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Thursday, 10 November 2016

Scotland Reports Another Record Year of Risk Capital Investment

10/11/2016 - The Scottish Investment Bank today announced the findings of its annual risk capital market report, revealing that risk capital investment in Scotland was up 70% to £430m in 2015. The results represent an almost fourfold increase in investment since 2012.

The announcement was made as Kerry Sharp, head of Scottish Investment Bank, led a delegation of Scottish companies at the EIE technology investor showcase event in London.  Scotland’s presence at the event reflects the growing attractiveness of Scottish start-ups to London’s investment community, and follows a recent trip to EIE Hong Kong & Shenzhen last month.

During 2015, VCs based outside of the UK invested some £290m (80% of VC investment) into Scottish SMEs, building on over £50m from the rest of the UK.
The Risk Capital Market in Scotland (2015), commissioned by Scottish Enterprise and undertaken by Young Company Finance, also found that 2015 was a record year for business angel investment in Scotland, with over £30m investment from this source, representing a 15% increase on 2014.

The report, the latest in a series from Scottish Enterprise, provides detailed analysis of the early stage risk capital market in Scotland.

Key findings from 2015 include:
  • Deals of over £2m are now a strong feature of the Scottish market. In common with other regions, 2015 was again characterised by the presence of significant large deals, with the top 2 deals accounting for 60% of total investment.
  • While the number of follow-on investment deals into Scottish SMEs reduced by 6% over the year, the total amount invested in follow-on increased by 85%.
  • The number of first time investment deals for Scottish companies continued to increase (from 52 to 54) during the year, with a 5% increase in amount invested (£41m). This is a changed position from 2012 when 30 companies received investment for the first time and amount invested reached £15m.
  • The ICT and Life Sciences sectors continued their dominance with almost 80% of all deals. The Renewables sector again featured highly with 14 deals and a relatively high average investment level per deal.
Commenting on the report, Kerry Sharp, head of the Scottish Investment Bank, the investment arm of Scottish Enterprise, said: “This report highlights that ambitious Scottish companies continue to attract significant investment; a terrific result, reflecting ongoing demand for investment from growth-oriented companies, matched by growing interest in Scottish propositions from new and existing investment partners.

“On the supply side, we remain focused on maintaining a buoyant risk capital market environment, and continue to seek new investment partners to work alongside our existing partners and co-invest in the next generation of ambitious Scottish companies. ’’

Jonathan Harris, editor of Young Company Finance and director of Research and Communications at LINC Scotland, added: "The risk capital market in Scotland has consolidated considerably in the past couple of years, with more funding available to young companies, from a wide range of sources including business angels and angel syndicates, crowdfunding, venture capital (VC) firms, and corporate venturers.  Most months see new investors arriving on the scene, adding to the variety of funding sources. And Scotland is now beginning to see some very large investment deals - still few in number, but no longer entirely unique."

The EIE London 2016 investor showcase, running as part of NOAH London, takes place at Old Billingsgate, and provides a unique opportunity to showcase some of Scotland’s top tech companies. With around 350-400 VC and private equity investors expected to attend, the Scottish delegation is hoping to make its mark on the London investment community. The ten Scottish start-ups selected by Informatics Ventures to represent Scotland at EIE London are: Comcarde, Hermes Apps, SnapDragonIP, snap40, Make it Social, Cognitive Geology, Krotos, Digital Sports Arena, Talking Medicines and The ID Co.  

In addition to the Scottish startups, EIE London also features early stage tech companies from across the UK and Europe.

The companies attending the London event hope to emulate the success of the trip to EIE China last month, where 11 Scottish companies pitched to over 200 international investors at events in Hong Kong and Shenzhen, and had a number of positive follow up meetings and conversations while out in market.

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