Insight Investments with Kelvin Capital
21 November 2012
Jim Hall is Director at technology investment specialist Kelvin Capital. We spoke to him about the types of companies they look to invest in and the current landscape for high-growth technology start-ups in Scotland.
Tell us more about Kelvin Capital
We’re a business angel syndicate based in the West of Scotland and we invest in new technology businesses across Scotland. We work with universities and Scottish Enterprise’s HGSU unit to source good investment opportunities which we share with our members. They then decide if they want to invest in the project.
We’re also partners of the Scottish Investment Bank (SIB) so work very closely with the co-investment bank.
What type of companies do you invest in?
Typically, what we’re looking for is a business with a novel technology that has been protected through patenting, where there is strong leadership team to take the business forward, and where the product will do some good. If the business can tick all these boxes then we’re interested.
If you look at the current list of companies that we’re investing in, there is a significant number based in the medical devices field, and also quite a few bio-based businesses.
It helps us tremendously working with the HGSU team. We know the people within the team and we know the processes that they use to select companies. If they see significant growth potential then that shows us the business is worth a closer look.
What are the reasons you would turn down an investment opportunity?
We could decline an investment if, through the judgement of the experts we have within our network, we don’t think the technology is going to work. We could also decline a business if we don’t think it has a management team that can take it forward, although if think we could potentially help the team, we may still help guide it as a business. We also only invest in businesses based in Scotland.
How do you attract new members?
We attract new members in a number of ways. We publicise what we do - through PR around investments that we’re involved in – and we also meet potential members through our work with financial companies and legal firms.
Aside from that, we find that we get a lot of members through word of mouth and networking. There’s nothing like another member talking positively about a business they’re investing in to their friends to encourage other investors to come forward.
How do you get involved with the companies you invest in?
We conduct a very thorough due diligence process before we make any investments so at the pre-investment stage we get involved very deeply. We work closely with the management team to understand the business and technology as best we can.
Going forward, we will continue to work with the company to get a non-executive Director in place who can not only help us to understand what’s going on within the business but also adds a huge amount of value.
We also make sure that the senior teams have access to help and support through our network, which can open doors with buyers or help them connect with key opinion leaders. As well as this, we make sure that we give them preference on our website and help to push their message out to ensure that they get exposure through social media.
How is the Scottish Investment Bank key to your strategy?
The SIB is critical to us because it allows us to invest in so many more businesses than we would ever be able to do on our own. The fact that we can co-invest up to half of the required amount means that we can get investment for so many more businesses than we would be able to do otherwise.
What are your thoughts on early stage technology in Scotland?
It’s a very exciting time for us as there are a lot of excellent business opportunities within technology. There is also a great deal of good science coming out of the universities in Scotland, so we’re very pleased with the level and quality of the new business plans that we’re seeing.
We’ll be completing six new business investments within the next three months, which speaks for itself.