Interest in the British Business Bank's new £150m investment fund for Scotland has been strong, with "plenty of submissions" from fund managers wanting to operate parts of it.
Chief executive Louis Taylor was in Edinburgh yesterday to meet with government officials and representatives from Scottish Enterprise and the Scottish National Investment Bank (SNIB), among others.
Speaking to Insider, he said that market engagement has been strong, ahead of today's deadline, with asset managers appointed in the spring ahead of a summer launch.
"We've had to balance a few things: we want to make sure the money doesn’t all get put into certain bits of the central belt, and not just the most whizzy tech companies," Taylor explained.
The money will be split between four sub funds - with two focused on micro lending from the £25,000 level where the bank's Startup Loans end, to £100,000 - one for Highlands and Islands and north east Scotland, and another covering central, west and southern Scotland.
There will also be a single debt fund for investments from £100,000 to £2m and an equity fund for amounts up to £5m.
Similar funds are being designed for parts of England, Wales and Northern Ireland, but Taylor said that the size and structure of the Scottish fund has been tailored to the nation's needs, following consultations last year.
"The feeling was that with the size of the Scottish markets, if we separate the funds down too much it won’t get fund manager awards - but there will be requirements to insure they don’t just distribute it to the central belt."
While the UK Government-owned economic development bank is able to take more risk - much like its Scottish compatriots SNIB and Scottish Enterprise - Taylor expressed that "we're not here to lose money, we want businesses that are fundamentally viable".
He argued that "there’s a fantastic halo effect" to a small amount of tangible money coming in to a start-up business, which then encourages private investment to follow.
Speaking of his discussions earlier in the day, Taylor said that during the last few years Scotland has made significant progress in the implementation of capital, although in the future there is more to be squeezed from the nation's promising university spin-outs.
"The sector is an area of national advantage, so proper support in commercialisation is really important - that's one of our focuses increasingly, as these research tech-heavy firms can have a disproportionate impact."
When questioned about the funding gap in the larger scale-up category - which is often filled by takeovers by foreign firms - Taylor responded: "Genuine commerce must stand on its own to feet, and sometimes takeovers are what’s right for a business, but we do want more UK capital going into these scale-up companies.
"That benefits the UK economy, keeping jobs and IP here, so I think both governments are focused on ensuring the structure of the markets is better served by UK investors."
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