Brown considering new bank to fund tech startups

Gordon Brown will look at the proposed scheme

Gordon Brown today said he would examine the case for a government-operated bank to fund high-tech startups.

Launching a new report, New Industry New Jobs, the prime minister said he would be examining the case for setting up "a bank for industry and innovation".

He said the proposed bank would "provide the finance for more difficult and more risky startups for high-technology businesses of the future".

Smaller high-tech companies are finding it difficult to obtain credit as banks are unwilling to provide loans as they attempt to shore up their balance sheets, according to the National Endowment for Science, Technology and the Arts (Nesta), citing a 70 per cent fall in new venture capital funding last year.

A separate report from Nesta today found that the UK stands to lose £44bn in annual revenue unless it invests in growth sectors such as technology that will turn the UK's economic fortunes around.

Nesta's report identified healthcare, green technology and digital media as sectors where the UK could lose its leading international status unless the government offered support.

Nesta called on the government to go half-and-half with the private sector to make £1bn available through the bank.

Jonathan Kestenbaum, chief executive of Nesta, said: "One dangerous aspect of the current crisis is the collapse of equity finance for early-stage growth business. These firms will be the heartbeat of our recovery."

Jon Moulton, founder of venture capital fund Alchemy and an angel investor, backed the call.

"One only need look at the stimulus package announced by President Obama to see how far ahead the US is planning in areas such as renewable energy. We have to do the same and extend it to biotech and digital media," he said.