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Plans set out to provide start-ups with access to funds needed to meet potential


Chancellor Philip Hammond said Britain "is an innovation powerhouse"

Chancellor Philip Hammond said Britain "is an innovation powerhouse"

Chancellor Philip Hammond said Britain "is an innovation powerhouse"

There is a £4 billion gap in funding available to new hi-tech firms in the UK compared with the US, the Government said as Chancellor Philip Hammond set out plans to improve access to finance for start-ups.

The proposed new National Investment Fund is aimed at helping cutting-edge British firms become "unicorns" - companies valued at more than one billion US dollars (£760 million).

The scheme could also help firms access finance after Brexit, because currently businesses rely on the European Investment Fund, which they may lose access to after the UK's withdrawal from the EU.

The fund could be set up as a public-private partnership or be placed fully on the Government's balance sheet to be sold off once it has established a sufficient track record.

The consultation on the scheme will also look at how firms could receive investment from pension funds and examine how to commercialise research from UK universities.

The Chancellor said: " Britain is an innovation powerhouse and it's vital that we make sure our cutting-edge firms have the funding they need to meet their potential and conquer new markets.

"Meeting this challenge will boost our productivity and enable us to create more well-paid jobs across the UK."

The consultation is part of the Patient Capital Review announced by Prime Minister Theresa May in November 2016, which intends to boost long-term funding for firms.

In a sign of the difficulties faced by start-ups, f ewer than one in 10 firms that receive seed funding in the UK go on to get fourth round investment, compared to nearly a quarter in the US.

Although the UK leads Europe in the creation of unicorns it accounts for just 4% of the world's total, while the US has 54% of the billion-dollar firms and China accounts for 23%.

Big US firms are also younger than UK counterparts, suggesting America is more effectively growing new businesses into large-scale companies - just 10 of the UK's largest 100 listed firms were created after 1975 compared to 19 in the US.