If only that headline was half accurate.
Mike Butcher over at TechCrunch UK has written a good overview of a £1bn investment in the tech sector announced by the UK Government at the weekend.
NESTA is the UK’s National Endowment for Science, Technology and the Arts. And it will, reports Mike, “oversee a £1bn emergency venture capital fund aimed at pre-revenue technology start-up firms.”
On paper that sounds brilliant.
One billion quid. What a way to kick-start the economy! Give any startup that half-deserves it, 175 grand. That keeps folk paid through the downturn. That enables folk to quit their jobs in shite sectors of the economy and experiment in the new tech sectors. It keeps the money flow working — as every one of those startups needs some sort of office, some kind of office stationery, some kind of broadband service, an array of computer equipment and so on.
1 billion quid is 1,000,000,000 pounds.
So here’s how I’d do it.
You need an agency that knows what it’s doing. With good people on board to manage and distribute the funds. Those good people cost money and so do the various support people and so on.
So call that 30 million quid over 3 years. That’s your very generous overhead.
Working on the basis that we give every successful company 175k (an arbitrary sum mentioned by Mike in his piece — you can do a lot with 175k), the fund can deliver 5,542 newly funded companies.
OR. You could do it another way.
500 million you disperse immediately, right? That gives 175k to 2,857 companies working in the tech space. Wow.
But you’ve only spent 530 million so far.
You wait 6-12 months. Then you look at the companies that are being successful.
You then blow another 250 million on funding 500 companies with £500k each.
Wait a bit longer.
You then blow the final 220 million on funding 220 companies with £1m each.
It’d be like turning the UK tech industry into a glorified Y-Combinator.
But you and I know it’d never actually happen.
It’s far too entrepreneurial, far too ‘big’, far too ‘real’, far too ‘sensible’ for the United Kingdom.
Mike is hoping that, should this fund go-ahead, it should, “Avoid, at all costs, allocating this cash to regional funds administered by pen-pushing civil servants, the woeful Business Links and local authorities.”
Yup. They’re more or less all bollocks. I’ve been right there on the coalface many-a-time when I’ve been looking for finance and assistance and I can comprehensively say they’re more or less useless.
I suspect that the NESTA announcement is simply that.
An announcement. No substance.
I’d be delighted if something came of it. But, again, as Mike pointed out, the ‘announcement’ was made in the Sunday Papers. Which is where policies are floated here in the UK. They’re floated. We all nod thinking ‘what a good idea’ (or ‘what tosh’, depending on the subject) and we go about our day a little happier.
And then 6 months pass. And some bright spark around the table at some event will say, ‘Yes, but what about that billion quid that ‘they’ were going to invest?’
And no one can quite remember what happened or who ‘they’ were.
And we move on.
So, taking a billion quid and sticking it into the UK tech sector would be a phenomenal, phenomenal investment in the country’s future. The attention, the excitement, the additional funds that would be drawn to the UK as a result — well that’s all far too exciting to consider closely.
We move on.