Byline: Bill Gleeson

PROFESSOR Michael Hulme leads a bit of a double life.

Much of his work, home life and roots are firmly located in rural Cumbria, on the Morecambe Bay coast. But the entrepreneur turned academic is also chairman of Merseyside Special Investment Fund, the venture capital outfit with a social conscience.

Academia is a second career for Prof Hulme, who began researching an MPhil 10 years ago. He now holds a chair at the Centre for Study of Media Technology and Culture at the Institute of Advanced Studies at the University of Lancaster.

Earlier he set up and ran two businesses before selling them in the early 1990s. One offered general consultancy services to small and medium sized businesses, the other offered radio communications air time and equipment that was, for example, used by haulage and taxi firms to stay in contact with their vehicles.

The proceeds from the sales of these businesses meant that he was free to concentrate on new horizons.

Now settled in as chairman of MSIF, Prof Hulme has found himself tackling some delicate issues. Those at the top of the list include what is to happen when MSIF's lifeblood, in the shape of European Union money, dries up and what is the right balance to strike between the need for the fund to be, on the one hand, commercially viable while, on the other, giving enough emphasis to its socio-economic objectives.

Currently, MSIF's investment coffers, which total pounds 80m, have been filled largely with European Union and British government money. But this money must be spent by 2008 and, as things stand, there is no prospect of a fresh round of public sector funded capital beyond that date.

The potential for the cash to run out gives rise to a need to create funds for the future by taking profits from investments. Yet the need to make useful profit sits a little uneasily next to the fund's original objective of taking risks that traditional private sector sources of capital wouldn't.

Prof Hulme said: ' MSIF treads a difficult path. Right at our foundation is a social and economic goal. But at the same time, we are not in the business of giving the money away.

'We have a duty to promote enterprise and grow businessesbut that duty is best served by having some degree of rigour and commerciality in the way our funds operate.

'On the question of making a return, if we are reasonably rigorous, while there may be some failures, money will also come back to us from the many successes. But that return is a bi-product of our social or economic aims.'

It is important to Prof Hulme that MSIF doesn't dish out grants. Instead it either takes equity stakes in investee firms or it makes repayable loans.

'I have concerns about grant culture. I don't think grants can sustain the future,' he explains.

'One of the things that drew me to MSIF is that it combines its social goals with being commercially viable. I think it's doubtful you can build something sustainable with freebies.

'On the other hand, our socio-economic agenda is discussed at every board meeting, as that is the essence of our role. Supporting businesses helps build the social fabric of Merseyside.'

Prof Hulme says the search is on for future sources of funding: 'If there are opportunities to raise new money we will pursue them. We have built a strong fund management team and we have a responsibility to make sure the area continues to benefit from that. …