Britain sets up technology investment fund

LONDON, June 29 (Reuters) - The British government has created a fund to invest in technology-based firms with high growth potential, which it hopes will raise up to 1 billion pounds ($1.7 billion) over the next decade.

The UK Innovation Investment Fund will focus on investing in small businesses and start-ups in digital and life sciences, clean technology and advanced manufacturing, the Department for Business, Innovation and Skills (BIS) said on Monday.

"This fund will provide crucial support for our most promising start-ups and existing small companies just when they need it most," Prime Minister Gordon Brown said in a statement.

The government believes the fund, part of its Building Britain's Future strategy, could leverage enough private investment to generate upwards of 1 billion pounds over the next 10 years.

The fund will not invest directly in companies but will invest in a small number of specialist technology funds which will then invest directly in companies.

The BIS and the Department of Energy and Climate Change and the Department of Health, will invest 150 million pounds, as will private sector investors, on an equal basis.

The life sciences industry welcomed the creation of the fund. Clive Dix, Chairman of the BioIndustry Association, said the government had recognised "life sciences are core to the future of the British economy".

The Association of British Pharmaceutical Industries said the move was "an important signal" of Britain's intent to put life sciences at the forefront of the country's economic future. (Reporting by Rhys Jones; Editing by Dan Lalor) ($1 = 0.6076 pound)