The government’s ambitious plans to turn its £150m Innovation Investment Fund into a £1bn pot with top-ups from private institutions look to be working.

Announcing today that it has appointed Hermes Private Equity and the European Investment Fund (EIF) as fund-of-fund managers for the venture capital scheme, it claims a further £175m has already been leveraged to create a pool worth £325m. Over a 15-year period, the funds will be invested into companies in the biotech, cleantech, advanced manufacturing, and digital sectors.

The extra money is subject to legal sign-off, but suggests private institutions are prepared to back the fund. Hermes will manage a £125m fund-of-funds focused on low-carbon and cleantech opportunities with £50m from the Innovation Investment Fund, while EIF will take care of a £200m technology fund of funds, with £100m coming from the government contribution.

Somewhat confusingly, chancellor Alistair Darling announced that the Innovation Investment Fund and the Carbon Trust’s venture capital fund together would ensure at least £160m will go towards low-carbon projects, suggesting the Carbon Trust Investments has £35m at its disposal.

Either way, it’s news that’s likely to be met with cheer in the technology and innovation communities, providing the 15-year investment plan gets underway expeditiously. Backed up by one of today’s other announcements, that profits stemming from patent registered by UK companies will be taxed at 10% as opposed to 21% for small firms and 28% for larger corporations, more research and development projects are likely to get the green light.

Yesterday Darling suggested his Pre-Budget would outline ways to ensure the UK economy relied less on the City for the country’s wealth generation, suggesting that re-embracing manufacturing and Britain’s historic export and trade strengths could provide the solution.

Science & innovation minister Lord Drayson was today feeling bullish: “UKIIF has been a hit with investors. We can now ensure that Britain’s high tech growth companies will have the capital to fulfil their potential. By backing entrepreneurs we back jobs and growth.”

The news has also excited chief executive of the British Private Equity & Venture Capital Association (BVCA), Simon Walker, who said: “To achieve £325m in less than six months after the fund was announced is very impressive, particularly in the current climate. This will be much needed investment for the young, innovative, businesses which will create jobs and opportunity in our future growth areas. It is these venture-backed companies that can be at the vanguard of the UK’s economic recovery.”

With a General Election fast-approaching, the only real fear now, is that Lord Drayson’s efforts to generate momentum could somehow be diverted by a change of government.