SCOTLAND needs to come up with new ways of funding the emerging companies that could help boost economic growth in the country, a study has recommended.

A report by the Royal Society of Edinburgh, Scottish Financial Enterprise and the Institute of Chartered Accountants of Scotland said the growth capital market needed to be strengthened to help ensure more early-stage firms made the transition into the big league.

The report found the Scottish investment infrastructure is relatively good at supporting promising start-ups and early-stage firms.

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However, it recommends that Scotland develop funding sources that could help firms that achieve business angel-type funding to reach the size where they would be able to win backing from the likes of private equity investors.

It suggested Scotland could try to find ways of encouraging pension funds to invest alongside private- sector partners in small venture capital funds.

The report said institutional investors might be persuaded to back so-called Super Co-Funds. These could be match funding provided by other sources, including the existing Scottish Co-investment Fund.

It said firms that operate venture capital trusts might be encouraged to recruit partners in Scotland.