Corporate venturers met senior UK government officials in May to stress that changes in tax rules for corporate investors would not stimulate more venturing.
“A few percentage points reduction in the amount of tax paid by a corporate is neither here nor there,” said one. “Tax is not something we take into account when looking at deals.”
However, there was consensus that simplying the tax credit system for research and development (R&D) could help some portfolio companies to plan their cashflows and spend less on legal fees. Tony Askew of Reed Elsevier Ventures and chairman of the British Private Equity and Venture Capital Association (BVCA) corporate venture group, said: “The message is clear – don’t give the tax breaks to us. Give them to the entrepreneurs.
The meeting, at the prime minister’s residence, 10 Downing Street, London, was chaired by one of his senior advisers, Tim Luke. It had been organised jointly by the BVCA, London’s technology hub Tech City and UK Trade and Investment (UKTI), the government body tasked with attracting investment into the country.
About 40 corporate venturers, some pictured above, primarily from the UK and continental Europe, joined the meeting, which aimed to help the government understand corporate venturing better and suggest areas in which policy could be improved.
While it was generally agreed that the government had recently introduced several measures to boost entrepreneurship and investment, and that the UK was generally a good place to invest, in some areas it had some catching up to do with countries such as the US, Israel, China and Taiwan.
Taiwan was quoted as an example of a market able to react more quickly to the needs of entrepreneurs and investors, for example making university labs available for developing ideas. Israel was lauded as being a better market in which to invest due to the depth of engineering talent and the number of venture capital firms with which to co‐invest.
One concern raised by the group was around visa processes for skilled immigrant workers. Despite recent changes to immigration rules there is still a perception that it is sometimes a difficult or lenghty process that inhibits companies looking to recruit talent from oversees or hire foreign students graduating from UK universities.
Paul Morris, of UKTI, said: “We launched the UKTI’s venture capital unit to help investors and entrepreneurs, and in March this year UKTI announced the new Innovation Gateway as the international front door for the UK’s innovation opportunities. UKTI’s Innovation Gateway will introduce sovereign, corporate and venture investors to tailored investment opportunities, while supporting the internationalisation and growth of key identified technology sectors.
“The UK government has implemented a number of other initiatives, from funding platforms and tax incentives to improved visa regulations for entrepreneurs, but there is more we could do and that is why we invited this group here – we are keen to hear the ideas and suggestions of these practitioners.”
The catalyst for the meeting was the publication last October of the BVCA’s report on the state of corporate venturing in the UK – The Missing Piece (download the report here). Report author James Clark said: “We interviewed a number of corporate venturers and there were two very clear findings – that government needs to understand corporate venturing better and then to use that knowledge to introduce new policies to facilitate more corporate venture investment.”