Memorandum submitted by 3i Group plc
LETTER TO THE CLERK OF THE COMMITTEE FROM
MR MARTIN M GAGEN, HEAD OF UK INVESTMENT AND DR PATRICK SHEEHAN
Thank you for your letter of 8 April to Brian
Larcombe.
We are firmly committed to investing in and
supporting promising young technology-based businesses and so
were the prime contributor to the submission made by our trade
body, the British Venture Capital Association. Our views are therefore
very similar to the submission made by the BVCA and in consequence
we did not feel that it would be helpful for us to provide a separate
submission. We should, however, be pleased to attend the Committee
meeting on 6 May, as requested, to give evidence to it. We attach
a copy of the BVCA submission for convenience.[1]
From 3i's specific perspective we would wish
to highlight several issues:
1. The importance of "seed capital"
being more readily available to germinate commercial organisations
from academic research. As the BVCA submission states, it is difficult
to structure such funds in an economically viable manner, but
3i has nevertheless been trying hard to help in this area. For
example, we recently made a substantial investment in the Medical
Research Council's new seed fund. We have supported similar initiatives
in Scotland with Scottish Enterprise, and in Cambridge with the
Quantum Funds. This remains, however, an area where further support
from government and the research councils could have a major beneficial
impact.
2. The commercial viability of fledgling
technology businesses is as least as dependent on attracting input
from seasoned commercial managers as it is on attracting intellectual
property or finance. Again, if more "career leapers"
could be systematically encouraged to join such companies it would
be a major step forward. There are, at present in the UK, a fairly
small number of such people who have each been involved in a series
of new ventures. The experience base of these "serial entrepreneurs"
is a valuable asset that we feel it would be productive to cultivate
more.
3. The international nature of the technology
markets means, to us, that the issue is not only about getting
more businesses created but also about ensuring that they are
of sufficient quality that they can thrive in what are typically
extremely competitive global markets. Resource should, in our
view, therefore be focused on the best rather than spread too
evenly.
4. 3i has been putting more of its resources
into technology investing over the past year and expects to continue
to do so over the next few years because, although individual
investment decisions are often difficult, it is an attractive
area for investors such as 3i, who have sufficient expertise and
critical mass. To illustrate this point I attach a copy of our
latest briefing note to institutional analysts, "Inform[2]",
which emphasises our growing commitment to technology investing.
We have been playing, we hope, a significant
part in the national debate about how we as a nation exploit our
inventive talents in the technology area. For example we have
contributed to the Committee's investigation last year into the
Innovation-Exploitation Barrier and both sponsored and participated
in the CBI's "Tech Stars[3]"
report.
ENCLOSURES:
1. BVCA Submission re Engineering &
Physical Sciences based Innovation.
2. "Inform".
3. 3i Evidence re the Innovation-Exploitation
Barrier.
4. CBI "Tech Stars" report.
5. 3i Annual Report & Accounts 1997.
1 Not printed. See HL Paper 62-I, Session 1996-97. Back
2
Not printed. Back
3
Not printed. Back
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