Barry Sealey and Mike Rutterford: Angels required to help Scots entrepreneurs fly

Whatever the political climate, one thing that most of us will agree on is that Scotland needs a vibrant, growing economy. To do that, we clearly have to build on what we have already, but we also need to continue to encourage innovation and entrepreneurialism and capitalise on the high-quality science and engineering that is developed here.

One of Scotland’s leading investors in early stage businesses is Archangels, founded a quarter of a century ago and still an active supporter of young companies today. Since 1992, Archangels has invested in some 82 Scottish companies and prompted additional investment from others, including Scottish Investment Bank (the investment arm of Scottish Enterprise).

When we started Archangels, we hadn’t a clue what it would ultimately become, but we did so with four guiding principles which ultimately became known, rather grandly, as “the four pillars”: to put something back into Scotland; support young Scottish companies; make a return on our investment; and have some fun. These hold good today.

And along the way, we like to think that our support has made a difference to the lives of some people too. Optos, based in Dunfermline and our first foray into the world of angel investing, is now owned by Nikon and is a world leader in retinal scanning, helping to save the eyesight of many people globally. One of our highest profile investments was in Livingston-based Touch Bionics, developers of the first bionic hand which has transformed the lives of amputees across the world.

Of course, supporting early stage businesses is a high risk endeavour and there have been failures along the way, but overall these investments have created over 3,500 high quality jobs here in Scotland and generated turnover of over £1.3 billion. It is vital that we continue to encourage and nurture young companies like Optos and Touch Bionics. But we can’t do it alone.

Today, Archangels has some 85 members, each of whom is ready and willing to invest their own cash in ventures like these and we have a portfolio of 22 young, ambitious Scottish businesses. But this is a high risk endeavour and it needs the ongoing support of government to encourage and leverage investment.

Business angel investors are incentivised through the Enterprise Investment Scheme, providing tax relief for investors, which partially offsets the high risk nature of putting money behind early stage companies.

The other important factor is Holyrood’s support for the Scottish Investment Bank which acts as a co-investor to many angel investors, thereby enhancing the funding that syndicates such as Archangels can raise for these companies.

We want Archangels to still be supporting Scottish innovation and entrepreneurship in another 25 years and fervently hope that the government support that has helped nurture so many success stories so far will still be evident.

Barry Sealey and Mike Rutterford are the co-founders of Edinburgh-based Archangels