£1bn investment fund launched to boost UK digital industry

The launch of the Innovation Investment Fund, with £150m of Government money, follows the release of Lord Carter's Digital Britain report in June. A spokesman for the fund said it would provide "crucial support" and "timely investment" for fledging companies.

The fund, launched yesterday, will be available to businesses and start-ups working on developing the potential of the internet and digital technologies to improve how people communicate, listen to music, learn at school, deliver higher quality healthcare and increase business capacity.

Prime Minister Gordon Brown said the fund would help "build Britain's future" by investing in key sectors and would provide "crucial support" for the country's most promising start-ups and for existing small companies, "just when they need it most".

It will not invest directly in companies, but instead in specialist technology funds, and private sector investment will be used on an equal basis to the Government money.

Lord Mandelson, Secretary of State for Business, said the Government had identified "access to venture capital" as one of the critical factors in developing innovative new companies in Britain.

Mandleson said the fund was a challenge to UK venture capitalists to follow the Government's lead in "backing British entrepreneurs" in building exciting new companies,  investing in new technologies and creating jobs.