This report presents a detailed and comprehensive analysis of the early stage risk capital market in Scotland for 2016. It aims to improve the understanding of the scale and characteristics of the early stage risk capital market in Scotland. It focuses on equity investments by independent third party investors and looks at: key trends in the value of investments; the amounts invested in different ‘bands’ i.e. higher (over £2 million); middle (£100k to £2 million); and lower (under £100k); investment by sector; new and follow-on investments; the age of companies at the time of investment; investments by region; investments in spinouts; and exits. It also details investments by different types of investors, including business angels, crowdfunding, venture capital, and corporate venturing.
Methods
The study involved the collation of raw investment data from existing records (deal date, amounts by investor), information available from the Companies House database, and new research into other early key stage investors. This data was then analysed to identify values and create visual representations of patterns and trends.
Findings
The research found that during 2016, Scotland’s risk capital market witnessed the highest number of investment deals on record. Overall, there were 285 deals, representing an increase of 33% on the year before and an increase of 40% on the 5-year average from 2011 to 2015. During 2016, the total value of investments made was £336m – an increase of 42% on the 5-year average from 2011 to 2015. Although total investment fell from 2015, £264m of the 2015 total of £472m was invested in just two deals (FanDuel £176m and TauRx £88m). After omitting ‘megadeals’ from the calculations (those few investments with a value in excess of £10m), the total investment for 2016 was £189m - the highest point for over a decade. This represents an increase of 7% on the previous year and an increase of 35% on the 5-year average from 2011 to 2015. The number of deals in the higher band has stayed fairly constant, although the amounts invested have varied enormously. The middle band saw large increases in 2016, both in terms of number of deals and investment totals. The lower band also saw increases in 2016. Since 2012, Scottish companies have secured just over £1 billion of venture capital investment across 272 deals. The 5-year average from 2012 is £200m, which is slightly higher than the latest annual venture capital investment total of £196m. In 2016, there was a substantial increase in investment by business angels. While formal angel group investment remained steady, at above £20m (5-year average is £18m), crowdfunding almost quadrupled to £30m and individual business angel investment more than doubled to £40m. The growth in equity crowdfunding has been rapid; however, it is worth noting that £19m of this is attributed to the BrewDog Equity for Punks campaign during 2016.
Cookies help Scottish Enterprise (“SE”, “us” or “we”) to provide you with a good experience when you browse our website and also allow us to improve our website. We assume that you are happy to receive all the cookies in the categories that you elect to allow, or which are strictly necessary for the operation of our website. You can change your cookie settings at any time.
Strictly necessary cookies
These are cookies that are required for the operation of our website. They include, for example, cookies that enable you to log into secure areas of our website.
Cookie name
Purpose
Expiry
DS_SEC_Necessary_AllowedCookies
This cookie is used to record your preferences in regard to accepting marketing, performance or functionality cookies across the site.
1 year
se_session
This cookie is used to provide secure access to SE website features such as address lookup and form validation/submissions.
When browser is closed
Performance and analytics cookies
They allow us to recognise and count the number of visitors and to see how visitors move around our website when they are using it. This helps us to improve the way our website works, for example, by ensuring that users are finding what they are looking for easily.
Third party service
Purpose
Where to find out more
Google Analytics
Google Analytics helps us analyse the behaviour of users on our site, such as which pages they view, how long they spend on each page, and which elements they interact with.
Hotjar helps us analyse the behaviour of users on our site by collating data into heatmaps, scrollmaps and other visual representations. It also allows us to add short surveys to the site.
These cookies record your visit to our website, the pages you have visited and the links you have followed. We will use this information to make our website and the advertising displayed on it more relevant to your interests. We may also share this information with third parties for this purpose.
Third party service
Purpose
Where to find out more
Google Ads
By consenting to advertising we will share personal data with Google Ads to perform ad measurement services on our behalf, and that we obtain customer consent for such sharing and use where legally required. Google Ads help us to show pay per click ads in Google search results. These cookies help us track who comes to our site through these ads, so we know how successful they are. By granting permission for marketing cookies, you are confirming that you are happy to be tracked from our sites and receive targeted marketing based on your Google account details.
The LinkedIn Insight Tag helps us analyse the behaviour of visitors to our site who have come through LinkedIn adverts, and also helps us target advertising on LinkedIn.
Our website includes embedded videos from YouTube using YouTube’s Privacy-Enhanced Mode. This means YouTube will not store information or set cookies unless you play the video. When you press play, YouTube may set cookies on your device and collect information about your activity, which may be linked to your Google account if you are signed in. These cookies are managed by YouTube and are subject to Google’s Privacy Policy.
SE sometimes embeds photos and video content from websites such as YouTube and Flickr. As a result, when you visit a page with content embedded from, for example, YouTube or Flickr, you may be presented with cookies from these websites. SE does not control the dissemination of these cookies. You should check the relevant third party website for more information about these.
SE will not use cookies to collect personally identifiable information about you. However, if you wish to restrict or block the cookies which are set by SE websites, or any third party websites, you can do this through your browser settings. The Help function within your browser should tell you how.
Alternatively, you may wish to visit the About Cookies website, which contains comprehensive information about cookies and how to restrict or delete cookies on a wide variety of browsers.
Please be aware that restricting cookies may impact on the functionality of the SE website.
SE and our other websites use a number of suppliers who set cookies on our behalf in order to deliver the services that they are providing. We are constantly reviewing our use of cookies and, as such, this cookies policy will be regularly renewed to include up to date information about the cookies used by our suppliers. We would highly recommend that you check this page on a regular basis.
Further information
Our website carries embedded ‘share’ buttons to enable users of the site to easily share articles with their friends through a number of popular social networks. These sites may set a cookie when you are also logged in to their service. Scottish Enterprise does not control the dissemination of these cookies and you should check the relevant third party website for more information about these.
Similarly, Scottish Enterprise sometimes embeds photos and video content from websites such as YouTube and Flickr. As a result, when you visit a page with content embedded from, for example, YouTube or Flickr, you may be presented with cookies from these websites. Scottish Enterprise does not control the dissemination of these cookies. Again, you should check the relevant third party website for more information about these.
Scottish Enterprise will not use cookies to collect personally identifiable information about you. However, if you wish to restrict or block the cookies which are set by Scottish Enterprise websites, or any third party websites, you can do this through your browser settings. The Help function within your browser should tell you how.
Alternatively, you may wish to visit the About cookies opens in a new window website, which contains comprehensive information about cookies and how to restrict or delete cookies on a wide variety of browsers.
Please be aware that restricting cookies may impact on the functionality of the Scottish Enterprise website.
Scottish Enterprise and our other websites use a number of suppliers who set cookies on our behalf in order to deliver the services that they are providing. We are constantly reviewing our use of cookies and, as such, this cookies policy will be regularly renewed to include up to date information about the cookies used by our suppliers. We would highly recommend that you check this page on a regular basis.