Investment now would keep recession at bay

Britain's campus entrepreneurial wizard, Chris Evans, of Merlin Ventures (among many other companies), is worried at the prospects of recession. He is not alone. But amid the gathering gloom he has raised his voice specifically on behalf of university enterprise. This week he told The THES (page 3) of his fear that hard times would dry up the flow of venture capital to knowledge-based, start-up companies just as the Challenge Fund and other initiatives promise to bring new candidates to the market.

As risks increase and margins dwindle, he warns, the banks will protect their own interests and academics will be squeezed. The deals they can negotiate will be less advantageous than they have been or should be. The academics, not the banks, will find themselves with all the risks.

This has led Professor Evans to appeal for a new initiative from large financial institutions (who might require some prodding from the Bank of England) to ensure that a flow of venture capital continues during the next few lean years.

It is a timely call. Something of the sort has been done before when 3i was set up in 1945. It was unexpectedly successful and is now Europe's leading venture capital firm. A similar initiative is needed as a bit of counter-cyclical intervention, and could produce enormous benefits both during a recession and against the time when the economy picks up.

In this way, potential new growth in the economy can be nurtured and protected. Without it, all the efforts of research councils, seed-corn funds and foresight panels to push academics into business activity will be jeopardised. Professor Evans's plea deserves vigorous support.

14 opinionThe Times HigherJoctober 30J1998 Admiral House 66-68JEast SmithfieldJLondon E1 9XY Fax 0171 782 3300JTel 0171 782 3000JEmail editor@thes.co.uk It may be demanding, but economics is not dull and it can encompass a passion for human affairs, says Francis Green