Dave Hughes: signatory to letter

Scotland’s high-growth company leaders and investors say they have been “passed over” in government support packages and warn that many may not survive the health emergency.

Founders and executives of companies such as Novosound and Chromacity, together with the heads of angel groups such as Equity Gap and Kelvin Capital, have told ministers they are losing out because they do not qualify for the schemes on offer.

In a letter to ministers they say there has been “no mention of support for high-growth, university spin-out companies” in the range of packages on offer.

It says: “During this challenging time, we strongly feel it is important to show support towards the next generation of potential £1bn companies, or Unicorns, in Scotland… and ensure that they do not fail prematurely.”

Follow Daily Business on Facebook

They have warned that the lack of support risks wasting millions invested in leading edge technology.

The letter, sent last week but only just made public, says that although these companies are currently well-funded, with significant investment from both the public and private sectors, this capital was intended to create highly profitable companies of scale on the international stage, creating high quality jobs “and not meant for the purposes of staying afloat during a national emergency.”

It warns that many of the companies “are incredibly apprehensive about using their cash reserves to keep their businesses going whilst they are unable to generate any significant revenue.

“If these companies are to divert all their funding to stay afloat during this period of economic downturn, they simply will not have enough revenue to support crucial business functions which are essential to growing the company once the Covid-19 crisis is over.”

If no action is taken by the government it is inevitable that some businesses will not survive

– letter to ministers

The signatories say it is important that university spin-out companies are not overlooked by government plans for business support, and that the large sums of public investment in university research and innovation is not wasted.

“If no action is taken by the government to provide financial support to this particular group of high-growth, start-up businesses, it is inevitable that some will be unable to survive,” they warn.

This would lead to the loss of numerous highly skilled jobs throughout Scotland, but also huge amounts of growth and tax revenue in the Scottish economy for the years to come.

Last month a survey by Turing Fest of 100 tech startups and senior executives revealed that more than half of startups (52%) felt the Scottish Government is doing too little to support entrepreneurs.

On Tuesday by Finance Secretary Kate Forbes announced the appointment of former Skyscanner executive Mark Logan to head up a short review of the contribution of the tech sector to Scotland’s recovery.

Signatories to letter

Dave Hughes, Richard Cooper and Martin Bell, