Some good business news published today (6 May) for Scotland. Hopefully BBC Scotland (perhaps even Reporting Scotland) will pick this up and amplify it as part of its balanced, fair public service broadcasting remit! The news is from Insider magazine – so it’s not hidden away! The latter is surely a source of news content on business and the economy used by BBC Scotland.
‘Business angels invested more than £100m in deals over year
The record figure shows continuing support for this investment sector’
Groups (‘syndicates’) of risk investors in early stage businesses (‘business angels’) have invested in 114 deals in Scotland, raising a total of £103 million for 87 separate companies in the year to end March 2020. This is reported as a record for the syndicates that are members of the national business angel association, LINC Scotland. Investments in new companies, as distinct from follow-on investments, accounted for 31 per cent of deals and 28 per cent of the investment value.
In announcing the record investment level, LINC Scotland director David Grahame said: “Entrepreneurial companies, particularly in the tech and life sciences sector, are a key part of the Scottish economy and especially of its future growth.” He added: “Even in normal times these high-risk ventures are not suitable for debt financing in their early stages but rely on external equity investment to drive their growth. Much of this is provided by business angel investors, an area in which Scotland has particular strengths.”
LINC Scotland has been operating since c. 2010: its members currently support several hundred high-potential companies. Grahame notes: “Collectively these businesses have created thousands of high-quality jobs, predominantly in Scotland.”
For more on LINC Scotland see: https://lincscot.co.uk
Scottish Investment Bank as co-investor
Typically, two or more syndicates join together to co-invest, both to spread their own portfolio interests and to increase the size of investment rounds. In most deals the LINC Scotland members have also been able to obtain co-investment from Scottish Investment Bank funds on a matched funding basis. This is in addition to successes in bringing in other private investors, including venture capital and corporate funds, as well as funds from universities, and from specialists in early stage company development who also manage investment funds under the Scottish Government’s Scottish Growth Scheme.
Scottish Investment Bank (SIB) referred to here is the investment arm of Scottish Enterprise. The SIB works across Scotland in partnership with Highlands and Islands Enterprise and in collaboration with other partners in the public and private sector. It supports the economy by increasing the supply of growth finance and by helping more companies to access finance.
For more on the companies who have benefited from public sector support via the Scottish Investment Bank see: https://www.scottish-enterprise.com/support-for-businesses/funding-and-grants/accessing-finance-and-attracting-investment/companies-we-have-supported
The Scottish Growth Scheme referred to here is a broad package of financial support of up to £500 million for growth-oriented small and medium sized businesses in Scotland. Backed by the Scottish Government, it can provide loan or equity finance.
For more on the Scottish Growth Scheme see: https://www.mygov.scot/scottish-growth-scheme/
Others talking up Scotland
The Insider article reports the views of some risk investors in Scottish businesses. It’s worth repeating some of their comments to reinforce the point that despite what appears from some quarters, ‘negativity’ is very far from the only kind of messaging being given ‘out there’ in Scotland.
Niki McKenzie, joint managing director at the syndicate Archangels who invested in four companies in Q1 of 2020: “Each of these businesses is a shining example of home-grown Scottish innovation that is succeeding on a worldwide stage.”
Fraser Lusty, director at Equity Gap: “This (£100 million record) is a significant milestone for the Scottish angel community and evidences both the buoyancy of early stage investment and the quality of deal flow.”
Andrew Noble, partner at Par Equity: “It’s exciting to be part of a growing tech sector in Scotland and crossing the £100 million threshold is an important milestone for the angel investment community.”
As one example of its investments, Noble highlights ‘Current Health’, a provider of remote patient monitoring devices: “We’re delighted with Current Health’s progress and in particular its recent partnership with the Mayo Clinic in the US to predict and identify potential coronavirus cases in patients and health care workers using its AI (artificial intelligence) powered wearable technology. This is an excellent example of home grown Scottish talent, and technology as a force for good.”
(The Mayo Clinic is one of the largest not‐for‐profit, academic health systems in the U.S., with $14 billion in annual revenues and 65,000 employees. With a focus on caring for patients with serious, complex illnesses, Mayo Clinic operates in five states and cares for more than one million people a year, from all 50 states and nearly 140 countries. Mayo Clinic frequently ranks top or very highly in worldwide surveys of clinical excellence.)