The successful bid, led by the Science & Technology Facilities Council (STFC), was announced by Science and Innovation Minister, Ian Pearson.

The Rainbow Seed Fund is an independently managed seed capital fund dedicated to investing in technologies from the publicly funded research base. The Rainbow Seed Fund will use this funding to accelerate early stage and high risk ventures through the early introduction of experienced entrepreneurs into spin-out companies in order to shape the business and support small business creation in the UK. Set up in 2001, to date Rainbow Seed Fund has invested £3.5m in helping to create 17 spin out companies which between them have raised well over £35m additional capital, one of the highest leverage multiples in the sector. This £1.5m award takes Rainbow Seed Fund's total asset base to £10m.

Bruce Smith, Chairman of Rainbow Seed Fund's advisory board, said "Our progress to date is clear evidence that the science carried out in UK public research institutes has real commercial potential. Rainbow Seed Fund works hard to turn ideas into businesses, and this award will allow us to bring together experienced entrepreneurs and first class technology in an even more effective fashion. We look forward to continuing to play a key role in this value creation."

Tim Bestwick, Chief Executive of CLIK Knowledge Transfer, STFC's wholly owned technology transfer and commercialisation company, said: 'As a lead partner in Rainbow Seed Fund, STFC is delighted that its performance so far has been recognised by the PSRE fund with this award. Without such backing and support in the early stages, commercial opportunities arising from scientific discoveries and new technologies can easily be lost.'

This award is part of the UK Government's £68m total award to 33 successful bidders across the UK, announced at the stakeholder event in London yesterday. MP Ian Pearson said at the event: 'Top quality research is carried out within the public sector to meet the needs of Government Departments in many areas. But it's vital that we also maximise the economic impact of this research to meet the challenges of the 21st century. That's why the Public Sector Research Exploitation fund is so important in taking great research and turning it into great business ideas.'

The £8.5m Rainbow Seed Fund was established in 2001 with funding from the Office of Science and Innovation to commercialise scientific research in a leading group of the UK publicly funded institutions, our partners. The Fund, which is independently managed by Midven Ltd, made its first investment in 2002, and currently has a portfolio of 15 companies with one exit.

The Fund invests at the earliest stages of a technology's development, and helps to turn an idea into a business by actively identifying and supporting experienced management and facilitating additional coinvestment. Rainbow's partners spend over £1 billion on research and development every year giving the Fund privileged access to high quality investment propositions at the earliest stage.