Scottish Enterprise helps secure £100 million equity funding for Scottish companies

Innovative Scottish companies have secured £100 million of risk capital over the last year through Scottish Enterprise’s co-investment funds.

 The economic development agency invested a total of £32 million in a wide range of technology based companies via its suite of equity funds during 2009/10.  Its co-investment approach in turn helped to leverage a further £68 million of risk capital from private sector investors. In total, Scottish Enterprise invested in 106 companies which employ 2,057 people in Scotland.

Gerard Kelly, investment director at Scottish Enterprise said: “Continuing economic instability has contributed to strong demand for our investment funds over the past year.  As a result we have been able to increase our level of activity for the fifth year in a row making 115 deals alongside private sector investors resulting in a total of £100 million of risk capital for Scotland’s businesses.”

Enterprise, Energy and Tourism Minister, Jim Mather said:  “Innovation and building the industries of the future is crucial for Scotland – both to support the recovery underway and to put our country on the path to a more successful future. That is why support for innovation is a key element of our economic recovery plan, ensuring that across the public sector we are doing all we can to support and develop companies and entrepreneurs at the cutting edge of their industries. These figures back up the success of that approach and confirm the excellent work Scottish Enterprise are doing through equity funds and the real economic benefits that brings.”

The investment figures, which were released as part of Scottish Enterprise’s Annual Report and Accounts for 2009/10 are split as follows:

• The Scottish Seed Fund, which provides equity investment from £20,000 to £100,000 for early stage, growth orientated companies invested £1.7 million in 21 deals.

• The Scottish Co-Investment Fund, part funded by the European Regional Development Fund, which invests between £100,000 and £1 million alongside the private sector in company finance deals of up to £2 million invested £12.3 million in 63 deals.

• The Scottish Venture Fund, also part funded by the European Regional Development Fund, which invests between £500,000 and £2 million alongside private partners in deals of up to £10 million invested £16.7 million in 18 deals.

Gerard continued: “Scottish Enterprise investment funds are vital in terms of helping to bridge the early stage funding gap that still exists for Scottish companies with significant growth potential.

“In the UK as a whole venture capital fundraising reached a ten year low last year with private sector investors continuing to be cautious.  In stark contrast to the rest of the UK - Scotland has continued to buck this trend with our investment funds helping to maintain investment activity and confidence in the investment community.”

According to a recent NESTA research report on Venture Capital the situation would be far worse without public funding.  The report states that public funds hardly featured in the dot com era but now they participate in 40 percent of all venture capital deals and 56 percent of all early stage deals.

A recent survey carried out by the Department of Business Innovation and Skills  also confirmed Scotland’s Co-Investment model has had a profound effect on the invesment landscape North of the Border.  According to the survey the Scottish market is distinctive with larger deals  more co-investment activity, more follow on investing and larger investee companies. The report claims this is largely down to the greater prominence of angel groups and the presence of the Scottish Co-Investment Fund.

The funds also continue to help build on Scotland’s capabilities and improve Scotland’s competitive advantage.  More than 80% of deals being made in the digital media, enabling technology, life sciences and energy sectors.

Almost £8 million was invested in Life Sciences companies such as Lab901, Sistemic and Marine Biotech with a total deal value in excess of £21 million.

Almost £13 million of SE funds were invested in companies in the Digital Media and Enabling Technology markets, including Elonics, Calnex Solutions and Reactec.  The deal value for the sector reached £48 million in total.

In the Energy sector, almost £7 million was invested in related technology companies  such as Aquamarine Power and Green Ocean Energy, resulting in a total deal value of around £19 million.



Ends

 Read Gerard Kelly's commentary on SE's impact on Scotland's investment landscape


   


Find out more about some of the companies SE has invested in






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