This item was published during the term of a previous administration that ended in April 2007
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New fund to help businesses fulfil growth potential
23/10/2006
A new investment fund to help businesses expand and fulfil their growth potential is now open for applications, it was announced today.
Deputy First Minister Nicol Stephen said that the Scottish Venture Fund (SVF) would play an important role in the comprehensive pipeline of support available to young and expanding businesses throughout Scotland.
As the next stage up from the successful Scottish Co-Investment Fund, the SVF will provide funding support for deals in the £2-£5 million range, leveraging in significant private sector funding.
Nicol Stephen said:
"Targeted business investment is a vital part of our efforts to grow the Scottish economy.
"The Scottish Venture Fund will deal with an identified gap in supporting deals in the £2-£5 million range. It will play a vital role in helping stimulate key sectors like life sciences and renewable energy. It will also encourage a wider range of investors to put money into growing businesses."
Two of Scotland's leading investment groups have welcomed the launch of the fund.
John Waddell, Chief Executive of Archangels Informal Investment Ltd said: "Following the success of the Scottish Co-Investment Fund, Archangel has been keen to promote Government supported funding at the £2-5m level to help create companies of substance in Scotland and this participative initiative is a major advance."
Geoffrey Thomson CEO of Braveheart Investment Group plc added:
"I am delighted that the Fund is now up and running. Braveheart will be working closely with the Scottish Executive and Scottish Enterprise to make a success of the new fund.
"This fund builds on what has been achieved with the internationally acclaimed Scottish Co-investment Fund and will provide an important source of follow-on funding for the type of companies in which we specialise in investing.
"Alongside the various grant schemes on offer, I believe that in Scotland we now have a package of public sector finance initiatives which complement the private sector players and capital base."
Sectoral support came from Dr Simon Best, Chair of the Biotechnology Industry Association UK, who said: "This is a very welcome development. It is especially tough to raise money in the range at which this fund is targeted to support. It will certainly help the Life Sciences sector realise its potential to generate employment, wealth and better health for Scotland."
Stephen Campbell, Director of Bank of Scotland's Growth Equity team said: "We welcome this initiative as the logical next step in building on the strengths of the Scottish Co-Investment Fund. It will help in building investor syndicates of scale which will ensure Scottish companies are funded for success."
Background
The Scottish Venture Fund is an equity investment initiative which will be administered by Scottish Enterprise. It will seek to co-invest in risk capital of between £500,000 and £2 million in deals in Scotland normally between £2-£5 million (but up to £10 million if required). The SVF contribution in single deals will normally be capped at 50 per-cent with a £2 million overall ceiling. Initial funding will be £20 million for 2006-07 and 2007-08.
The SVF uses a co-investment approach, investing alongside private sector investors on a matched funding basis.
For early stage businesses, the Scottish Seed Fund will provide investments from £20,000 to £100,000. For small and ambitious companies, the Scottish Co-investment Fund provides between £50,000 and £500,000 in company finance deals of up to £2m, in partnership with the private sector on a matched funding basis.
The Co-investment Fund, in four years, has supported almost 150 deals with £20 million, leveraging in a further £50 million from the private sector.