UKTI unit to lure investors with the right mix of risk

Student beds, government bonds and science parks in investment packages assembled by new UK innovation team

March 12, 2015

Source: Rex

Take a chance: the team hopes to attract investment from overseas individuals, sovereign wealth funds and pension funds

A government department has launched a new team to boost overseas investment in UK innovation.

The unit, which is part of the government’s UK Trade and Investment department, is hoping to attract funding to traditionally high-risk innovation activities such as science parks by packaging them with low-risk investments such as student accommodation that offer investors stable returns, for example.

The Innovation Gateway Team was established towards the end of 2014 and has already seen “definite interest” from several universities, according to James Dancy, head of science and innovation at UKTI.

The unit hopes to attract investment from overseas sovereign wealth funds, pension funds and individuals. Such investors traditionally put money in low-risk assets such as infrastructure, government bonds and regeneration projects that guarantee a return.

However, the government is now trying to entice them on to new and potentially more risky ground by getting them to invest in innovation as a result of its current focus on the area as a driver of economic growth.

Mr Dancy said that recent government strategies, including the Department for Business, Innovation and Skills’ focus on “eight great technologies” and its 2013 industrial strategy, have identified that the country is “world-leading at research and development”. “There was a misperception out there that the UK was not very good at innovation or that there was not enough funding in innovation,” he added.

A starting price of £30 million

Mr Dancy’s team define areas ripe for investment as groundbreaking technologies that have passed through the research and development stage and are near commercialisation, or environments that stimulate innovation such as innovation centres or science parks linked to universities.

“It aims to provide investment for the innovation market. A lot of countries find there is a lack of investment in that area because it is perceived as fairly high risk,” he added.

Although he could not disclose details, Mr Dancy said that a number of universities were working towards investment deals where low-risk ventures were packaged with innovation opportunities.

He said that investors were looking for projects worth in excess of £30 million, with the UKTI acting as a facilitator in the arrangements. Projects in the higher education sector could be university campus expansion programmes, science parks or innovation centres.

“If a university has a particular plan or project [where] they might seek this type of investment, they can come to us for advice and introductions to these funds. We can facilitate them meeting up and they can essentially get on with the deal themselves,” he said.

The team is also working with start-ups needing investment to expand, and hopes to attract venture capital funds to the UK to support such firms.

It is also working to promote UK innovation globally through a network of ambassadors in more than 100 countries.

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