Business Angel investment struck record levels in Scotland last year, but the industry body yesterday warned that future investor spending will be jeopardised if the government goes ahead with its proposed changes to capital gains tax.
Business Angel investment struck record levels in Scotland last year, but the industry body yesterday warned that future investor spending will be jeopardised if the government goes ahead with its proposed changes to capital gains tax.
A total of £14.1m was invested in 61 separate deals by business angels in Scotland last year, against just over £11m the previous year, according the figures released yesterday by LINC Scotland, the angel capital association.
Overall, these deals generated more than £28.5m of investment in Scottish companies, with the £14.1m of angel money leveraging an additional £7.1m of other private funding sources and around £7.4m of public investment, mainly through the Scottish Co-Investment Fund, a Scottish Enterprise initiative set up in 2003.
David Grahame, LINC's chief executive, said: "While I am delighted to see us exceeding £14m in total angel investment in 2007, and the first quarter of 2008 looks very strong, I am also concerned about the impact the government's plans to increase capital gains tax levels from 10% to 18% could have on our members.
"Given the degree of risk which entrepreneurs and the business angels who back them undertake, it is important that they are sufficiently rewarded for those companies which are ultimately successful."
Grahame added that the proposed increase in capital gains tax could thwart future investment in start-ups and emerging companies, and that it would "eventually impact on Scotland's economic growth and job creation, especially within high-value sectors".
Nonetheless, investments during 2007 were made throughout a wide range of sectors, with a particularly strong focus on information technology and life sciences, the LINC figures reveal.
Some of the angel-led deals of 2007 included funding for Glasgow-based contact lens IP firm, Ocu-Tec, Bellshill firm Lamellar Biomedical, which is pioneering a new treatment for cystic fibrosis, and Linlithgow-based Calnex Solutions which produces test instrumentation for the telecoms industry.
The latest LINC data reveals that last year's record levels of Scottish angel investment continue five years of steady progress within the sector, which has seen more than £53m worth of angel investment since 2000.
Moreover, this additional private and public-sector funding has released a total of £147m of capital investment into Scottish businesses via angel activity since the millennium.
