Venture capital company 3i has teamed up with Interregnum Venture Marketing to bring new investment to young IT startups in the Thames Valley area.
The joint initiative is called Step IT Up. It will offer financial backing with seed equity finance of up to #1m in tranches of between #100,000 and #250,000.
To qualify for the scheme, companies have to meet some strict criteria. They must be less than three years old and need financial and strategic support (rather obvious, that one). They must also offer IT products and services in one or more of the following areas: multimedia, intranet, Java or client-server. And they must be based in the Thames Valley area.
Laudable though this effort is, there are gripes. First, to get the support, companies must be working in markets which seem rather arbitrary and based on trendy buzz words.
Multimedia and client-server are terms that were bandied around the industry about two years ago, while intranets and Java are the watchwords of today.
So it's easy to see why the investment firms have homed in on them.
But equally important are areas that are not mentioned, such as networking hardware. Hubs, switches and routers may not sound sexy, but as the world becomes a more connected place and bandwidth demands increase daily, this will be ever more crucial. The danger is that, by focusing on areas that are trendy today, investors will miss the opportunities offered by more commercial technologies.
Although many IT companies have their headquarters in the Thames Valley, other regions have their centres of excellence. For example, Scotland has also seen massive investment from, mainly foreign, IT companies.
Cambridge company Nemesys was bought in December by Fore Systems, and the development effort will continue to be based in Cambridge, rather than at Fore's headquarters across the Atlantic. Mainly because of the proximity of Cambridge University, the area contains a sizeable amount of technical talent.
Olivetti's Research Labs, also in Cambridge, are highly respected throughout the world. Recently, they received a u10m investment boost from Oracle, and are leaders in the field of ATM. Indeed, it is Nemesys's expertise in ATM that attracted Fore to the company.
A recent report from the Bank of England was one of the main factors behind the Step IT Up initiative. The Bank's study, The Financing Of Technology-based Small Firms, found that hi-tech companies face increasing difficulties in attracting start-up or growth capital.
A thriving culture of innovative technological development benefits everyone in the UK, from computer whizz kids huddled in their parents' garages to the Chancellor of the Exchequer. And if technology prices in the US are anything to go by, computer purchasers in the UK could benefit from a home-grown industry.
Genius is a sensitive plant. It needs to be nurtured. Unfortunately, the bright young things are still more likely to get that in the US than in the UK, which is a pity. It also leads to a host of missed opportunities.
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