THE number of early-stage investment deals brokered for start-ups by Harper Macleod has surged over the summer, as the law firm cited a rise in entrepreneurialism in Scotland.
Harper Macleod said its corporate team advised on 10 deals worth a total of £3.25 million over a six-week spell this summer.
The activity, which saw the firm line up finance for start-ups in the healthcare and recruitment sectors, was up 30 per cent on last year in volume terms. It was also up narrowly by value.
The surge led to Harper Macleod topping the monthly table compiled by Young Company Finance for deals notified by law firms for the first time.
Bedi OralCare and Flexiworkforce are among the firms the Glasgow-based firm secured backing for over in the period, with investment coming from angel syndicates, crowdfunding and traditional capital investment.
Bedi, which designs dental products for people with disabilities, dementia and for young children, received £100,000 from Kelvin Capital, the Glasgow-based angel syndicate.
This was secured via the Enterprise Investment Scheme (EIS) and the Scottish Investment Bank, the investment arm of Scottish Enterprise. Kelvin Capital also backed Flexiforce, which helps job seekers find flexible working opportunities, with £150,000 of investment.
Harper Macleod partner Paula Skinner, who specialises in advising high-growth start-ups, said the increased activity comes as more people in Scotland look to take charge of their own destinies.
And she said the emergence of alternative sources of funding for start-ups was not specifically linked to a shortfall in bank lending.
"I don't think these are businesses that would possibly have got bank funding in the good old days," Ms Skinner said. "Maybe some of them would, but they are not a lending play because a lot are pre-revenue - they are an equity play.
"What I do think has happened recently, particularly in Scotland, is that there are new syndicates appearing, the likes of Kelvin Capital and Lancaster Capital. In the west and in the Borders new investment syndicates are being set up, which helps spread the message about early stage investment in Scotland and also the tax benefits.
"The new syndicates starting up are doing their bit to increase the awareness of the opportunities out there."
Ms Skinner expects the growth in early-stage funding to continue to rise, noting that three further opportunities landed on her desk last week.
All operate in the healthcare sphere. "We see that continuing," Ms Skinner added.
"Whether we do 10 in six weeks in the short-term is probably unlikely, [but] certainly between now and Christmas we have a good pipeline, particularly in the life sciences, healthcare sector, and technologies for renewable energy."
Harper Macleod's growing involvement with start-ups comes amid heightened awareness of entrepreneurialism, which Ms Skinner said this has filtered through to the education system in the shape of focused schemes such as Mirco-Tyco.
"When I was at school everything was always [geared at] going to university and that's it - you went and got a job," she explained.
"It was never that you could start your own business."
"My sister is a primary school teacher and I know from her that they teach more life skills than ever."
Asked why a start-up would go to the cost of enlisting a law firm to help secure finance, Ms Skinner said the fees it levies on early-stage businesses are competitive and also fixed.
She also said entrepreneurs coming to Harper Macleod can be advised on everything "under one roof", from intellectual property, employment law as well as their internationalisation plans.
"From our point of view, we want to work with clients long term," Ms Skinner said. "That is my ideal type of client, one we can work with from the very beginning until an exit.
"We will probably take more pain at the earlier stages, on the basis it is long-term relationship and we will reap our rewards when there is an exit, when everyone reaps their rewards.
"That's why we try and work with them at an early a stage as possible."
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