Abstract
ABSTRACTGovernment intervention to improve the supply of early stage risk capital has taken many forms, the most recent of which is the establishment of public/private co-investment funds. The contribution of this article is to provide a detailed case analysis of the first phase of operation (2003–2009) of the earliest such fund, the angel-led Scottish Co-Investment Fund (SCF). Unlike many other co-investment funds, SCF is a passive investor: it does not find and negotiate deals of its own, but forms contractual partnerships with active business angel syndicates and Venture Capital fund managers. Based on a detailed analysis of the design, operation and impact of the Fund, the article concludes that it has encouraged more angels into the market and stimulated the organizational transformation of the business angel market in Scotland into one dominated by business angel groups and syndicates. This analysis provides useful lessons for public risk-capital investment more generally.
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