The stellar idea has been hatched and the team is full of ambition and expertise – so far so good. The funding to take it to fulfilment, though, can be challenging to find. 

That’s the dilemma facing many Scottish companies, whether at start-up stage or more established companies looking for additional funding to grow and scale. 

Derek Shaw, Head of Investment Management at the Scottish Investment Bank (SIB), the investment arm of Scottish Enterprise (SE), explains the extensive support available to help companies identify and secure the funding they need to grow as well as the wide range of funding options available from SE, including loans, grants and equity investment.

“Scottish Enterprise is keen that companies with the ambition to grow speak to us about their plans because in many cases we can offer the help that will allow them to realise their goals,” he says.

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KEEN TO MAKE CONTACT: Derek Shaw of Scottish Investment Bank.

The scope, he adds is a broad one: “SE can work with companies across the scale – small, medium-sized and large companies, from start-up and early stage through to established companies looking to scale and grow.

“We’ve got a real appetite to work with businesses of any size who have the ambition to compete in the global marketplace, to be competitive, to increase their productivity and to achieve sustainable growth in Scotland. We also want to help companies export their products or services, to become truly international in their outlook.”

“The overall message is that Scottish Enterprise has a range of support available to companies to help them secure the funding needed for growth, as well as a range of funding options to support companies directly”

“We’re reaching out to companies with a real appetite for growth, innovation and exporting, encouraging them to have an early discussion with us about their plans and how we can potentially help.

“We have a team of specialists that can assist companies in putting together a business plan that is funder ready and work with them to identify and secure the right type of funding for the business at that particular point in time,” he says.

That funding, he adds, is tailored carefully to the business and its current and future needs and can include debt, equity or grant funding. Grants are available for companies engaged in R&D, job creation and capex expenditure. For example, an R&D grant could enable a business to research an innovative new product or service whilst SE’s Regional Selective Assistance  (RSA) can help companies create new jobs in Scotland.

Derek explains: “Companies that are innovative and have products or services with export potential, are the types of companies which will grow faster, provide better jobs and be more sustainable. Indeed, if you are innovating you are twice as likely to export, and if you do both you create sustainable growth”. 

Last year, SE helped companies secure £315m of planned R&D investment, with grant funding helping companies unlock £215m of additional capital investment in Scotland. In addition, the organisation supported 75 companies with £14m of RSA funding to support expansion and create new jobs. 

“These numbers are really transformational,” he says. In addition to grant funding, the Scottish Investment Bank makes commercial equity and loan investments alongside a range of private sector funders. Equity funding often provides vital capital in the early stages of a high-growth company where alternative sources of funding are not as appropriate with SIB potentially providing up to 50% of the funding needed by a company where there is a gap in their overall funding package.

Commercial loan funding, on the other hand, may be attractive to established viable businesses that are seeking additional working capital, or funding to invest in their facilities or equipment that they can’t, for a variety of reasons, get from traditional lending sources.

SE believes there are grounds for optimism about the levels of investment in Scotland, with the underlying market showing a doubling of investment in new and earlier stage equity deals over five years ago, a testament to the strength of both the entrepreneurial and internationally diverse investment ecosystems and the highly innovative companies at various stages of development that are thriving here.

Indeed, last year, SE worked with over 500 companies to help them identify the most appropriate type of funding for their business, to get “funder ready” and help them secure the funding those businesses needed. SIB invested over £43m into 147 companies, leveraging more than £200m of private sector investment.

“Where there is a gap in the overall funding package or where funding is needed to deliver the project more quickly and efficiently, we can help,” says Shaw, who adds that Scotland is competing with other UK and regions and European countries for inward investment opportunities.
“Our funding and wider support can often unlock significant inward investment,” he says.

All in all, 2019 could be a landmark year of growth for many Scottish companies. “We are encouraging companies who have ambitious plans for growth and need help and support to deliver their goals to have an early conversation with us,” says Shaw.

“There is a broad range of funding available to suit your business needs throughout its lifecycle and a simple and straightforward application process.”
 

Visit www.scottish-enterprise.com/funding-growth to enquire about your business requirements and funding options.

Drug firm valued at $550m a decade on from support

NuCana is a clinical-stage biopharmaceutical company focused on significantly improving survival outcomes for patients with cancer. Scottish Investment Bank’s early 
funding of £2 million helped leverage major investment for the Edinburgh company.

