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Importing Capital

Posted on Jan 24, 2011 by Sandy Finlayson  |

The biggest single challenge which faces our innovative growing companies is access to capital. In 2008, the last year for which figures are available, the amount of early stage equity investment in Scotland was only about £100 million which mostly came from business angel syndicates supported by the Scottish Co-investment Fund. This may be contrasted with the sum of $2.1 billion which is invested in early stage technology companies in Israel, which has a population of about 7 million, in the same year. The view of investors is that the best propositions will always secure investment but that there are simply not enough good quality investment propositions going around. Unfortunately it is difficult to attract management teams of sufficient calibre because of the difficulty in securing investment and this creates an unfortunate vicious circle. We have, however, seen a very encouraging trend of investment “non-Scottish” investors emerging over the past couple of years. We have completed investments on behalf of Scottish companies with investors from America, France, Germany and Holland as well as numerous English investors. We currently have a client engaged in discussions with a major Japanese investor and it is hopeful this trend will continue as international investors provide not only finance but also access to international markets. While it is to be hoped that this encouraging trend will continue it does make one wonder what foreign investors can see in our young companies that our home based investors are unable to see. The birth of the information technology industry in California and the “Boston Miracle” are entirely dependent upon the coincidence of capital and innovation to create the vast amount of new wealth which is evident in these two parts of America. Here, on our doorstep, we have some world class intellectual assets and about £700 billion of funds under management. With a contracting public sector and a quoted company sector which is a mere shadow of its former self our only chance of recovery is through the enterprise economy. It is up to us to support it! Sandy Finlayson Senior Partner

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