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Fund helps city's growth plan

£25m boost for Stirling’s tech hub hopes

Stewart Carruth

Stewart Carruth: fund is ‘a catalyst in terms of retaining and attracting talent’

Stirling Council is joining city-based syndicate ESM Investments to showcase a new fund that aims to turn the area into Scotland’s next technology hub.

Investors will be invited to a pre-launch event for the £25 million ESM Capital Growth Enterprise Investment Scheme Fund at the new Codebase facility in the city next week.

ESM intends it to be the first of many that it will launch from its Stirling headquarters as part of a larger drive in the region to create an asset management centre to rival Edinburgh and Glasgow. 

A recent survey of 69 cities across the UK named Stirling as the best city in Scotland to start a new business, with a focus on its global connectivity and highly competitive costs.

Stirling Council says the support for high-growth potential and digital technology businesses will contribute to job creation and sustainable innovation.

Stewart Carruth, the council’s chief executive, believes the initiative will be a key building block in realising its ambitions ahead of the anticipated City Deal for the area.

He said: “We believe the fund will help businesses, both in Stirling and outside of the region, to realise their ambitions for growth.

“It will provide encouragement to local scale-up companies to continue growing their businesses, thereby creating sustainable employment. It will also enable entrepreneurs outside of the area to consider Stirlingshire as a location to establish or scale-up their businesses to the next level, thereby creating new inward investment.

“It builds on the foundations of the City Region Deal and is a catalyst in terms of retaining and attracting talent to Stirling. 

“Stirling has great potential. We have a strong pipeline of talent – digital employees of the future – through well-established collaboration between industry, Stirling Council and our partners. 

“My vision is for us to become an economic and cultural powerhouse that can compete globally”.   

The fund will be regulated by the Financial Conduct Authority (FCA). The pre-launch event on Friday 23 February will be at the Codebase offices in Stirling 8-10 Corn Exchange Road. This will be followed by a series of investor showcases throughout 2018.

ESM Investments is a boutique investment firm established in Stirling providing investment and business consulting for technology and scale-up companies connecting entrepreneurs together.

The 10 year fund will back technology companies across Stirling, Scotland and the North of England looking to scale up their operations. 

The fund will launch towards the end of this year with a 5-year ‘investment period’ in a series of businesses followed by a 5-year ‘maturity period’ where the values of the stakes, at that point, will be realised and delivered to investors. 

An initial target of £25m is being sought from private and public sector investors, and will include funding from the ESM Investments syndicate, led by founder and CEO Steven Morris.

The fund will subsequently look to make investments of £500,000-£2m in a series of strongly managed dynamic technology enterprises that are struggling to access capital for further development. 

It intends to make investments in EIS qualifying enterprises thereby enabling investors who are UK income tax payers to obtain 30% income tax relief on the capital invested upfront and disposals free of capital gains tax, plus other benefits.

Mr Morris was recently appointed a city commissioner, a unique approach by a regional council, to develop new opportunities in the Stirling area. 

He said: “It is clear that many viable, dynamic enterprises with innovative products and services, strong business plans and capable management teams, struggle to access the investment that will allow them to develop their businesses.

“Bridging the equity gap for early to growth stage technology companies is a major challenge to fostering innovation and entrepreneurship.

“The fund will seek to address just that as well as giving investors the prospect of attractive long-term returns from businesses that hopefully will flourish with their support.   

“We have already had several strong notes of  interest in our plans and really look forward to presenting further details to additional investors”. 

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