In October 2017 NuCana plc raised $114 million through an Initial Public Offering of shares on the US Nasdaq valuing the company at approx. $550million. The listing positions NuCana to continue its rapid growth, with the aim of getting new life-saving cancer drugs to market as quickly and efficiently as possible.

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When Hugh Griffith set up the company in 2008, he had recently sold BioEnvision, a highly successful company also based in Edinburgh that had developed and commercialised a new medicine for the treatment of children with acute leukaemia. 

In the 10 years since, he has grown NuCana from a start-up with three employees to have a staff of 20 at the Edinburgh headquarters and a total team of 50 worldwide.

The company aims to transform some of the most widely-prescribed chemotherapy agents, nucleoside analogs, into safer and more effective medicines and using proprietary technology it is developing new medicines, ProTides, designed to overcome key cancer resistance mechanisms and generate much higher concentrations of anti-cancer metabolites in cancer cells.

One, Acelarin, is being evaluated in a number of different clinical studies including biliary tract cancer, ovarian cancer and pancreatic cancer.

Development was initially funded with private investment but it was clear to CEO Hugh Griffith that additional finance was essential. In 2009 he set up Alida Capital International as a business angel syndicate for his own and others’ investment. Scottish Investment Bank (SIB) recognised the potential and became co-investors with Alida.

Between 2009 and 2011 SIB invested a total of £2m over several rounds of finance. 

“SIB’s ability to match our own investment and its commitment to NuCana helped us reach the point where we could attract institutional finance,” says Griffith.

“We used the funding from these first rounds to take Acelarin into the clinic to treat patients with advanced cancers. 

“The fact that the safety profile proved acceptable and we were beginning to see early signs of efficacy gave the venture capital community confidence to invest.”  

By April 2014 NuCana raised $57m in a Series B round led by US venture capitalists and growth over the next three years led to it being floated as a public company on Nasdaq in 2017. 

This launched the next stage of NuCana’s development with institutional investors such as Capital Research Global Investors, Capital World Investors, Baillie Gifford, Alliance Bernstein and UBS Asset Management participating.

The $114m raised on Nasdaq is the largest ever IPO for a Scottish life sciences company and NuCana is now fully funded into 2020.

‘Social distillery’ growth creates vital jobs on Harris

From the outset, the Isle of Harris Distillery has been known as the social distillery. Launched in 2015, the business has brought new jobs to the island and benefited the local economy.

Investment from Scottish Investment Bank (SIB) along with other public and private funding helped to establish the company, whose success has exceeded expectations in the first three years.

The distillery currently produces a multi-award-winning gin and distillation, bottling and order fulfilment all take place at Tarbert on Harris. The long-term plan is to focus on whisky, with casks of a single malt, The Hearach, maturing in a warehouse by the shores of Loch an Siar. A visitor experience provides the third element of the business, attracting over 80,000 visitors last year.

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EXPANSION: SIB funding encouraged others to invest in Isle of Harris Distillery.

Ron MacEachran, one of the original group of investors and now company Chairman, has worked closely over the years with fellow members of the core project team - Anderson Bakewell (founder Director and the company’s first Chairman), Simon Erlanger (Managing Director) and Alison MacKinnon. Ron led the funding and construction stages for the distillery, including liaising with the Scottish Investment Bank.

He is positive about the support from SIB. “When we began discussions, late in 2011, we had around £2 million of private investment. SIB’s willingness to consider matching this with a further £2m of equity made it easier for us to attract other investors.”

Isle of Harris Distillers went on to raise a total of £11m from a number of public and private investors. In addition to the £1.5m from SIB, the company was awarded a £1.9m grant from the Scottish Government’s Food Processing, Marketing and Co-operation scheme and also attracted £1.2m in grants from Highlands and Islands Enterprise. The remaining £6.6m came from private UK and international investors prepared to commit to a long-term project.

MacEachran comments: “SIB’s involvement was critical at two points – at the outset, and at the completion of fundraising. 

“As we concluded the funding phase, drawing investors together, SIB was pragmatic and supportive while ensuring its own interests were protected. This enabled us to close out the fundraising phase and move on to construction of the distillery.”

The largest inward investment in Harris for the best part of 100 years has created 30 permanent jobs for local people which has also created a positive and optimistic outlook and is, he says a good example of how the public sector can align with the private sector to create a commercial vehicle that benefits a community and a range of stakeholders.

Simon Erlanger, Managing Director of the distillery, says one focus was to recruit young people from the island. “We’ve taken two school leavers, with others to follow, into employment which has allowed them to stay on the Island rather than have to leave to find work,” he says.