Moral of the Woodford saga: if you want to back start-ups, do it yourself

Hounds are baying for the blood of former star investment manager Neil Woodford, whose shrinking funds have closed for withdrawals. His promoters such as the broker Hargreaves Lansdown have also been taking media flak, as has the Financial Conduct Authority, whose critics say it should have spotted the problem early and intervened. There are suggestions that Woodford and his associates have made ‘a huge pile of money’ (to quote Merryn Somerset Webb in the FT) out of an over-puffed venture in which small investors are now stuck — and that all those responsible should queue up for a public lashing from the Treasury select committee.

So it goes: as a parable of financial hubris, this looks like an open-and-shut case. But I return to the point I made last week, that Woodford was one of the few big investors willing to put money into smaller, innovative companies and that was, in principle, a good thing; indeed, this column has frequently trumpeted the value of trying to pick potential winners in fields of science in which UK laboratories excel.