Long-term Investment For Technology and Science (LIFTS) initiative: request for feedback

Following a public consultation on different design options for and eligibility criteria for participating venture capital funds and investments in the government’s so-called LIFTS (Long-Term Investment for Technology & Science) initiative, the Department of Business & Trade and the HM Treasury have now issued a consultation outcome paper in this context. Therein, the two regulatory authorities outline the responses they have received to their consultation and stipulate the modifications that are made to the document before launching the final Call for Proposals which is set out on the website of the British Business Bank (BBB) owned by the UK government.
To recall, the LIFTS initiative aims to promote large scale institutional and pension scheme investments in venture capital funds that primarily invest in UK science and technology businesses, particularly start-ups coming from UK universities. The government would thereby support these funds with up to £500 million, e.g. in form of cooperative investments. Several options were presented in the consultation paper as to how the scheme could be designed to attract eligible investors and venture capital funds. Additionally, the consultation sought feedback on eligibility criteria for such funds and eligible investments that can be made.
In its outcome paper now, the two regulators note that they are pleased with the positive response they have received from the investment community regarding the LIFTS initiative. Most respondents found the options identified for LIFTS appropriate and effective in achieving the program’s objectives, although some respondents sought some relaxation of the „qualifying investments“ criteria. Therefore, and taking into account the feedback received, the regulators decided to proceed with the above noted „Call for Proposals“ that will include all four options for government support identified in the consultation. While there was support for all options to varying degrees, removing any of them could discourage potential applicants, jeopardizing the objectives of LIFTS which is why the options will be maintained. One change has been made regarding the investment collaboration option in connection with the British Patient Capital (BPC), which will be positioned differently within the Call for Proposals, as it is distinct from the other options and won’t be „formally assessed through LIFTS“. BPC is a subsidiary of the government’s British Business Bank.
Also based on the feedback, the two regulators have also modified the definition of „qualifying investments.“ The new criteria include „a minimum of 50% UK content in the LIFTS fund(s) or 1x the HMG (HIS Majesty Government) investment, whichever is higher“. The definition of science and technology firms will be broadened to meet the diversification needs of potential applicants. However, applicants demonstrating a higher level of both UK and technology-focused investments will receive higher scores within the assessment criteria.
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To conclude the two regulators note that the responses received are summarized without attributing specific comments or views to individual respondents to maintain „commercial confidentiality“. The summary primarily focuses on feedback from institutional investors and fund managers, as they are the target audience for the LIFTS initiative.