The venture capital (VC) industry is pressing the government to finance a £1bn fund to support the sector as VCs warn that hordes of promising UK companies face a cash crisis caused of a lack of funding.
A report in the Financial Times (FT) quoted Richard Anton, a partner at Amadeus Capital, one of the UK’s largest VC investors, as saying a number of fast-growth UK firms, particularly technology start-ups, could go under in 2009.
“Starved of capital, companies will go to the wall or they will be forced to cut back too far, reducing jobs and losing competitiveness,” Anton told the paper.
“This question is of great importance to the UK, as these are fast-growing companies that will create jobs.”
The FT said the sector was pressing the government for a billion pound “fund of funds” to support the industry, and that calls for a lifeline were being taken seriously in Whitehall.
A survey by Populus of 80 members of the British Private Equity and Venture Capital Association found that a third of UK venture capital groups expect to write off at least three investments this year due to lack of follow-on funding, and over 80% said portfolio companies still in product development stage would survive less than a year on cash reserves.
© Crimson Business Ltd. 2009