Wasting our money

The FT report that:

"An investment by taxpayers of £74m into regional venture capital funds has been marked down to just £5m according to a report by the Whitehall auditor, which is highly critical of the government’s wider venture capital programme.

Since 2000, the Department for Business has invested £338m in 28 venture capital funds – through seven umbrella schemes – that have provided seed money to more than 800 companies.

...

The regional venture capital funds – one of the seven schemes – has reported an interim rate of return of -15.7 per cent, far worse than the -0.4 per cent delivered by other similar European funds.

Meanwhile, many of the funds have been paying high costs to private sector fund managers. The RVCF, for example, spent £46m in fees against £130m invested up to December 2008.

The taxpayers’ investment of £74m in the RVCF is now worth only £5m – a drop of about 93 per cent.

...

The National Audit Office revealed in December that these venture capital funds had taken a loss on four out of five investments they had sold – 189 write-offs since 2000 against just 45 profitable exits."

And now for the punchline....

"“Whether the investments represent value for money is entirely unclear,” says Edward Leigh, chairman of the Commons committee. "

Unclear? Unclear!