Universities have a vital role to play in helping Britain to boost economic growth by increasing the amount of venture capital investment, a Centre for Policy Studies report concludes.
Higher education's assistance is needed if the United Kingdom is to achieve a level of venture capital funding comparable to that enjoyed by the United States, according to Patrick Burgess, senior partner with London law firm Gouldens. Although it topped £2 billion last year, that figure needs to rise to about £7 billion.
Such investment typically creates between three and five more jobs than normal business investment, while investment in technology creates output of five times the input. High-street firms including Books etc and Dolland & Aitchison have been backed by venture capital funding during their development.
Mr Burgess says that universities can nurture young companies, as Stanford University's fostering of Silicon Valley attests. Similarly, Cambridge University is aiding the development of "Silicon Fen".
Incubators, which can help new companies become "market ready" in two to five years, appear to be more successful in a university environment.
When incubators are established, Mr Burgess says, universities should encourage academics to work on the commercial application of their work.
"If more universities could act as anchors for science park activity, the venture capital-backed sector could receive a major boost," Mr Burgess says.
However, he believes cultural wariness of venture capital in universities, as well as in the professions and the civil service, is a barrier to its growth in Britain.
Attitudes could change, he says, if the government takes steps to stimulate venture-capital investment. These include reducing capital gains tax: "A substantial cut in capital gains tax in the US 20 years ago was the stimulus that has made the American venture capital industry the world leader."
Unlocking Growth: Proposals to Expand Venture Capital Investment and Activity in the UK , by Patrick Burgess, Centre for Policy Studies, £7.50. Tel: 020 7222 4488 or www.cps.org.uk