Risk capital investment surges 70% to £430m

Kerry Sharp

Risk capital investment in early stage companies in Scotland was up 70% to £430 million in 2015, according to the Scottish Investment Bank’s annual risk capital market report.

The results represent an almost fourfold increase in investment since 2012, said the Scottish Investment Bank, the investment arm of Scottish Enterprise.

It said that during 2015, venture capital firms based outside of the UK invested £290 million into Scottish SMEs.

The Risk Capital Market in Scotland (2015), commissioned by Scottish Enterprise and carried out by Young Company Finance, also found that 2015 was a record year for business angel investment in Scotland with more than £30 million of investment.

Key findings from the 2015 report include:

  • Deals of over £2 million 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 two 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 (£41 million)
  • The ICT (information and communications technology) and Life Sciences sectors continued their dominance with almost 80% of all deals.

Kerry Sharp, head of the Scottish Investment Bank, 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, said: “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.”