Public venture capital and economic development: The Scottish experience

This paper attempts to both chronicle and evaluate the development of public venture capital in Scotland over the past 20 years or so. This terminology refers to the role which public bodies have sought to play in venture capital to achieve economic development ends, initially using public money, but in recent years by launching and managing funds involving both private and public capital. The paper concentrates on the activities of Scottish Development Finance (SDF), the investment arm of the major Government funded economic development agency in Scotland called Scottish Enterprise (SE) and its predecessor body, the Scottish Development Agency (SDA). SDF has been by far the most substantial public venture capital investor in Scotland throughout this period and a study of its evolution and development is an illuminating one for any student of industrial policy. This study is longitudinal, charting the various different policy environments and political climates in which SDF has existed, as well as seeking to evaluate its achievements, and in particular its impact on economic development.