PLANS to raise £25 million to fund university spin-out companies have been scrapped after the backers of the scheme failed to raise the money.
The University of Edinburgh and Braveheart Ventures were unable to raise even the £10m minimum they needed to start the joint fund after Bank of Scotland Corporate backed out as a cornerstone investor.
Geoffrey Thomson, chief executive of Bravehe
art, was yesterday reluctant to point the finger at HBOS. But he said an institutional investor was necessary to anchor the fund, which would include smaller "angel" investors.
Thomson said: "Times are very tough and people are not committing money. You do need big strong institutional investors to set up these funds."
The partners have been discussing details of the fund since it was announced in July 2007.
But Braveheart delayed marketing it to potential investors until it had completed raising money for another, smaller, fund for the University of Strathclyde. That fund closed yesterday after raising £4.5m, well short of its initial target of £12m.
Thomson told The Scotsman conditions were so difficult now they did not even bother to send out the University of Edinburgh proposal to other investors.
When it was launched, the proposed Edinburgh University fund was hailed as the largest of its kind in Scotland. It would have given Braveheart first rights to invest in commercial opportunities coming from the university, except in medicine, veterinary and life sciences, where it would have had the choice of being a co-investor.
The failure is a blow for Edinburgh University and its commercialisation subsidiary, Edinburgh Research and Innovation (ERI), which helped to establish 26 companies in the past year.
Thompson said Braveheart would have been prepared to suspend plans for the fund until the market improved, but the University of Edinburgh chose to withdraw from the deal.
"What the university didn't want was some compromise whereby a fund was raised with relatively modest amounts," said Grant Wheeler, head of company formation for ERI.
In response to the collapse of the deal, Edinburgh University has launched a review of its spin-out strategy through its newly formed Equity Management Group.
Derek Waddell, the chief executive of ERI, said the university would continue to work with Braveheart and other investors to raise funds for companies that need it. It hasn't ruled out the possibility of launching another tied fund "with Braveheart or others" at a later date.
The full article contains 410 words and appears in The Scotsman newspaper.
