Creative industries 'lacking investment'

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The Independent Online

Venture capitalists consistently underestimate the potential for return from the creative industries even though they acknowledge that the UK has the potential to be a world leader in the field, according to research published today.

Venture capitalists consistently underestimate the potential for return from the creative industries even though they acknowledge that the UK has the potential to be a world leader in the field, according to research published today.

Nearly two-thirds of the venture capitalists questioned believed the UK could be a world-beater yet they ranked the creative industries ­ a term including advertising, architecture, fashion and music ­ below pharmaceuticals, insurance and pensions for the contribution they made to the economy. Only 22 per cent said they would invest in the field compared with 42 per cent willing to invest in the pharmaceuticals sector, the survey for the National Endowment for Science Technology and the Arts found.

Yet Nesta pointed out that in recent years, the creative industries have contributed twice as much to the UK balance of trade as pharmaceuticals. They are estimated to account for 7.9 per cent of UK GDP, more than that recorded by any other country. And the sector grew by an average of 8 per cent between 1997 and 2001, compared with an average of 2.6 per cent for the whole economy during that time.

Those who have invested in one of the creative industries were more enthusiastic. More than 80 per cent of those who had invested chose the sector as having the most growth potential. Only 14 per cent of those who had previously dipped a toe in the market regarded creative industries as being too risky compared with 40 per cent of those with no experience of the sector.

There have been some high-profile cases of venture capitalist interest. Kleinwort, for instance, bought a 45 per cent stake in Hat Trick Productions, the company behind Have I Got News For You, last year, for £23m.

Chris Powell, Nesta's chairman, said negative attitudes "threaten the potential creative industries have to nourish the economy."

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