The UK’s Business Growth Fund (BGF) has signed a strategic partnership agreement with the Scottish Investment Bank’s (SIB) Scottish Venture Fund to boost availability of equity funding for ambitious Scottish businesses.
The partnership will create significant potential investment opportunities of up to GBP10 million for Scottish businesses with a solid track record and demonstrable strong growth trajectory.
The Scottish Venture Fund was introduced in 2007 to support development of Scotland’s private SME funding market by participating in risk capital fundraisings from GBP2 million to GBP10 million, with up to GBP2 million of investment. In line with other SIB funds, the SVF is based on Scotland’s successful co-investment approach, where public sector funds match private sector investment in the country’s most promising growth businesses. Since its introduction SVF has invested GBP41.8 million in 33 companies resulting in a total of GBP140.7 million of combined public and private sector investment in Scotland.
The Business Growth Fund was launched earlier this year to support Britain’s fast growing smaller and medium sized businesses as a partner investor. In return for a minority stake and two seats on the board, it will provide long-term equity of between GBP2 million and GBP10 million for fast growing companies, as well as offering support, advice and access to a network of contacts. It currently has a team of five based in its Edinburgh office and a further team of 45 people working in key regions across the UK. The fund is seeking to forge links with co-investors across the UK.
Head of the Scottish Investment Bank, Gerard Kelly (pictured), commented: “Scotland continues to produce exciting innovative companies with global potential and by partnering with the Business Growth Fund, we hope to boost access to risk capital for Scotland’s most promising enterprises.
“Our co-investment approach has proved to be a catalyst for increased equity finance in Scotland, even at a time when investors are being cautious. The opportunity to co-invest alongside the Business Growth Fund, a new and substantial participant to our market, is very welcome and will help address a gap in the funding cycle that existing funds are unable to satisfy.”
Simon Munro, BGF Regional Director for Scotland, says of the partnership: "We are delighted to be partnering with the Scottish Venture Fund, with whom we share a commitment to supporting fast growing ambitious businesses. Small Scottish companies with annual turnover in the GBP5 million to GBP100 million range have in recent years struggled to attract the capital they need to invest and grow and together we can play an important part in filling that funding gap. With a team of five people in Scotland, an office in Edinburgh and further appointments expected in the months ahead, we are actively talking to local businesses about what we can offer and we would urge them to come forward.
“This also demonstrates BGF’s intention to forge strong links with other investors across the UK and is integral to the way we will operate.”
