Scottish Venture Capital Fund

The Scottish Venture Fund invests in high growth potential, early-stage companies from start-up/spin-out, seeking funding to develop innovative products/services/business models and/or create or develop new markets.

The role of the Scottish Venture Fund is to fund an identified gap within a funding round which is being led by sophisticated experienced arms’ length private sector investors. The Scottish Venture Fund will invest on equal terms to the private sector investor(s) and up to a maximum of 50% of the total funding package on a commercial basis.

Scottish Enterprise is a 'gap' funder, so you should seek to maximise private sector investment before approaching us. We typically provide from £100,000 up to £2 million, as part of a total deal size typically ranging from £200,000 to £10 million.

The fund primarily provides equity (so, Scottish Enterprise will subscribe for shares).

To be eligible for investment from the Scottish Venture Fund:

(i) your company must:

• Be a commercially-viable high-growth potential business
• Have, or be in the process of developing a significant operational presence in Scotland which is proportionate to the levels of investment being sought
• Demonstrate the economic benefits to Scotland that could result from the investment
• Demonstrate which other funding sources have been explored
• Fall within the UK Companies Act 2006 definition of a Small to Medium Enterprise (SME)

Find the definition of SME on GOV.UK opens in a new window 

• Have a net zero plan in place, be developing a net zero plan or be committed to developing a net zero plan. Scottish Enterprise’s sustainability team can support companies in building a net zero strategy.

Read our 10 steps to achieve net zero emissions in your business  

• Be demonstrating or working towards the seven key principles of fair work (employee voice, security, respect, opportunity, fulfilment, flexible and family working, and the rejection of fire and rehire practices). Scottish Enterprise can work with you to review and develop working practices

Take a look at our guide on building business resilience  

(ii) the proposed co-investor that Scottish Enterprise will align with must:

• Be a sophisticated and experienced arm’s length private sector investor
• Have a proven track record of investment, be undertaking appropriate due diligence that they are willing to share with Scottish Enterprise and take an active approach to post deal portfolio management
• Be investing on arms’ length terms
• Be leading the investment round (negotiations, deal terms and valuation)

Restrictions

The fund is not sector-specific but companies operating in certain sectors or carrying out certain activities may be ineligible for investment. This includes companies operating in the defence sector or providing goods, services, or activities in well-served markets or markets with high displacement (such as local trading), for example:

• Banking, insurance, sub-prime lending, or other activity where there is onward lending or credit risk including hire purchase and dealing in land, derivatives, or commodities
• Retail, events, restaurants, hotels, pubs, and clubs
• Social and personal services
• Professional services
• Motor vehicles
• Real estate and property development

Companies operating in these areas with disruptive business models, or technology companies which innovate or create new markets or market engagement, may be considered.

We will not invest in a company involved in any activity that could have a negative impact on our organisation's reputation or ethical standards. Such activities include, but are not restricted to, the following:

• Activities with an adverse impact on human rights or the environment
• Gambling
• Tobacco
• Adult entertainment
• Weapons and ammunition

Firstly, you’ll need to secure an offer of funding from a private sector investor before you or the investor can approach Scottish Enterprise to consider the gap in your investment package.

We will work with private sector investors both known and new to Scottish Enterprise, as we are keen to encourage new investors into Scotland. Our approach to the investment will depend on who our co-investors are.

The following information is required for Scottish Enterprise to begin its appraisal of any investment opportunity:

• Details of the private sector funding secured, its sources and terms
• The amount being sought from the Scottish Venture Fund
• A detailed business plan including key financial information (at least three-year forecasts and historic information)
• What the funding will be used for

We will also conduct a review of the potential economic benefits to Scotland.

Following an initial appraisal of the investment opportunity, terms of the investment will be proposed and fuller due diligence, as appropriate, will be undertaken.

Once the investment is completed, our portfolio management team will work alongside your management team and the private sector investors to maximise the outcomes of the investment for the company, for Scottish Enterprise, and the Scottish economy.  Other forms of Scottish Enterprise support, such an account management, specialist support (e.g., from our sustainability team) and access to Scottish Enterprise’s networks in the early stage ecosystem, may also be considered on an ongoing basis to help shape the business strategy more broadly.

Got a question regarding the Scottish Venture Fund?

If you’re looking for investment, you will need to secure funding from an arms’ length sophisticated private investor first. If you need support in securing such investment you can contact our team of Financial Readiness experts 

Are you an investor considering an investment opportunity where there's a funding gap? Get in touch with us to discuss further.