Business Minister Michael Fallon has announced an Enterprise Capital Fund (ECF) to invest in science, technology and engineering-based small and medium sized enterprises (SMEs).
The new fund, Longwall Ventures ECF, comprises £25m of government money and £15m from private investors.
The minister, speaking at the London Stock Exchange, said: “We are determined to make the UK the best place in Europe to start, finance and grow a business. Helping entrepreneurs to access a diverse range of finance options is vital.
“The new £40m Enterprise Capital Fund will address a gap in the market and help our small businesses find the finance they need to realise their potential.
Fallon said he was also taking action to encourage more investors to bank roll small businesses.
"Today’s event with entrepreneurs and investors at the London Stock Exchange was an important opportunity to drive take up of the Seed Enterprise Investment scheme, which reduces the risk of these types of investments, and offers significant tax benefits.”