Braveheart chief sets investment sights on England

Published on Sunday 27 April 2008 20:56

Geoffrey Thomson is making his own piece of history.

HE MAY not be as famous as William Wallace, but Braveheart's Geoffrey Thomson might yet claim his own place in the Scottish history books. As the co-founder of Braveheart Investment Group, Thomson is one of the leading pioneers of the angel investment movement in Scotland – which, in turn, is billed as one of the most advanced markets of its type in Europe.

Now, the Perth-based firm – believed to be the only angel investment group in the world to have floated on a stock exchange – is planning to expand south of the Border to harness wealthy would-be investors in England.

Thomson recalls: "In 2003, we were already an informal investment group, making some good money out of things like Wolfson (Microelectronics]. But we decided that rather than being a loose group of business angels, we would do things together. We set up a company and got people to invest."

The investment guru, who formally launched Braveheart in 2003, along with Garry Watson and two other Scottish businessmen, told shareholders that he was planning to float the newly-formed firm as soon as possible, doing so on London's Alternative Investment Market last year.

"The Scottish angel investment market is well ahead of the rest of Europe," Thomson beams. "What is interesting is that no-one has ever floated a business angel syndicate before. Being a public company, it means that Joe Bloggs can buy one share and, by doing so, he indirectly invests in our portfolio companies."

The company recently announced that it is considering making an offer for Angle, a Surrey-based investor in early-stage technology companies, in a move that would double the size of Braveheart's business.

The offer is believed to be at 60p a share – more than double its current share price and valuing the company at around 16 million.

And Thomson has also got his eyes open to other possibilities in England, where he says the Braveheart name looks set to be an advantage, attracting English investors drawn by the "canny Scots" image.

While Braveheart receives approaches from hundreds of companies every year and seriously considers just 30-40 of them, it usually only invests in about four or five, with an average investment of around 5m a year.

Its current portfolio of 36 firms includes Gourmet Burger Kitchen-owner Clapham House and a host of start-up technology companies, such as Spiral Gateway, a mobile phone technology firm spun out from Edinburgh University. Thomson says: "The skill is finding the good prospects.

"The rule of thumb is that as long as the good ones make twice the money, we're OK. Everybody needs luck, but also good judgment. When you get a company that makes ten or 20 times the investment, it is fantastic.

"We narrow the odds substantially by doing due diligence and knowing the sector very well, but you still can't guarantee anything."

While the group hasn't always had good luck with its choices, Thomson says the poor decisions are often weeded out quite quickly.

"The lemons ripen before the limes," he notes. "Of course, we have had bad investments and a few little disasters," he laughs.

"There was one company, which shall remain nameless, where we just knew the marriage wasn't working. We got divorced from them very quickly."

Of the companies Braveheart does choose to invest in, the "marriage" usually lasts an average of 35 months, but can vary between just a few months or three years.

And while Braveheart's main focus will remain on technology companies, Thomson says he is considering expanding the firm's limited leisure portfolio, which currently consists of Central Pubs as well as restaurant group Clapham House.

"I think we would respond to what out investors want and would look at other options if a client wanted something other than our core offering," he explains. "But our main strength is in the early-stage technology stuff."

Of Braveheart's 36 portfolio firms, just six are based south of the Border, but Thomson hopes to change that.

He says: "I think we have to go where the business is. We're looking at places like the University of Bath, and there is a lot going on at the University of East Anglia, too.

"There is good stuff in England and now that we're a public company, we may be seeing more of that." He adds that while Braveheart is in a good position to weather the storm of the credit crunch, he is having to look beyond Scotland's shrinking pool of investors to grow the firm.

"It is very tough for companies to raise money at the moment. And, as far as we are concerned, we're heading into very difficult times and there will be a dearth of early-stage companies in the near future. Also, investors are changing their habits and their appetite is diminishing in current market conditions and we have to go where the money is and look to get extra investors from elsewhere. In England, there are high-net-worth individuals who might want to get involved."

Thomson, who openly admits he named his firm with the 1995 Mel Gibson epic in mind, adds: "I always thought the Braveheart name would be a problem in England, but it seems to be a good thing. In Scotland, we're good at financial services and people respect that."

He muses: "I do try to be a canny Scot myself." Wallace would be proud.