The West Midlands should aspire to become the new business capital of the UK and lure entrepreneurial talent away from London, one of the region's small business experts has suggested.
Neil Mackay, chief executive of Advantage Business Angels, said the West Midlands now had the conditions and business infrastructure to start enticing private investors out of the capital.
Extra investment was needed to support many new businesses in the region that fail through insufficient funding, he said.
"Despite more than £500 million being raised every year through business angels, there were still many businesses that failed to raise the necessary finance to succeed," said Mr Mackay.
"Nationally, the chances of a business wishing to raise the necessary capital for development are, on average, a lamentable one in two thousand.
"The regional distribution of funds is heavily weighted in favour of London but London is a source of capital rather than a source of deal flow. The West Midlands has a real opportunity to become the acknowledged early stage financing capital of the UK."
Mr Mackay's comments follow the publication of a report by the Small Business Service which mapped the provision of venture capital to SMEs in England. The report states
that 64 per cent of funds targeting early growth businesses are in London and the South-east.
That compared to just three per cent in the West Midlands which is still further ahead of other regions such as the East Midlands at one per cent and the South West at two per cent.
However, the report acknowledges that it is hard to persuade a fund manager to travel long distances from London for a small deal.
This means prospects for smaller businesses could be greater in London and the South-east while potentially successful propositions could go unfounded in other regions. But Mr Mackay believes the West Midlands had all the right ingredients to attract investment.
"We have a growing professional services sector that is skilled at working with developing businesses and has a cost base that enables it to be active in this market," he said.
"We also have a networking infrastructure that enables us to communicate rapidly.
"This is one of the triumphs of the West Midlands: close knit, well connected groups of professional advisors that can identify opportunities and match them with the right people to work on them."
Mr Mackay praised the region's tradition for self-employment and said it was now a hotbed for entrepreneurial investment.
"Birmingham is recognised as the city of a thousand trades but we should aim to become the region of 10,000 trades.
"Entrepreneurs who have built the West Midlands' economic base have shown themselves ready, willing and able to create the next wave," said Mr Mackay.
The Small Business Service report also said the public sector had become an increasingly important force in the venture sector.
Some 26 per cent of all funds targeting small investments (below £500,000) are publicly-backed.
Mr Mackay welcomed the contribution of the public sector but said it was now time to focus on attracting private finance out of London. He said: "AWM has made substantial progress on providing funds. What we now need to do is lure some of that private sector money away from London."