businesses. Such guarantees could offer more flexible terms than the existing Small Firms Loan Guarantee Scheme.
The consultation document also seeks views on the merit of including mentoring and business support as part of any knowledge funding service and discusses ideas for restructuring the general support that the Government provides towards the finance needs of SMEs.
