THERE has never been a better time for young entrepreneurial talent in Scotland to set up a company. Now that banks are no longer putting money into early-stage companies, a wide range of angel investors is coming forward to fill the gap.
Certainly for companies looking for up to £1 million, the Scottish angel community is buoyant – if you have a viable proposition.
But while software companies, for example, have a good chance of securing the investment they require, those in the life sciences, energy and electronics sectors need considerably more to get their businesses up and running. Funding of more than £1m is generally beyond most angel investors in Scotland and there are only a few venture capital companies operating in Scotland capable of offering this level of investment. Addressing this gap by attracting more venture capital to Scotland is vital to offer businesses funding for serious growth and something that the forthcoming EIE13 investor showcase, being held tomorrow at the Assembly Rooms in Edinburgh, is designed to promote.
Small to medium-sized companies are the lifeblood of the Scottish economy, and we need to continue growing new companies into significant businesses that employ lots of people. In this respect, internationalisation is important, particularly as the growth in online activity favours companies looking to do business on an international basis.
However, I believe we have to continue to develop initiatives to encourage younger people to set up their own companies, especially mentoring, so that these smart young people can work with those with commercial business experience to build growing enterprises.
Over the past 20 years, Scotland has changed a lot. I believe we are more joined up, as people realise we are all part of the same eco-system, with everyone doing their bit to help build the economy. The future lies in cultivating a large number of small private companies to create a continual pipeline from which, in the right environment, many more Scottish-based global giant companies will emerge and flourish.
• Gordon Stuart is senior executive of Informatics Ventures.