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Corporate Venture Capital | Where are the incentives ?

Whilst there has been considerable focus given to encouraging venture capital in the UK in the form of policies aimed at channeling individual investment, little has been done at the corporate level or so says the BVCA in their current report “The Missing Piece”.

Does this reveal a lack of understanding from policy makers or an inability of corporations to make their case? A Corporate Venture Scheme was not renewed in 2010.

With historically high cash balances held by corporate UK (and US too ),  is now the time for Government to rethink their policy on attracting this important source of equity capital to the development and commercialisation of innovation?

The report’s findings and recommendations  derive from a series of interviews with major corporate venture capital (“CVC”) investors.

In short the report is looking for more harmonisation around the accounting and fiscal incentives. Currently CVC is limited to larger players who can absorb the losses derived from consolidation accounting aspects which differ considerably from those deploying equity capital from an investment fund. It also looks at how the UK can make itself a more attractive domain for CVC, beyond fiscal incentives which will be only a short run factor.

Remember in late 90’s when investors asked at every AGM about a company’s digital policy and the penalty for not having one? Yes there wastage and not everything worked – that’s venture, but the productivity that came from that period even post the bubble has not been matched since. We need investors to be asking as a matter of course about a company’s innovative/venture policy- how much is internal and what is invested externally

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