The fund will support small firms in mid and north Wales and provide money to ¡°ambitious local businesses¡±.

The institutions plan to launch the fund, which will operate independently of the universities, in the first half of 2012,

It will be financed from a ¡°variety of sources¡± including private equity, the universities said.

In their joint statement, the universities say that the ?2 million figure is an ¡°initial¡± amount.

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The fund still has to be ratified by the governing bodies of the universities and the Welsh government.

Noel Lloyd, the vice-chancellor of Aberystwyth, said: ¡°Universities have a key role in promoting innovation and this is something which is at the very heart of our existing commercial activities.

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¡°As we deepen and broaden the collaboration with our colleagues in Bangor, the time is now right to take a bold step in helping to support early stage companies, looking to invest and grow here in Wales.¡±

John Hughes, vice-chancellor of Bangor, added: ¡°The launch of this fund demonstrates the firm commitment of both universities to contribute in a very direct way towards the economic development of our region.

University venture capital funds are more prevalent in the US, where New York University launched a $20 million (?12.3 million) fund in June.

NYU gave $2 million of its own money, with the rest to come from donations.

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It will be making investments of between $100,000 and $1 million in early stage firms using technologies developed at NYU.

Other US institutions with venture capital funds include Case Western Reserve University in Ohio.

david.matthews@tsleducation.com