Read the latest research report from Demos
Summary from report
The UK faces a very serious 'triple challenge'. Economically it is emerging with an extremely fragile recovery from the worst recession in living memory. Environmental necessity will require a large-scale transition to a low carbon economy. Socially the UK will need to respond to unprecedented levels of inequality in incomes and wealth, and find a long-term solution to the problems of social exclusion, social immobility and poverty.
This report asks to what extent the venture capital industry can help the UK meet these challenges, whether it needs to adapt its current investment approaches to do so, and what the most elective government policies are to encourage the industry to meet them. Start-up firms of the type backed by venture capital are usually by nature highly innovative"—"they have a total focus on developing successful new products. Their innovative activity is also likely to create social returns and positive spillovers, which will be conferred on the wider economy. In this sense, venture-capital-funded start-ups will have a key role to play in developing new technologies for the low carbon economy to the stage where they can be adopted for large scale roll-out.
Indeed, based on previous simulation work of the impact of increases in innovation on economic growth undertaken for the European Commission, we estimate that national income could be increased by around £3 billion per year by 2020, if the new government ensures that £2bn of commitments already made to support the development of a low carbon economy are specifically directed to venture capital, and we assume — as seems reasonable — that 40 per cent of this is spend on R&D.
Photo from Creative Commons: Flickr thinkpanama
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