DELIVERING RESULTS

If you are an entrepreneur starting or growing a high growth business, you will be acutely aware that delivering results is at the forefront of everything you strive to do.?Here at Scottish Enterprise, we want to help more high growth Scottish businesses to access the growth finance and support they need to deliver results.

As well as providing advice and tailored support for high growth businesses, we are an early-stage, gap funder, providing patient commercial investment to high growth businesses, alongside private sector investors, sharing risk and rewards.?Our support is targeted to those businesses that are striving to bring innovation to our health care, supporting and enabling our net zero ambitions and contributing to better quality employment opportunities, across Scotland.?

These types of businesses are amongst Scotland’s very best early-stage prospects, and like us all in the last year, many have faced immense challenges.?It has been so rewarding to provide support to so many of them, to witness their resilience and achievements in the face of such challenges and to be part of their growth journey.

For some companies, last year provided them with exceptional opportunities to accelerate growth. Dundee based Snappy Shopper Ltd , established in 2017, is one such business.??They have developed a technology platform which provides E-commerce capability for convenience retailers to provide a quick customer delivery service.?This was transformational for many during lockdown, allowing?retailers?to grow sales safely whilst protecting their colleagues and fulfilling customer needs.??SE first invested in 2019 alongside Kelvin Capital, Maven Capital and Mercia. The company recently raised a ￡20m round to accelerate their continued expansion in Scotland and the rest of the UK with funding from new investors Paypoint, Highland Tech and former Sainsbury’s chief executive Justin King, alongside existing investors including ourselves.?

For others, there were challenges in raising sufficient funding to continue to support growth during the year, and those raising equity for the first time found it especially difficult as investors naturally focused on the needs of their existing portfolios. Our aim is to work with the market to identify and respond to gaps that are limiting the progression of our very best company opportunities, which is why we introduced the Early-Stage Growth Challenge Fund to respond to the unique challenges from the impacts of the pandemic. This ￡25m fund (which was part of a ￡38m early-stage response from Scottish Government) extended cash runways and allowed many companies to secure first-time investment and a number went on to successfully secure their next and larger funding rounds from private sector investors.??The progress of the 90 companies who secured funding are illustrative of where a tailored and targeted intervention can address cash flow challenges to protect and develop the early-stage pipeline of growth opportunities.?

One company who received investment via the Early-Stage Growth Challenge Fund is Trojan Energy Ltd, the Stonehaven based electric vehicle charging system developer. The Fund helped the business to weather the impact of Covid-19 and ensure?it was?able to bring forward the commercialisation of?its innovative technology.?The company also benefited from support via our scale up service helping the company to accelerate its growth plans and further co-investment funding ??in 2021 alongside Equity Gap and Alba Equity is supporting the roll-out of its on-street electric vehicle charging hubs.

Like the Scottish risk capital market, 2020-21 was an extremely busy year for Scottish Enterprise’s investment activities. ?We transacted a staggering 177 deals investing ￡78m alongside a diverse range of investors, including venture capital firms, private equity, corporates and business angels, who invested a further ￡122m, with ￡23m of that coming from international investors.?This activity saw us add 67 new companies to our portfolio, many of those raising investment for the first time, taking our portfolio to over 340. The companies we funded last year, expect to create over 900 additional new, quality Scottish jobs and make a positive contribution to the communities where they are located, invest at least ￡62m in research and development activities and over ￡11m of capital expenditure, so the benefits are going far and wide. Helping companies understand and navigate the funding landscape was particularly important last year and via our Financial Readiness Service we provided funding advice to over 350 companies, who then raised over ￡51m of growth capital.?

I am frequently in awe of the companies in our portfolio, the drive and enthusiasm of their management teams, the way in which they see an opportunity, bring a new technology or business model to market, and identify where they can stand out and succeed is not only inspiring, but key to enabling Scotland’s future economy. Our job at Scottish Enterprise is to help these businesses accelerate their growth journey by providing commercial investment as well as specialist support and advice such as accessing new markets, access to talent and specialist input in areas such as intellectual property and sustainability.?

