Equity Gap eyes expansion after record year

The group undertook 18 transactions during 2018, consisting of six with new companies to its portfolio and 12 follow-on funding rounds for existing clients with a £2.8 million round for Shotscope concluding the year.

A record six deals were transacted at more than £1m, including follow-on rounds for peer-to-peer platform LendingCrowd and heat battery developer Sunamp, and seed investments in life sciences firm EnteroBiotix and Drinkshare, the parent of beer subscription outfit Flavourly.

Equity Gap invested £5m last year, taking the total invested in its portfolio since it was founded in 2010 to £12.5m. This activity leveraged a total investment into the portfolio of £17.5m for the year, factoring in the involvement of partners and other stakeholders, taking the total invested into the companies, since inception, of £48m.

The value of the group’s investments has risen by £6.9m in the past year to £15.5m, while the total (notional) value of the companies within its portfolio has increased by £23.3m to £58.1m.

The year saw the company’s own revenues rise significantly which has allowed Equity Gap to invest in its systems and hire staff. Equity Gap’s headcount rose to six, including the appointment of Andrew Coleman as an investment and portfolio manager and Julie Foster as its finance and administration manager.

Mr Coleman became one of the firm’s investors two years ago and is chairman of MiAlgae, one of the companies that Equity Gap has supported.

The investment group expects to make a further two appointments as it expands its operations and forges closer links with the mergers and acquisitions (M&A) market.

Jock Millican, director of Equity Gap and also chairman of the LINC Scotland angel capital association, said: “Investing £5m during 2018 came on the back of busy years in 2016 and 2017 as well.

“This cash has allowed the companies in our portfolio to ramp up their own growth, creating jobs and helping to grow the wider economy here in Scotland.

“We work in partnership with the Scottish Investment Bank and with other business angel syndicates, demonstrating the strength of the funding ecosystem and the availability of capital for the right companies.

“What’s most exciting for me is that we’ve continued to back start-up companies, with other investors introducing us to opportunities throughout a range of sectors.”

Equity Gap gained a further 40 investors during 2018, taking its tool pool of active business angels to 160.

Last year’s investments included a funding round for corrugated cardboard maker Interpac, the first time it has worked with a company outside Scotland.

Fraser Lusty, investment director at Equity Gap, added: “Our primary focus will always remain on Scotland, but we will always look at the right investments in other markets.

“Interpac is interesting because its production process emits 90% less greenhouse gas and so is more environmentally sustainable.

“Expanding our team will allow us to look at further opportunities in the rest of the UK and to increase our links with other stakeholders and potential acquisition partners.

“Developing our links with wider corporate finance and venture markets will also help our portfolio companies as they continue to grow and want to move towards the right exit deals for their investors.”