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Corporate Venturing Scheme (CVS) - a great shame

The Corporate Venturing Scheme (CVS) was set up to promote venture capital style investments for companies. It is comparable to the Enterprise Initiative Scheme (EIS) – which is for individual investors. The tax breaks were not quite as generous, but it did offer upfront corporation tax relief (20% of the investment) and capital losses could be offset against trading income.

On the 31st of March 2010, the CVS’s ten year period expired and it has not been renewed. The CVS was not hugely popular, but it was used sporadically across our firm.

I believe that any tool which incentivises investment into growth companies will be beneficial for the economy. Corporate venture capital is theoretically a symbiotic relationship – with bigger companies providing finance and other resources to fledgling businesses, who then provide technical know how, and ultimately dividends in return.

The government do offer the EFG scheme, Enterprise Capital Funds, the SBRI scheme and others. However I feel that rather than directly funding businesses, the public sector should do more to promote investment within the private sector, and in particular by successful businesses. Not only does this alleviate the financial burden on the public purse - the experience and knowledge within ‘corporate UK’ should be more relevant than that in the civil service.

Julian Dobbin is a partner at Mercer & Hole. The views given in this blog are personal to the author.

 

 

Date: 12th May, 2010
Author: Julian Dobbin

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