Government funding for small and medium enterprises (SMEs) in the technology sector needs to be less risk averse, according to industry experts.

The Institute of Physics, a scientific membership organisation devoted to increasing the understanding and application of physics, claims that the government needs to accept that failures in the technology sector will inevitably happen and dare to take risks.

Alex Connor, the technology and innovation policy officer for the Institute of Physics, said: "[Funding] often lacks an understanding of the potential gains that can be reaped from investing in early-stage high-tech companies. The government should play a role in this process, providing a directory of venture capital funding and facilitating contact between companies and investors.

"Small scientific start-up companies and academic spin-out companies have a low rate of success in the UK, as compared with the strength of the science base. Academic spin-out companies in particular are often managed by people with limited business experience."

Last month the government announced that it will provide £100 million of funds through the Technology Strategy Board for research into sectors such as green energy and communications.

Since it was established in 2004 the board has provided over £1 billion of funding for over 700 projects.

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