New £185m Scottish fund for fast-growing start-ups

Technology, energy and healthcare start-ups are being targeted by a new £185 million-plus fund launched yesterday by Scottish Equity Partners, the Glasgow-based venture capital group.

The firm, which pointed to a “strong” deal flow in recent months, said it had been raising cash from investors for several months ahead of the formal launch of SEP IV.

It declined to disclose the names of those who have subscribed to the new fund. However, the aim is for it to take minority equity stakes in UK-based “high-growth potential businesses”, with deal sizes ranging from £2m to £5m for early-stage companies and £5m to £15m for more established firms.

The strategy mirrors that taken with previous such funds, including SEP III, which closed in October 2006, raising some £160m.

During the past 12 months, the firm has made investments totalling almost £32m and completed exits from its portfolio with an aggregate value of £82.6m.

Calum Paterson, SEP’s managing partner, said: “It is difficult to find reasons to be cheerful on the broader economic front, but there are still opportunities for individual companies to expand.

“I think there is a greater awareness that equity investment is the right way to fund growth and our deal flow has been strong.”

He added: “Although exits remain hard work in the absence of a vibrant IPO [initial public offering] market, there are grounds for optimism on that front also.”

SEP’s current portfolio includes Edinburgh-based flight search specialist Skyscanner and Sumerian, a data analytics company based in Glasgow and headed by entrepreneurs David Sibbald and Calum Smeaton.

Scottish firms previously backed by SEP, which employs 25 people, include healthcare software group Craneware and chip designer Wolfson, which both did IPOs.