In July 2020 the Scottish Government announced a £38 million funding programme for innovative early stage businesses whose routes to investment and growth had been hit by coronavirus.
The largest part of the programme is the Early Stage Growth Challenge Fund (ESGCF), from which funding was awarded on a competitive basis, with eligible applications being assessed and graded by Scottish Enterprise with support from private sector investor panels. Successful applicants were offered a convertible loan note (a loan that can be converted into an equity stake in the business at a future date) and a grant (subject to eligible costs) for up to 20% of the total award.
The Fund awarded almost £25 million to 90 companies, in a range from £50k to £300k, with the majority of the awards at the £300k level.
A further £10 million was provided to Scottish Investment Bank’s existing co-investment funds.
Certain companies which are at the pre-seed stage were supported with funding under SE’s High Growth Spinout programme (£1 million awarded to 16 companies, in the range £5k – £130k, median £62k) and its High Growth Venture programme (£1.6 million awarded to 41 companies, in the range £10k -£50k, median £41k).
Scottish Enterprise interim CEO Linda Hanna said “There was concern among Scotland’s early-stage ecosystem that the coronavirus pandemic would cause investment levels to reduce dramatically, potentially wiping out a generation of Scotland’s up-and-coming businesses.
“The creation of the early-stage support package, developed by Scottish Enterprise on behalf of the Scottish Government, has proved to be an important intervention.
“Through the Early Stage Growth Challenge Fund, we’ve been able to provide several of Scotland’s most pioneering young companies with the financial support necessary to overcome obstacles to growth created by covid-19.”
Full lists of the awards can be downloaded from the Scottish Enterprise website:
Scottish Enterprise gave examples of some of the companies awarded funding from the ESGCF:
Oban-based biotechnology company CuanTec, which is developing a sustainable alternative to single-use plastic from food waste extract alongside the Scottish Association of Marine Science. CuanTec CEO Craig Sterling said “This is a critical time in our development. The Early Stage Growth Challenge Fund support will allow us to push forward and attract further funding to get our first sustainable food packaging product to market.”
Dundee tech company Snappy Shopper, which aims to revolutionise and revitalise the community-based convenience retail industry. Snappy Shopper chairman Sean Collins said “Our investment plans were delayed by COVID-19, but being awarded Early Stage Growth Challenge Fund support ensures we can continue our current incredible sales growth, strengthen our team with professional, high-quality people and invest heavily in our expansion into the rest of the UK.”
Glasgow-based space engineering company Craft Prospect. Craft Prospect managing director Steve Greenland said “The Early Stage Growth Challenge Fund will be transformational for Craft Prospect, allowing the business to invest in a number of high-profile opportunities to grow our commercial offering internationally over the next two years, and providing us with the confidence to recruit and upskill our workforce despite the ongoing impacts of covid.”
Edinburgh-based consumer protection software company Vistalworks. Vistalworks CEO Vicky Brock said “We’re incredibly grateful to the Scottish Investment Bank and the Scottish Government for their Early Stage Growth Challenge fund investment. This has been transformational at a point when the business was ready for acceleration. We’re already executing our plans and have taken on four new employees as a direct result, with more to follow.”
Lanarkshire-based biotechnology company ILC Therapeutics, which is working with leading academic institutions including the University of St Andrews and the University of Oxford to develop therapeutic products addressing diseases and conditions including covid-19, cancer, atopic dermatitis and asthma. Dr Christopher McKenzie, senior scientist at ILC Therapeutics, said “The Early Stage Growth Challenge Fund will allow us to continue developing novel therapeutics by allowing us to increase lab space and double our scientific team.”
Proteus, the cloud-based operating platform developed by Aberdeen-based tech firm Xergy. Xergy COO Niger Filer said “As a start-up business the support provided by the Early Stage Growth Challenge Fund is invaluable in helping to make up for delayed revenues and allow us to continue to evolve our software platform and execute our sales and marketing plan to take our Proteus platform to market.”