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Evaluation of the Scottish Co-Investment Fund: a report to Scottish Enterprise


The Co-Investment Fund aims to work with private sector partners to increase capacity and capability in the venture capital market in order to increase the supply of early stage equity funding to Scottish based small and medium sized enterprises (SMEs) that have high growth potential. The Evaluation had four main objectives: to review the rationale for public intervention in the venture capital market; to assess the extent to which the Fund’s objectives were being attained; to undertake an economic impact assessment of the Fund, using Scottish Enterprise’s (SE’s) standard methodology; and to make recommendations to guide the Fund’s development.


The methodology consisted of a literature review; analysis of the Fund’s management information; and interviews with the Fund partners, companies in which investments had been made and a number of other players who were not directly involved with the Fund but who had an interest in it.


The Fund was found to be attaining its objectives. It was held in high regard by all parties – partners, investees, non-partner intermediaries and non-partner investors – and the model being used was widely praised. The Fund was also having a positive impact upon the performance of the investee SMEs and upon the wider Scottish economy. Turnover, gross value added (GVA) and employment have grown and are generally forecast to grow further as the companies develop. The main concern was a fear that the private sector leadership (a key strength) might become less significant as factors such as Portfolio Management become more significant. It is therefore suggested that the Fund needs to retain its private sector leadership.


It was recommended that: the maximum investment in any one company be raised to £1 million; consideration be given to allocating a proportion of the Fund, or each partner’s allocation, to early stage companies; the role of the Portfolio Team and its objectives are clearly communicated; the main areas of investment readiness failure and the support needed to overcome these must be identified; partnerships should be utilised to identify potential deals that would benefit from investment readiness support and ensure this is provided; greater efforts be made to support the Fund’s investments with other SE products and services; and the Fund’s investment successes be publicised generally and to potential partners. It is also recommended that the market failure justification for all future policy interventions be clearly stated; and SE’s evaluation staff be involved in the design of initiatives involving market interventions to ensure that proposals are addressing market failure.

Author Keith Hayton (Hayton Consulting); Graham Thom, Vincent Percy, Chris Boyd, Kathleen Latimer (GEN Consulting)
Published Year 2009
Report Type Evaluation
  • Enterprise
    Support to existing/growth businesses
  • Investment
    Equity investment