In depth: SIS Ventures reveals extent to date of impact investment activity
And SIS Ventures has now unveiled its inaugural Impact Report, shining a spotlight on the positive impacts since its 2018 debut of its investee firms on people and planet, benefiting Scotland and beyond, including the creation of more than 300 jobs, for example.
The Edinburgh-based organisation is a wholly-owned subsidiary of Social Investment Scotland (SIS), a social enterprise and charity that was established in 2001 and offers loan funding and business support for social enterprises, charities and community groups.
SIS Ventures has today unveiled the report, saying that since launching the Impact First Fund five years ago, it has invested more than £5.6 million in 14 high-impact, high-growth-potential businesses that have consequently gone onto secure £65m in follow-on funding rounds.
It adds that its portfolio companies – who include Glasgow’s Microplate Dx that earlier this year closed a £2.5m seed funding round to develop its point-of-care diagnostic platform – have so far created 318 jobs globally, of which 149 have been created in Scotland, since receiving funding injections from the impact investor. The cohort is also credited with having developed innovations in diagnosis and treatment for patients with brain cancers, liver disease, asthma, epilepsy and cystic fibrosis, with the potential to treat multiple other conditions and illnesses, and delivered innovations to support positive environment impacts across multiple industries including the advertising, energy and food and drink sectors.
SIS Ventures says investee companies are also carefully selected for their commitment to developing their environmental, equality and diversity, social impact and governance practices. Nearly half of such firms are founded or co-founded by women, which the investment vehicle says compares favourably to the Small Business Equity Tracker 2023 report published by the British Business Bank showing that, in 2022, teams with at least one female founder accounted for just 27 per cent of equity deals overall (albeit up from 17 per cent in 2012), while their share of investment reached 15 per cent (13 per cent in 2012). The Scottish organisation also points out in its Impact Report that 29 per cent of its investee companies are founded or co-founded by people of colour or minoritised ethnic heritage.
SIS Ventures says its Impact First fund was created to offer investors the opportunity to make tax-efficient financial as well as impact returns by investing equity into Scotland-based businesses whose aims for people and planet are aligned to the United Nations Sustainable Development Goals. In return for investment, the investment vehicle seeks a mission lock – where the social and/or environmental mission of the organisation is locked into the Articles of Association and cannot be changed without consent.
It adds that each portfolio business is led by a unique mission including, for example, providing earlier diagnosis for life-limiting diseases such as cancer (Dxcover, which at the start of this year announced a new capital injection of almost £10m) and Parkinson’s (Manus Neurodynamica); tackling some of agriculture’s most pressing environmental issues for crop protection (Solasta Bio) and animal feed (Beta Bugs); encouraging the switch to electric vehicles through on-street charging points (Trojan Energy); and turning online advertising into a force for good (Good-Loop).
Arran Dewar, executive director of SIS Ventures, says: “We believe that impactful businesses, which combine profit with purpose, are the future – and should be supported with the full power of the investor community. For a relatively young, but rapidly growing portfolio, I am particularly pleased with the steps taken by our investee companies towards commercial growth and progress on delivery of impact. This impact can be seen within Scotland, and well beyond across several continents, as products and services gain traction in widening markets, and progress is made on regulation with several jurisdictions for our life science investments.
“Delivering impact through innovation takes time, as early technical and commercial milestones are key. Some of our portfolio companies are delivering impact now – others are working toward technical and commercial milestones before realising their full impact ambitions. Our unique approach to impact management ensures that we can work alongside our co-investors to help investees scale their businesses without compromising on their impact aims and ambitions.”
SIS Ventures also notes that one of its earliest investments, Cyacomb, “aims to make the online world a safer place where no harmful digital content can be hidden or shared”. The company is behind technology that pinpoints harmful content, at source, enabling law enforcement, social media and cloud companies to scan devices at “up to 100 times faster” than traditional methods – and it recently received funding of nearly £3m from the Scottish National Investment Bank.
Ian Stevenson, chief executive of Cyacomb, which he founded in 2016 with former police forensics analyst Bruce Ramsay, comments: “A lot of investors talk about ‘adding value’ to a business – I can say from experience that not all succeed. SIS Ventures has definitely added value. The processes we have been supported through, along with their guidance, have put us in a position where we have a strong understanding of our impact. That is extremely helpful in conversations with potential future investors, whether they are impact-focused or not.”
SIS Group, which comprises both SIS and SIS Ventures, in October revealed its latest annual report and accounts showing that its investment activity included £11.7m of new loans approved and £16.1m of loans drawn over the previous financial year. The group’s chief executive Alastair Davis said at the time: “We are as determined as ever to deliver our mission to connect capital with communities, to make a real measurable and sustainable impact upon people’s lives.”
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