Scottish Equity Partners has been launched as an independent venture capital business and is in the process of fund raising for a new venture capital fund, called SEP II. The target for the fund is GBP75 million and its remit is to invest in early-stage and emerging growth technology companies principally in areas such as software, Internet infrastructure, wireless applications and technologies, opto-electronics, healthcare, and life sciences. It is hoped that investments for as little as GBP100,000 will be possible.
The reason that the new fund is called SEP II is that the team at Scottish Equity Partners led by managing director Calum Paterson has already raised and invested SEP I when it was at Scottish Development Finance, the former venture capital arm of Scottish Enterprise. Scottish Equity Partners was spun out of Scottish Development Finance in August but this was not formally announced until the end of September.
The size of SEP I, which was raised four years ago with Scottish institutional backing, is GBP25 million. “By raising the new fund we will at least have the option to participate to a larger extent in the funding of our transactions and to follow our money in a much more significant way than we have been able to do in the past. However, we continue to believe in a syndicated approach, which most successful technology investors do, both in the UK and elsewhere. It’s a sensible way to spread risk and can potentially bring a wider range of experience to the companies we back,” says Calum Paterson. SEP II will be raised from existing investors in SEP I alongside new investors. And, if interest warrants it, may exceed the present aim of GBP75 million.
In the guise of Scottish Development Finance, the team predominantly led the investments in which it became involved but was frequently not the largest investor as a result of the limit of its fund.
Recent deals led by the Scottish Equity Partners team include IndigoVision, which floated on the London Stock Exchange producing a return of some 20 times its investment, Atlantech Technologies, sold to CISCO Systems in May for $180m, Orbital Technologies which also recently floated with great success, Quadstone, Aspects Software, and TeraHertz. TeraHertz is Scottish Equity Partners’ most recent deal. It is an optical coatings technology company that has been spun out of Heriot Watt University.
Scottish Equity Partners says it has built close relationships with Scotland’s universities through activities like managing the Synergy seed fund on behalf of Glasgow and Strathclyde Universities.