The BIA has released its second report on Citizens’ Innovation Funds (CIFs) – the case for unlocking the patriotic potential of the UK public, and I would encourage you all to read the latest detail of our funding proposal for innovative companies.
Since we launched the BIA’s campaign to engage the British public with UK innovation in September 2012 we have been greatly encouraged by the positive response we have received from policymakers, companies, business organisations, investors, financial institutions and other innovative sectors like medical technology, software or gaming.
What is perhaps more encouraging still, and outlined in our updated report, is the results of some independent public polling commissioned by the BIA. The poll found that just over nine out of ten people who expressed a preference agree that where bank lending is not an option; the government should seek to incentivise such investment. Furthermore, almost nine out of ten who expressed a preference agree that the public should be given the opportunity to invest in innovation.
I find these results incredible encouraging. It shows that there is an appetite amongst the public to be given a chance to “crowdfund” innovative UK companies and the BIA believes this could be achieved through a scheme like CIFs.
As the report again points out, CIFs would compliment, rather than conflict with, existing government tax policies such as the R&D Tax Credits, Enterprise Investment Schemes and the Patent Box. It will add to a suite of measures that are designed to put the financial pieces of the jigsaw in place to ensure the most competitive landscape possible.
What is important to remember is this isn’t pie in the sky thinking. The scheme has been shown to practically work in France through a policy which CIFs are closely modelled on. This allows the general public to invest modest sums of money, with a tax break, into funds that must invest 60% of their assets into innovative companies. To date, this scheme has raised well over €6bn – an average of €500m per year. That makes a huge difference in any economy.
And for policymakers who must make difficult decisions in a time of economic constraint the CIFs proposal offers an economical and cost effective way to build a sustainable and diversified funding source for small and growing companies. For example, for every euro spent by the French exchequer in foregone income tax through the scheme, five times as much private investment has been raised.
So what’s next? The BIA has met with a number of policymakers in the last few months and we have been happy with the positive response we have received. Going forward we now plan to meet HM Treasury again shortly to discuss the finer detail of this policy and work with others to ensure a practical mechanism can be put in place to achieve CIFs.
We are delighted, as the report shows, that a number of different business organisations, innovative sector groups, investors and companies are building into a coalition to support this. I would encourage others to read the report and get in touch to provide feedback and discuss this with us.