Corporate giants ‘hold key to £670bn funding tap for start-ups’
Big businesses should be given tax breaks to encourage them to invest an estimated £670 billion in start-ups, according to an entrepreneurs’ manifesto backed by Luke Johnson, the venture capital veteran.
A return to “corporate venturing” is one proposal included in a report published by the Centre for Entrepreneurs, which is calling for political parties to embrace the ideas of business owners in their election manifestos.
The think-tank, which is chaired by Mr Johnson, said that enabling companies to write off a proportion of investments into small businesses against their tax bills would help start-ups to gain access to wealth and expertise when they are finding it hard to obtain finance.
Labour wound up the most recent corporate venturing scheme in 2010 after £132 million was raised for 600 companies over a decade. The disappointing figures obscured a late rush to use the scheme in its final year, however. Supporters of the initiative argue that a revival would encourage large companies to put the billions of pounds sitting on their balance sheets to use in new and fast-growing companies.
The Centre for Entrepreneurs also wants a relaxation of restrictions on entrepreneurs’ relief, which reduces the capital gains tax liabilities of those who sell their businesses. While praising government policies, such as improved tax reliefs for private investors in small companies and government loans for start-ups, it argues that measures such as easing immigration restrictions and tackling the late payment of invoices would demonstrate that the parties are “serious about creating a robust and internationally competitive framework to attract, retain and grow the most promising businesses”.
Mr Johnson, who led the expansion of PizzaExpress and Patisserie Valerie, said: “It’s essential that all political parties commit to supporting entrepreneurs, maintaining proven entrepreneurship policies and, most importantly, work with entrepreneurs to improve business policies and to help solve wider challenges.”
The think-tank believes that entrepreneurs should be engaged in policy formation and used to “inject entrepreneurship into the public sector through formal governance and review roles”.
It said in its report that the economic downturn “brought into sharp focus the dangers of an overreliance on big business and big government”, but there was now a growing acceptance that “developing a more entrepreneurial society [holds] the key to creating a more prosperous and secure future . . . For many years the contribution of entrepreneurs was overlooked and, in many cases, marginalised. All political parties must now show they are willing to engage with entrepreneurs and recognise the unique value this group can provide.”