Army scraps plans for solo in­vest­ment fund

The Daily Telegraph - Business - - Business - By James Cook

THE Army has scrapped plans to launch a £50m ven­ture cap­i­tal fund which would have in­vested in promis­ing de­fence tech­nol­ogy start-ups.

Pro­pos­als for the scheme were shelved af­ter White­hall in­sid­ers de­cided gen­er­als should in­stead work more closely with the low-pro­file Na­tional Se­cu­rity Strate­gic In­vest­ment Fund, which is run by Bri­tain’s spy agen­cies and backs firms seen as use­ful to the coun­try’s in­ter­ests.

Ma­jor Gen­eral Jez Ben­nett, the Army’s ca­pa­bil­ity di­rec­tor, told a con­fer­ence in Twick­en­ham in Jan­uary that there were plans to cre­ate a fund that would in­vest £50m over four years.

This would have matched the ap­proach taken by the US army, which launched a sim­i­lar ini­tia­tive in 2002 to har­ness the power of free en­ter­prise. How­ever, the Bri­tish plan has been scrapped and the Army will in­stead team up with NSSIF.

Sources said the Army never came close to launch­ing its own fund, and that Ma­jor Gen­eral Ben­nett made his com­ments when it was still in the very early stages of plan­ning.

A sub­se­quent re­view found that it would be more ef­fi­cient to com­bine planned in­vest­ments with NSSIF, rather than set­ting up a sep­a­rate ven­ture cap­i­tal fund just for the Army’s in­vest­ments.

NSSIF con­firmed that it had part­nered with the Min­istry of De­fence. The fund was cre­ated af­ter the 2017 Bud­get and has £135m to pump di­rectly into tech­nol­ogy start-ups or other tech­nol­ogy in­vest­ment com­pa­nies.

NSSIF has al­ready backed ven­ture cap­i­tal fund Amadeus Cap­i­tal, The Sun­day Tele­graph re­vealed ear­lier this month. It has also in­vested in quan­tum com­put­ing start-up Quan­tum Mo­tion and has held talks with No­tion Cap­i­tal, another ex­ist­ing fund.

In­sid­ers say the fund was a key sup­porter of min­is­ters’ de­ci­sion to spend £400m on a 45pc stake in com­mer­cial satel­lite busi­ness OneWeb.

An MoD spokesman said work­ing with the fund would al­low it to de­liver value for money.

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