Scottish Enterprise urged to speed up its decision-making processes

SCOTTISH Enterprise must speed up its process for investing money in start-up companies, according to one of the economic agency's entrepreneurship advisers.

Ken Morse, who set up the Massachusetts Institute of Technology's entrepreneurship centre and is now an adviser to US President Barack Obama's administration, called on the government body to increase the pace of decision making.

Morse, one of Scottish Enterprise's commercialisation advisers, praised the work done by the business angel community in Scotland, which he said was able to move fast.

But he said that venture capitalists, who generally make larger investments than business angels at later stages in company development, "lacked ambition".

His comments came as Morse led a workshop at Edinburgh University's Informatics Ventures programme, which has led to 33 spin-outs being formed in the past four years.

Morse, himself a successful technology entrepreneur, said: "Government decisions to support fledgling enterprises and bridge the funding gaps have to be quicker.

"There's been a lot of planning and restructuring. The pace of the restructuring may have been slow because there was more looking inward rather than out at the headlamps of the oncoming train.

"I'd rather make a few mistakes and move twice as fast than waiting to get everything right first."

But he added: "We've got the pieces in place but it's like a new motor - it's got oil and the parts are all there but we need to start running it in."

Scottish Enterprise has funds that offer seed (20,000-100,000), co-investment (100,000-1 million) and venture (up to 2m) investments, with the two latter streams matching money from the private sector.

David Grahame, executive director of Linc Scotland, the national association for business angels, disagreed with Morse's assertions.

He said: "We deal with Scottish Enterprise regularly through the Scottish co-investment fund and our experience has been very positive. The mechanism responds very well to the private sector's lead and provides a fast turnaround."

Gerard Kelly, senior investment director at Scottish Enterprise, defended the agency's record on funding start-ups.

He said investment decisions were being made within "a matter of weeks rather than months" and added: "I think that's faster than you'll see in the private sector.

"We even did away with our old business growth fund because the application procedure was taking too long."