THE Braveheart Investment Group run by Geoffrey Thomson fell deep into the red in the first half, when the costs of the unsuccessful acquisition of the Envestors corporate finance business weighed on the bottom line.

Announcing a pre-tax loss of £845,000 in the six months to September, the Perth-based group said £805,000 of the losses were attributable to the Envestors business, which it sold last week.

The costs included a £610,000 provision against the valuation of the goodwill Braveheart acquired through the £2.5 million all-share purchase of Envestors in 2010.

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Braveheart said recent trading had been poor at Envestors, which made significant losses due to high fixed costs.

Asked whether the takeover had been a mistake, Mr Thomson said: "Looking back it was not a good acquisition to make."

Mr Thomson said Braveheart had extended its network of contacts and knowledge of overseas markets through Envestors.

He added: "That business was going ok but the wheels really came off in quarter one... Demand for corporate finance advice did not seem to be there."

Mr Thomson said the rise of crowd-funding websites, which allow firms to raise money direct from the public, seemed to have impacted on demand for such advice.

"There's more DIY schemes going on and there are bigger deals happening on crowd-funding sites, up to a couple of million pounds," he said.

Mr Thomson noted some other corporate finance businesses had faced challenges.

Deal activity dropped amid the economic slowdown from 2008.

But Mr Thomson does not believe the emergence of crowd funding raises questions about the need for the kind of business angel investment syndicates that Braveheart has fostered.

"There's always going to be safety in numbers, investors like doing things together," he said.

The sale of Envestors also reflected Braveheart's decision to focus on fund management activities.

Mr Thomson said firms could generate stable long-term earnings from managing funds. Braveheart had £121m under management at 30 September. Activities include managing the £43m Finance Yorkshire Equity Fund.

By contrast, corporate financiers' income can be lumpy and heavily dependent on the success of the teams they advise.

Braveheart said its employee benefit expenses would reduce by around £450,000 annually as a result of the Envestors disposal. Employee benefit costs totalled £1m in the first half.

The Aim-listed company may make further acquisitions.

Braveheart said it was considering a number of opportunities to accelerate growth in its chosen areas. Mr Thomson said it might acquire portfolios of investments made by other fund managers in the expectation it could sell off the holdings at a profit.

The company has stakes in 19 firms, mainly in technology, including 18 in Scotland. The portfolio was developed when Braveheart focused on angel investing.

The book value of the investment portfolio fell to £3.57m at 30 September, after accounting for an unrealised loss of £22,000 in the period.

Braveheart said it was working on some exits which it expected to provide a good return on capital.

The company looks after the portfolios of high net worth angels through its Strathtay Ventures arm.

It recorded £1.32m fee-based revenue in the first half, in line with the same period last year.

It made £67,000 pre-tax profit in the first half last year.