Date: 04.03.2010

The Prime Minister announced today that £200m from the UK Innovation Investment Fund (UKIIF) will be used to benefit life sciences, digital and advanced manufacturing businesses.
This follows an announcement last month that £125m from the UKIIF will be invested in low carbon and clean tech sectors, bringing the total UKIIF investment to £325m.

The UKIIF today completed first closing on this £200m UK Future Technologies Fund with fund managers the European Investment Fund (EIF). EIF have raised £100m to match Government funding. They will now make their first investments in UK venture funds, investing in technology-based businesses where there are significant growth opportunities, driving the UK economy forward and creating highly skilled jobs.

Speaking to the Global Investment Conference, Prime Minister Gordon Brown said:

“Our new £325 million Innovation Investment Fund – launched as part of Building Britain’s Future – shows our commitment to the industries and the technologies that will create the skilled jobs of the future.

“This fund, seeded by the Government, is bringing private venture capital to growing enterprises. It is already providing £125 million of funding to high tech, low carbon businesses. From today, a further £200 million will be available for life sciences, digital and advanced manufacturing.”

Science and Innovation Minister Lord Drayson said:

"Despite a tough market, the UK Innovation Investment Fund goes from strength to strength. Private funds have matched the Government's investment and money can now flow into promising technology companies. This is just the boost these companies need as the economy returns to growth."

The UK Innovation Investment Fund was announced last June by the Prime Minister as part of the Government’s strategy for Building Britain’s Future. The European Investment Fund and Hermes Private Equity and were each confirmed as fund of fund managers for two separate funds of funds. Backed by £150m investment by the Department for Business, Innovation and Skills, the Department of Energy and Climate Change and the Department of Health, it has already attracted private investment to more than match this amount with the total first closing of £325m.

Chief Executive of the European Investment Fund, Richard Pelly said:

“The leveraging of the UK government’s funds and expertise coupled with our experience in the EU venture capital market will help us to support the next generation of high growth, high tech businesses”.

The Government appointed Capital for Enterprise Limited (CfEL) to advise on the development of the UKIIF and to lead the process of selecting and appointing the investment fund managers. CfEL negotiated the fund with EIF as part of the Government’s continuing drive to support young British businesses.

The UKIIF will target small growing businesses, start ups and spin outs including pre-profit and pre-revenue stages of development.

Evidence shows that venture capital-backed companies significantly out perform other companies in terms of their ability to create wealth and generate the spill-over benefits including export performance and the creation of high skilled jobs vital to the economy.*

Date: 04.03.2010

Innovation accounted for two thirds of average labour productivity growth in the UK between 2000 and 2007 according to the 2009 Annual Innovation report, published today. The report, a yearly analysis of innovation identifying trends to pinpoint areas of strength and weakness, found that most national indicators show improvement, although venture capital investment had gone down.

Today also saw the first closing of the £200m UK Future Technologies Fund managed by the European Investment Fund. This is in addition to the £125m Environmental Investment Fund managed by Hermes. The first closing of these funds creates a £325m UK Innovation Investment Fund, including £175m of private sector investment, to provide equity finance for technology based businesses in the UK. The UK Innovation Investment Fund has been established to drive economic growth and create highly skilled jobs by investing in businesses where there are significant global opportunities.

Key findings from the Annual Innovation report include:

· Investment in R&D in 2007 reached 1.79% of GDP, represents £25.4 billion and increased by 5% from its value in 2006. 45% of R&D funding in the UK comes from UK businesses (a small decrease in value and overall proportion compared to the figures reported in the previous report), and 32% from Government. 17% is funded from overseas, mainly by business which is high when compared with Canada (9%) and Japan (0.3%).

· Intangible investment in innovation by business, a key driver of innovation in the UK economy, in 2007 was estimated at £133 billion

· In 2007/08 R&D tax credits claims totalled £790 million, based on almost £8.7 billion of R&D expenditure in businesses. R&D tax credits form the single largest source of government funding for business R&D. The amount claimed has continued to rise, (up 13% on 2006/07), and was based on almost £8.7 billion of R&D expenditure. Claims are expected to continue to increase, totalling £820 million in the year to 31 March 2009.

· First degree science, technology, engineering, and maths (STEM) qualifiers increased by 4.2% between 2006/7 and 2007/8. STEM entries at A level have also continued to increase (by 9.7% since 2000).

· UK Universities’ external income increased by 6.5% from 2006/07 to 2007/08 totalling £2.8 billion, demonstrating strong progress in an important indicator of the commercial benefits of the higher education sector.

Science and Innovation Minister Lord Drayson said:

“Our world class research base and successful university spinouts create the foundations we need to innovate and rebuild our economy for sustainable growth. This report shows some encouraging signs. We must await next year’s report to better understand the impact of the recession, but we have already taken action. Today’s first closing of the UKFTF fund managed by EIF brings total investment in the UKIIF to £325m, which is now ready to invest. “

The £950 million Strategic Investment Fund has also been set-up to support a range of targeted investments across the UK economy to support growth and innovation.

The report also highlights the key role played by partner organisations, including the Technology Strategy Board, the National Endowment for Science technology and the Arts and England’s Regional Development Agencies. These organisations play a vital role in delivering innovation support and promoting innovation across the UK in business, the public sector and the third sector.