Fall in SIB investment into Scottish growth companies but private input rises

The total means that funding for companies through the Scottish Government’s investment arm has declined by £14 million over the last year.

But the SIB said the investments leveraged almost three times as much private sector cash – £277 million in 2015-16 compared to £99 million the prior year.

This includes the investment of over £12 million into 13 established SMEs through the Scottish Loan Fund, managed by Scottish investment house Maven Capital Partners.

Key results include:

Leverage: investee companies leveraged £277m of private sector investment, reflecting the growing strength of investment opportunities in Scotland and companies’ success in attracting growth capital.

Income: investment activity generated a record income of £35.7m during the year, following 12 successful exits. This is a positive signal of the health of the Scottish early stage risk capital market and these exits will facilitate further investment into a new cohort of ambitious Scottish companies.

International activity: over 50 international VCs and corporate investors backed investee companies, as SIB continued to build its investor base both domestically and internationally. This illustrates the vibrancy of Scotland’s investment market and the high calibre and international appeal of Scottish companies.

Investor support: SIB’s team of financial readiness specialists supported 418 companies preparing to raise finance.

In terms of economic impact, SIB’s activity has resulted in a growth in economic benefits. SIB investee companies supported over 3,700 full time jobs in Scotland during the year, and, working alongside private sector partners, SIB helped these investee companies achieve a combined annual turnover exceeding £550m.

SIB’s aim to support companies with international ambition also paid off during 2015-16, as international sales by SIB investee companies continued to grow to over £220m.

During 2015-16, SIB supported Scotland’s strong focus on renewable energy through £9.85m of investment into 10 marine and community renewable energy, through the Renewable Energy Investment Fund (REIF) delivered on behalf of the Scottish Government, leveraging £33m additional private and public sector investment.

Kerry Sharp, head of the Scottish Investment Bank, said: “It’s been a very good year for the Scottish Investment Bank. The results illustrate the impact that our activity is having on the Scottish economy, both in terms of actual investments made and the support we’re providing to companies in helping to prepare them for investment.

“In line with the Scottish Government’s ambition to support more companies to access growth finance, we’re aiming to work with more companies at different stages of development, to help them identify and access appropriate finance from both existing and new sources.

“As such, we’re working hard to improve access to capital for Scottish companies. Under our expanding remit we’re focusing on improving the diversity of funding available for companies in Scotland and we continue to seek out the best ways to address emerging market gaps and identify additional sources of capital for investment into Scottish companies.”

Keith Brown, Cabinet Secretary for the Economy, Jobs and Fair Work, added: “I welcome the positive performance delivered by the Scottish Investment Bank, which is continuing to support early-stage innovative companies to access risk capital investment, providing equity investment alongside private sector partners.

“This is a key element of the Scottish Government’s efforts to enhance the support available for SMEs. It forms part of a comprehensive set of initiatives that will help companies seeking to get started and grow – stimulating growth and supporting jobs. That includes the introduction of the SME Holding Fund dispersing European resources and the new Scottish Growth Scheme, announced as part of the Programme for Government, which will seek to leverage the release of capital by removing uncertainty and share the risk that high growth potential businesses face when making investment or export decisions.”