Capital investor makes critical £200 million funding pledge to Scottish businesses

Scottish businesses with high-growth potential are in line for a £200 million boost after a new pledge from a key capital investor.

BGF, formerly the Business Growth Fund, has made the commitment as part of a £3 billion UK-wide promise to support fast-growing companies over the next five years. The latest pledge builds on the £391m already invested in Scotland since 2011.

BGF says its “regional-first” approach is designed to address disparities in capital access and support entrepreneurial ecosystems across Britain.

Members of the BGF Scotland and Northern Ireland team. Picture: Chris Watt Photography

As part of the broader UK-wide pledge, BGF has committed £300m to “female-powered” businesses across the UK, making it one of the largest initiatives of its kind. This follows a £25m commitment to the Invest in Women Taskforce (IWT), which helped unlock in excess of £250m of investment in 2023.

Since 2011, BGF portfolio companies across the UK have driven £7.1bn in revenue growth, £1bn in export growth, and created more than 27,000 jobs, according to the group. With 74 per cent of its capital invested outside London and the south east of England, BGF sees itself as being “uniquely placed to reduce regional inequalities”.

Paddy Graham, regional partner, Scotland and Northern Ireland, said: “Scotland has long been recognised for its innovation and entrepreneurial energy. Our new £200m commitment builds on a strong foundation and is focused on unlocking even more opportunities for Scottish scale-ups to thrive.”

The new £3bn commitment from BGF ramps up the £2.3bn invested between 2020 and 2024. The capital will be deployed across a range of sectors to accelerate economic growth and support entrepreneurs in Scotland, it added.

Sulmara, an independent provider of survey and inspection services to the offshore wind and energy markets, is a BGF portfolio company. Picture: Paul Box

The Invest in Women Taskforce noted that female entrepreneurs remain underfunded in the UK, often receiving just a fraction of available capital. Data from Beauhurst shows that in 2024, just 2 per cent of UK equity investment went to all-female founded teams, down from an already low 2.5 per cent in 2023.

BGF’s new commitment aims to help close this gap, unlocking opportunities for diverse leadership and driving economic growth in every region, IWT added.

Debbie Wosskow, co-chair, Invest in Women Taskforce, said: “This is another historic moment. BGF’s 10 per cent commitment to female-powered businesses is significant; at £300m in total, it builds on our already ground-breaking progress with the Invest in Women Taskforce, and is one of the largest ever made in the UK.

“It marks a turning point in how we back women-led enterprise and setting a minimum proportion of invested funds is exactly the kind of action that can start to reshape our business landscape for the better. Yet the scale of the challenge is vast - we need more institutions to show the leadership and vision that BGF has by pledging support to female entrepreneurs and investors, and reap the commercial returns and economic benefits it can yield.”

Andy Gregory, chief executive of BGF, added: “We’re committing at least £300m in female-powered businesses because we believe the next wave of great British entrepreneurial businesses will be far more diverse. This is about shaping a future that reflects the talent of the whole UK. Now is the time to turn good intentions into meaningful action - and that starts with investment at scale.”

BGF claims to be the “most active investor” in female-led scale-up ventures for the past five years, having provided some £500m since 2011. The new commitment represents a significant step up from previous investment. BGF backs earlier-stage businesses in the life sciences and “deep tech” sectors, and growth-stage businesses typically generating between £1m and £10m in profit. It provides patient capital as a minority equity partner.

Initial investments in growth-stage business are between £3m and £30m, and between £3m and £10m for earlier-stage businesses. BGF provides follow-on funding to support further growth, and “tailored value creation support” from investment to exit.

With a local team based in Edinburgh, BGF ensures close collaboration with Scottish founders and businesses.

Example investments north of the Border include providing £15m for Sulmara, an Aberdeen-based low carbon offshore specialist, to support the company’s global growth and investment in new technologies. Meanwhile, BGF-backed Strathberry, the Edinburgh-based luxury brand, has announced plans to target £100m of revenues in the next three years.

In March, it emerged that the amount of money being pumped into smaller businesses in Scotland rebounded last year after a tough 2023, with the nation ranked top for deal numbers outside of London.

Releasing its latest research, the British Business Bank said that during the first three quarters of 2024 the overall investment value of announced equity deals involving smaller businesses in Scotland rose 14.2 per cent on the same period the previous year, to top £407m. That increase was more than double the UK-wide gain of 6.6 per cent.

While the actual number of transactions dropped slightly, by 1.5 per cent to 135, this was the second best year-on-year change among the UK’s “nations and regions” and well ahead of the average drop of 24.3 per cent.

Dedicated funding

In late 2023, the state-backed British Business Bank launched its £150m dedicated Investment Fund for Scotland to increase the availability and supply of finance to all parts of the country.

Susan Nightingale, director, UK network, devolved nations at the British Business Bank, said: “Our report’s findings underline the strength and resilience of Scotland’s smaller business community and the financial ecosystem that supports it.

“With interest rates on a downward trajectory, financing conditions are improving and that should create a more supportive environment for finance into 2025.”

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