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<p>The government notes that while there have been reports of a decline in venture
capital (VC) investment in UK start-ups, this has been broad based and global in nature.
We also note that because of the nature of private markets, there is a lag in data
reporting for VC deals, meaning that final data on investments made in Q1 2024 will
not be available until later in the year.</p><p> </p><p>The BBB’s Small Business Finance
Monitor 2024, which covers data up to the end of Q3 2023, found that there has been
a “slowdown in activity that has occurred in the market since Q2 2022” and that the
market decline over the past 18 months is not unique to the UK and can be seen across
other global regions.</p><p> </p><p>However, we also note that VC funding in the UK
has reduced from record levels in 2021/2022, and that despite this slowdown, early
stage/seed funding has remained robust, indicating that there is a pipeline of future
investment opportunities still being created.</p><p> </p><p>The government recognises
that VC funding is an important source of finance for innovative companies and is
proud of the fact that the UK has the third largest VC market in the world, behind
only the US and China. The government is backing British business by tackling barriers
to investment, cutting taxes and rewarding work, and by supporting the priority growth
sectors, including digital technology, which are helping to turn the UK into the world’s
next Silicon Valley.</p><p> </p><p>This includes making over £3.5 billion of public
investment in the AI ecosystem since 2014, extending the sunset clause for the Enterprise
Investment Scheme and the Venture Capital Trust scheme to 6 April 2035, making changes
to simplify and improve R&D tax reliefs, extending the British Business Bank’s
Future Fund: Breakthrough investment programme, and implementing the measures the
Chancellor announced at last year’s Mansion House speech to reform the pensions market
to unlock investment into high growth sectors and generate increased returns for savers.</p>
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