The West Bengal government is working on a plan to set up a venture capital fund for budding entrepreneurs and start-ups through a government agency, a minister said here Thursday.

"The idea is to encourage innovation and creativity among the local entrepreneurs. We are focusing on development of applications and solutions related to cloud computing and mobile value-added service and other cutting-edge technologies which will be backed by this venture capital fund," Partha Chatterjee, minister for parliamentary affairs and education, said at a conference organised by Confederation of Indian Industries.

He said incubation centres for start-ups will be set up in tier-2 and tier-3 cities.

Chatterjee said there was a need to arrest the loss of bright young people to other states and countries by promoting a better industry-academia connect and provide innovative entrepreneurial opportunities in Bengal.

"I sincerely believe West Bengal has all the potential to emerge as the leader in the innovation space," he said.

He said other than infrastructure, fiscal incentives and enhancement of localised human resources, the state was vigorously promoting innovation and research and development as well.

The state already has a venture capital agency, Webel Venture Capital Ltd., working primarily in enabling technology in start-up firms.

It has funded five companies in areas of RFID tags with sensors, data leak prevention, cellular based applications and others in form of soft loans and equity.