Examination of Witness (Questions 560-564)
9 NOVEMBER 2004
MR JOHN
MACKIE
Q560 Mr Mudie: The Government wants to
see closer collaboration between the universities and the venture
capital funds. How can we improve that collaboration?
Mr Mackie: It is a very good question.
There are a number of areas and there is a further taxation point,
which, while not directly affecting my members, is of huge importance
to UNICO, the universities organisation, and that is the impact
of schedule 22 of the Finance Act 2003 as it affects academics
being granted shares in start-up technology businesses; and there
are still some very significant adverse tax impacts. I know that
UNICO is in discussion with the Inland Revenue and the Treasury
on that, but that is an area deserving of attention in our view.
What we see in the university sector in particular is the great
difficulty of the seed capital stage of investments, and here
we are talking about very early stage ideas, and probably, no
more than that, they are ideas, where they need to raise very
modest amounts of capital—it might be £10, £30,
£50,000—to get that idea into some sort of shape where
people can make a proper commercial analysis of it, and very often
it might just be the funding needed to put a proper business plan
together or to do some market research. By and large those businesses
are at too early a stage to attract capital on proper commercial
terms; so I think if there were one area of that relationship
between technology, universities and the venture capital industry,
I think it would be at the seed capital end that would be worthy
of very serious investigation on the part of government.
Q561 Mr Mudie: You have not mentioned
clusters, but you have mentioned in your evidence the Lambert
Review. Can you tell us whether your organisation has a positive
policy in terms of clusters at universities, with universities
and at a regional level?
Mr Mackie: No, the BVCA as an
organisation does not have any policy on clusters at all. That
is not an area that we would normally engage. The evidence, however,
and the most striking evidence from my members probably centres
around the Cambridge area, is that there is absolutely no doubt
as these clusters are formed and gather strength and depth they
act as a natural focus for more entrepreneurs, more new businesses,
more venture capitalists, the advisory community grows, and so
on. So, yes, there is a thriving venture capital industry in and
around Cambridge that has really been generated probably over
the last 10 years, and the cluster effect, we think, has been
a very strong contribution to that.
Q562 Mr Mudie: If Cambridge can do it,
why cannot Leeds, and why are you and your members not speaking
to the likes of the Leeds and Newcastles and Manchesters to see
what room there is for clusters?
Mr Mackie: Individual member firms
again operating at the technology end of the industry, but, yes,
individual member firms do strike up relationships with the universities
all over the country. It is quite difficult territory, because
until you have got a cluster, how do you create it, how do you
start to generate that, and, in part at least, it arises out of
the technology transfer activities within any one location. We
know that Cambridge has a very strong technology transfer centre;
we know that other universities have as well; but how you create
or encourage the creation of a cluster, I am not sure I have the
answer to that.
Q563 Mr Mudie: If you take St James's
Hospital, a teaching hospital, and, a mile away, Leeds University,
the City Council puts a lamp in alongside the hospital, you start
to put the infrastructure together and the missing parts are people
like yourself to encourage an active dialogue. What would your
reaction be to that sort of initiative?
Mr Mackie: I think the initiative
is great, and I think we would encourage and warmly welcome that.
You cannot make people go where they do not believe there is opportunity.
So if they believe there is opportunity, whether it is in Leeds
or Bristol or Durham or any elsewhere, venture capitalists will
go there. If they do not believe there is a flow of opportunity,
you cannot make them.
Q564 Chairman: Mr Mackie, thank you very
much for coming this morning. It is very helpful to us and we
wish you well in your pre-Budget submission.
Mr Mackie: Thank you, Chairman.
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