Scotland continues to be recognised as having one of the strongest equity risk capital markets in the UK.?We should all be proud of what we have collectively done to grow our market over the past decade - but we need to be alive to the drift of private investment away from the very early and higher risk stages, as well as to other markets.?Working alongside our world class Universities, entrepreneurs, and committed investor base, we need to continue to foster a supportive eco-system in Scotland, working with the compelling early-stage opportunities that can then progress to attract larger rounds of investment supporting the next stage in a companies’ growth journey.?

Last year, we saw a number of successful exists from our portfolio which contributed to the income we generated of ￡56m from our investment activities, which is recycled into further economic activity. ?Symphonic Software Ltd was one of those successful exits. ?SE supported this business, who are an industry leader in dynamic and intelligent authorisation software, from initial proof of concept and spin out from Napier University, providing wrap around start up support and funding. Our support in the early stages helped them develop their technology and accelerate commercial deployment. We supported the company right through its growth journey from spin-out to its successful exit to Ping Identity, providing commercial investment alongside Maven Capital and Par Equity. ?

A personal high point for me last year was the IPO of Calnex Solutions , a world leader in testing and measurement solutions for the telecoms industry, the first Scottish IPO in two years – a tremendous Scottish success story, with the business continuing to see continued growth from their base in Linlithgow. Calnex started out with encouragement from one of SE’s high growth advisors and benefited from SE’s tailored advice, guidance, and funding along the bumpy path of any start-up, gaining commercial investment in 2007 and 2009 from Scottish Enterprise alongside Discovery Investment Fund Ltd supporting their growth acceleration and scale up towards IPO.?

You would be surprised if I didn’t reflect on such a strong year without talking to the most significant common goal of our lifetime – achieving Net Zero.?Having delivered the Energy Investment Fund on behalf of the Scottish Government?since?2012?to help enable and?accelerate?Scotland?as?a low carbon economy, last year we supported more?community?companies and?our?existing portfolio continued to generate world firsts.??The Morvern Community Development Company is a great example of a 100% community owned?project. Our funding was vital in bringing together a funding package alongside?Tridos?Bank?UK?to bring the development of a 142m hydropower scheme on the Barr River near Loch?Teacuis to fruition. It is the largest Scottish community owned?hydro?scheme with 1.6MW installed capacity,?generating enough to power around 1000 homes and is expected to operate for at least 50 years.?All profits from the project will be channelled back into the local community contributing significantly to the aims of the Community Growth Plan such as exploring further renewable energy projects and delivering a wide range of projects to benefit the people living on the Morvern Peninsula.

With COP26 fast approaching, it gives us the platform to let the world see how Scotland is playing a lead role in the development of tidal energy. Two of our portfolio companies are very much leading the way. Sustainable Marine Ltd continues with its exciting plans to deliver the world’s first floating tidal array after unveiling its next-generation platform and Orbital Marine Power Ltd, ?which is attracting interest from global investors through the Green Investment Portfolio, building on the success of its world leading 2MW turbine which is currently generating power in Orkney.

The challenges we all faced last year, whether on a business or personal level, are a stark reminder that our paths are never straight forward, there will be bumps in the road, and some of them pretty big, unexpected bumps and the impacts can be far reaching. Whilst we might get pushed off the path slightly, or slowed down somewhat, we need to continue on the path to support Scotland’s highly innovative, ambitious, impactful, high growth, early-stage businesses to support our future economic growth. If we work in strong collaboration right across the Scottish eco-system in a way that is focused on helping these ambitious Scottish companies achieve their full potential, at the heart, we will collectively deliver the results, we all want to see.

To find out more about our co-investment funds and loan funding please visit www.scottish-enterprise.com/investment