Innovation Fund cash to help start-ups?

Today, more than £1.2 million remains sitting in the frozen fund.

However, the JEP has learned that work is currently under way on a proposition which could see the fund brought back into use or another similar scheme to support Jersey start-ups introduced.

Following an approach by this newspaper, which first began asking questions about the fund amid concerns about repayments by one of the companies it had supported in 2016, a spokeswoman for the States said a proposition was due to be lodged later this year on proposed options for the fund.

Business and industry leaders are keen to see some kind of government support for start-up companies reintroduced.

Tony Moretta of Digital Jersey said that in the time since the Jersey Innovation Fund was frozen the challenge of supporting start-ups and innovation in the Island had not gone away.

‘Governments around the world have realised they need to intervene financially and Jersey should be no exception,’ he said. ‘We would like to see a replacement for JIF that provides financial support for start-ups but in a range of ways, from small grants of a few thousand pounds to help prototype ideas to incentives for investors to take more risks supporting new companies, but also to drive genuine innovation in areas such as artificial intelligence and blockchain, perhaps through competitions or incubators.

‘If Jersey is not only to retain its entrepreneurs but have any likelihood of attracting the best opportunities to the Island, then it must be at least as good for funding as competing jurisdictions. This is not the case today.’

He added that globally governments had recognised the particular difficulties which early-stage companies faced in attracting investment.

‘Many different schemes are in place to help small, riskier, early-stage companies to overcome barriers in raising external finance, making it easier for these companies to become established and to grow,’ he said.

‘Digital Jersey recently surveyed over 40 digital businesses to ask them about their experiences of seeking funding locally. Half of the digital businesses tried and failed to secure funding in the previous 12 months. Of those businesses which secured funding, the amount raised was highly skewed towards larger investments of over £100,000, and not a single respondent who was seeking less than £50,000 received investment.’

Responsibility for innovation, and therefore the fund, currently rests with the Chief Minister and has yet to be delegated, if it will be at all.

According to the latest States accounts, as of 31 December 2017 there was £1.216m in the Jersey Innovation Fund.

It was frozen after concerns were raised about the way the fund was being handled and in January 2017 Comptroller and Auditor General Karen McConnell released a scathing report which concluded that no more loans should be paid out until the failings were addressed.

She criticised the operation of the fund and stated that about £1.4 million given out to start-up companies might never be recovered.

The report found that of the six new businesses given £2 million grants, one had gone under and three others were significantly underperforming. It also said that board members, who made the decisions about who should receive funding, had financial interests in applicants.

In July 2017 it was reported that a £60,000 loan provided to Stumpydog Innovations to develop the BabyHub travel cot had been paid back in full, in the first success story from the fund.

Asked about the status of the other loans as of July 2018, a spokeswoman for the States said: ‘Some more capital repayments have been made but we won’t comment on individual borrowers.’

She added: ‘A proposition will be presented to States Assembly later in 2018 on proposed options for the fund.’