Chancellor Philip Hammond launches consultation into funding the next UK unicorn startups

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The chancellor wants to see more UK startups leading global innovation (Source: Getty)

Philip Hammond has proposed a new investment fund for innovative UK companies to help them become "unicorns" valued at more than $1bn (£760m).

The chancellor today launched a consultation on financing growth in innovative firms in response to an identified £4bn funding gap between American and British firms.

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Fewer than one in 10 firms that receive seed funding in the UK go on to get fourth round investment, compared to nearly a quarter in the US.

"Britain is an innovation powerhouse and it’s vital that we make sure our cutting-edge firms have the funding they need to meet their potential and conquer new markets," said Hammond.

"Meeting this challenge will boost our productivity and enable us to create more well paid jobs across the UK."

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The fund would also help fill the gap left by the European Investment Fund, if the Brexit process results in the UK cutting ties with the body.

The consultation asks 26 questions, including whether the government should increase investment in university startup hubs and if investment is better value for money than tax cuts.

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It is part of an ongoing review into patient capital announced last year, which is looking into providing UK firms with long-term finance to scale up.

Sir Damon Buffini, governor at the Wellcome Trust, said: "This consultation is asking the right questions to inform what the government and industry must do to enable businesses to access the patient capital they need, at the scale they need, in order to grow."

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