Source · Select Committees · Defence Committee
Recommendation 10
10
Paragraph: 50
Venture capitalism helps to drive innovation in defence and associated industries.
Conclusion
Venture capitalism helps to drive innovation in defence and associated industries. However, we heard concerns that venture capitalist funding could represent an avenue for hostile foreign investors to gain entry into the UK defence supply chain. The Minister for Business and Industry told us that the National Security and Investment Bill legislates in this area to protect national security-sensitive entities.
Paragraph Reference:
50
Government Response
Accepted
HM Government
Accepted
The Government agrees with the Committee that venture capitalism can have a positive impact on UK industry. The UK remains by far the leading destination in Europe for venture capital and is one of the most innovative countries in the world–ranked fourth in the 2020 Global Innovation Index. The Committee is right to highlight the importance of understanding the ultimate ownership and investment structure of the venture capital vehicle. Under the new National Security and Investment regime, parties must declare their ownership structures including ultimate owners. If acquirers provide any false or misleading information in their notification, they will be punishable through civil and criminal sanctions in addition to the impact on their transaction. Furthermore, the new legislation will also introduce powers to address the risks relating to small, start-up companies, which was difficult under the extant Enterprise Act (2002), due to the minimum annual turnover and share of supply thresholds. Fifth Special Report of Session 2019–21 7