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Integrated Review reinforces the Government’s commitment to science and technology – Oxford Capital commentary

Integrated Review reinforces the Government’s commitment to science and technology – Oxford Capital commentary

Today the government released their long-awaited Integrated Review. Within it they reaffirmed their commitment to the fields of science and technology, stating that, in the years ahead, the countries which establish a leading role in critical and emerging technologies will be at the forefront of global leadership.

It is essential that the UK continues to be at the forefront of technological advancement, and must continue to take an active approach to building and maintaining a durable competitive edge in these fields of industry, not only for the benefit of the UK, but to contribute to creating a more resilient world.

The UK is ranked 4th in the Global Innovation Index, attracting more venture capital investment than Germany, France and Sweden combined – we are a world leader in applied innovation and transformative tech. The commitment to invest at least £800m in to the Advanced Research and Invention Agency, which will back breakthrough technologies and basic research through experimentation, will only strengthen the UKs position as a science and technology superpower.

Since 1999, Oxford Capital has actively invested in companies focused on science and technology, through the government backed Enterprise Investment Scheme. Today’s review shows that this commitment is as strong as it has ever been, and it will only get stronger.

David Mott, Founder Partner at Oxford Capital, commented: 

“The UK remains one of the most attractive markets in which to launch a tech start up. We have a long history of backing founders and working with them to scale up their businesses into international markets and we welcome this new push from the government to foster entrepreneurial talent and innovations.”

Estimated reading time: 2 min

 

Due to the potential for losses, the Financial Conduct Authority (FCA) considers this investment to be high risk.

What are the key risks?

  1. You could lose all the money you invest
    1. If the business you invest in fails, you are likely to lose 100% of the money you invested. Most start-up businesses fail.
  2. You are unlikely to be protected if something goes wrong
    1. Protection from the Financial Services Compensation Scheme (FSCS), in relation to claims against failed regulated firms, does not cover poor investment performance. Try the FSCS investment protection checker here.
    2. Protection from the Financial Ombudsman Service (FOS) does not cover poor investment performance. If you have a complaint against an FCA-regulated firm, FOS may be able to consider it. Learn more about FOS protection here.
  3. You won’t get your money back quickly
    1. Even if the business you invest in is successful, it may take several years to get your money back. You are unlikely to be able to sell your investment early.
    2. The most likely way to get your money back is if the business is bought by another business or lists its shares on an exchange such as the London Stock Exchange. These events are not common.
    3. If you are investing in a start-up business, you should not expect to get your money back through dividends. Start-up businesses rarely pay these.
  4. Don’t put all your eggs in one basket
    1. Putting all your money into a single business or type of investment for example, is risky. Spreading your money across different investments makes you less dependent on any one to do well.
    2. A good rule of thumb is not to invest more than 10% of your money in high-risk investments. https://www.fca.org.uk/investsmart/5-questions-ask-you-invest
  5. The value of your investment can be reduced
    1. The percentage of the business that you own will decrease if the business issues more shares. This could mean that the value of your investment reduces, depending on how much the business grows. Most start-up businesses issue multiple rounds of shares.
    2. These new shares could have additional rights that your shares don’t have, such as the right to receive a fixed dividend, which could further reduce your chances of getting a return on your investment.

 

If you are interested in learning more about how to protect yourself, visit the FCA’s website here.