Investor readiness support: final review report (Business product review)

The Investor Readiness Support (IRS) product, within Scottish Enterprise's Strategic Development Intervention Framework, and delivered to relationship-managed and other growth companies, aimed to help businesses raise capital for growth. It was designed to support companies in preparing for investment, primarily in the form of equity, but with an expectation that a proportion of funding raised would comprise debt. The research aimed to: validate the delivery of the IRS product against its specification; assess the product’s continuing fitness for purpose; and identify potential for improvement of service and effectiveness of the product.

The study used the following research methods: consultation with the Scottish Enterprise (SE) Appraisal and Evaluation Team and a senior manager in the SE Products team; a review of relevant information and documentation; and a facilitated discussion amongst product users and implementation managers.

The report suggests there are high levels of satisfaction with the IRS product amongst both Account Managers (AMs) and the Investment Specialists. Particular strengths of the product include: flexibility; the discretion to provide bespoke solutions; the application of the product to businesses faced with different financing issues; the capacity to provide additional support under Modules 1 and 2 to businesses facing particular issues in times of economic downturn; a clear understanding of the roles and contribution of AMs and Investment Specialists in delivering the product; and high reported levels of additionality of the Core product. The report identifies some weaknesses of the product, including: the requirement for client businesses to engage and pay advisors in advance of securing reimbursement from SE; restrictions on re-application of the product to businesses undertaking several rounds of financing; the potential for variations in the quality and consistency of service provided to client businesses across the SE operating area; the potential for the product to be diverted from its core purpose of raising finance for growth, in light of shortfalls in the supply of loan finance; the absence of a specified product budget and criteria against which resources might be allocated; no clear sectoral focus in the application of the product; low conversion rates of referrals into live applications; a lack of application of the product; and a lack of comprehensive information on the product's specific contribution to SE core performance measures and the Government Economic Strategy.

The report outlines a series of potential improvements relating to: improving referral; core module purpose and focus; supplementary modules; measuring effects on businesses; targeting assistance; and delivery and procurement. The report recommends that consideration is given to: discontinuing the Module 2 product, based on low levels of reported take-up and low intensity of assistance provided; re-defining Module 1 as a Financial Health Check; prioritising resources towards the delivery of the Core Module on businesses with greatest potential to generate net economic impact; restoring the importance of the Core Module in providing access to equity, as the mainstream business loan finance market strengthens; preparation of a Monitoring and Evaluation Framework; providing higher rates of intervention on a case-by-case basis, with particular focus on younger high-growth businesses in priority sectors; providing for serial applications at decreasing intervention rates to priority sectors; providing specific day rate caps for advisor services, to allow greater consistency; providing a forum for Investment Specialists to share information on the performance and suitability of advisors; and exploring ways to improve the consistency and relevance of referrals.