TENS of millions of pounds could be pumped into creating high-tech businesses and hundreds of jobs in the region during the next five years.

That is the aim of technology finance company NStar, established by regional development agency One NorthEast last September to create a new investment climate for technology in the North-East.

Only last month, it secured more than £30m of funding from the European Union, on top of an initial £500,000 pledged from One NorthEast.

The organisation hopes to more than double its European funding, from private investment funds over the next five years.

Venture capitalist Andrew Mitchell, 45, is the chief executive of NStar.

He said: "In effect, we hope to more than double the total amount of venture capital available to new technology start-ups and high-growth businesses over the next five years.

"We have already secured £33m from the European Union. That is a good start, but we plan to bring in even more money from other sources, which could amount to anything up to £80m over the five years.

"Our overall objective is to attract additional private sector investment into the region to ensure the development of new technology-based companies and jobs.

"We need to encourage high-tech companies from elsewhere in the UK to consider establishing a base in the North-East.

"We have five excellent universities turning out high calibre graduates every year, but at the moment many of them head to areas in the South of England after graduation.

"If they want to work in high-tech businesses, or even want to create their own, they tend to go to places like Oxford and Cambridge to do so.

"We need to encourage them to stay in the region once they have completed their studies, and end the brain drain away from the North-East.

"That is hopefully what this funding can help to achieve.

"We will ensure the available funds are managed by a team of specialists who understand the needs of technology businesses, and can make potential deals happen.

"We are now in the process of appointing professional managers to run the funds and, hopefully, we should have them up and running within the next three to four months."

The money will be invested in two venture capital funds - the North-East Proof of Concept Fund (PCF) and the North-East Co-investment Fund (COF).

The £10m PCF is aimed at early stage technology opportunities coming out of the region's universities. Up to £90,000 will be made available to universities to help create spin-out companies, while up to £60,000 will be available to small to medium-sized enterprises (SMEs).

"It is basically a seed fund to start the ball rolling and try to make things happen," said Mr Mitchell.

The £23m COF Fund is aimed at bigger deals, targeting companies that need anything up to £2m of capital for technology projects.

Mr Mitchell expects such funding to be matched by investors from the private sector, and is already attracting interest from around the world, including the US and Europe.

NStar is often referred to as the region's sixth centre of excellence. While it will provide some finance for projects at the region's five other centres, mainly to enable them to invest in new venture creation, its main mission is to create a climate for technology investment in the North-East, encouraging early stage venture finance and deal creation.

This includes building an entrepreneurial culture and supporting the knowledge transfer operations of the universities.

It will also lead to the creation of a forum to co-ordinate business development activities across the region's universities, and the development of business angel and business mentor networks to provide finance, management and expertise for potential technology entrepreneurs.

Mr Mitchell said: "The overall aim of such initiatives is to try to retain graduate expertise in this region.

"NStar will provide access to funds as well as advice to organisations, such as the universities, centres of excellence and SMEs in the region on all aspects of deal creation and investment to improve the quantity as well as quality of proposals."

He said: "Our mission involves attracting funds to finance the development of new technology business, working with the five regional centres of excellence on issues of early stage finance, and co-ordinating deal generation projects to ensure a steady flow of investment opportunities which have the potential to become high-growth and sustainable technology businesses."

The fund is being used to plug part of the gap left by venture capital group 3i, which left the region last year.

"Since 3i moved out of the region, traditional venture capital companies have not been investing in early stage science," said Mr Mitchell.

"NStar is developing a new model for such investment in science and technology-based SMEs to ensure the supply of funds for the region.

"At the same time, we must act to increase the number and quality of potential deals for investors. Only by addressing both supply and demand side issues can we hope to rejuvenate the early stage technology-funding environment in this region."