LORD Smith of Kelvin has declared he would like to see more Scottish firms “stay the distance” and build ventures of significant scale instead of selling up at an early stage of their growth cycle.

The Glasgow-born business veteran was speaking in his capacity as chairman of the British Business Bank, which was due outline the support it can provide Scottish SMEs (small and medium-sized enterprises) at an event at Strathclyde Business School this morning.

The British Business Bank is funded by the UK Government and works in partnership with financiers such as challenger banks and venture capital funds to provide backing for businesses. To date it has facilitated more than £460 million of finance for 3,600 businesses in Scotland, with more than 3,300 firms supported through its start-up loans programme.

Last year it received £2.5 billion of additional resources at the Autumn Budget to increase the flow of patient capital to innovative businesses. Lord Smith said he hopes this kind of long-term backing can convince more Scottish firms to build for the long term.

He said: “We are very good at the small and medium-sized end. What I would like to see through this new British patient capital, which is £2.5n of additional funding we are getting from Government, is companies stay the distance longer. Don’t build it until it’s worth £1m or £5m and sell out. Build it so that you become one of these billion-dollar size companies.

“I would like to see Scotland have more of those sort of things. And it’s that patient capital – second, third, fourth round type of money - we hope to encourage, so you don’t just build a small business and sell out, you take it right through. There are one or two examples of that in Scotland already.”

He added: “We will be backing venture funds that take this long-term approach.”

Asked whether the uncertainty brought by Brexit was discouraging SMEs from seeking finance to expand, Lord Smith noted that there is some caution in the business world. But he said there is an encouraging number of companies growing and businesses being created in Scotland.

He said gross value added per head in Scotland lags only London and the south-east of the UK. And he noted that the £190m of equity investment was made in Scottish companies last year was double the amount invested in 2016.

“Something is happening out there – people are expanding their businesses,” Lord Smith said.

Lord Smith, who is chairman of Alliance Trust and a former chairman of Weir Group and SSE, did not offer a direct view on the Brexit negotiations.

But he raised the prospect of the British Business Bank stepping in to replace the European Investment Fund and European Investment Bank, should the UK withdraw from those after Brexit. Those European organisations provide venture capital funding for UK businesses.

Meanwhile, Lord Smith said that plans to establish a Scottish National Investment Bank could “make a good bit of difference” to the Scottish economy.

Plans for the institution are being drawn up by former Tesco Bank chief executive Benny Higgins. Lord Smith said he has met Mr Higgins to discuss the project. “Being a proud Scot, I hope it is successful,” he added. “Benny has succeeded at everything he has tackled so far.”