Fast-growing Scots tech firms targeted by new £25m fund

Scotland's technology sector has been given a fresh boost after a Stirling-based investment syndicate pushed the button on a £25 million fund.

Steven Morris, founder and CEO of ESM Investments. Picture: Graham Flack
Steven Morris, founder and CEO of ESM Investments. Picture: Graham Flack

ESM Investments is looking to attract high net worth individuals throughout the UK to pool funding through its newly established venture capital trust (VCT).

The money is being earmarked for “next stage” technology developments, with ESM arguing that the role of the investor is fundamental to the success of many new innovations due to the short time-frame involved in getting to market.

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Since its formation in 2011, ESM has invested some £8m in technology start-ups across a number of sectors including energy, finance, media and the arts. Through the new VCT it is seeking to grow its investor base from 80 to 200 individuals.

Steven Morris, founder and chief executive of ESM Investments, said: “We have tremendous confidence in the Scots based technology sector. We believe now is the right time to scale up with new funding to support next stage developments.

“New investment is critical to technology businesses to take ideas through implementation and deliver success. This benefits the entrepreneurs and engaged investors.

“We have a stream of opportunities presented to us on a regular basis and, in Scotland, an unrivalled tradition and strength in depth of an investment community to support them. Without this support many great ideas are commonly halted six months after inception.”

Morris, who has worked in the IT industry for more than 20 years, founded and exited two businesses and is currently personally invested in ten more. He was recently enlisted by Stirling Council as a “city commissioner” to develop new opportunities in the area.

He added: “The funding and ongoing support of an invention is in many ways as important as the invention itself. We have a sharp focus on Scots based technology developments and continue to see them as exceptional investment opportunities.

“That is the primary driver behind the launch of the VCT.”

Shares in venture capital trusts trade on the London Stock Exchange. Income tax relief on investments up to £200,000 per year in newly issued VCTs is available to investors, provided shares are held for at least five years.

ESM is looking to commence trading in the specialist technology fund next year.

Glasgow-headquartered private equity house Maven Capital Partners has been active in the VCT arena for some time. It has been responsible for a series of successful fundraisings in recent years.

The firm has just launched offers to raise £30m for established VCTs, “reflecting a strong UK pipeline of investment opportunities in high-growth UK private companies”.

Industry figures show that some £458m was invested in VCTs in the 2015/16 tax year.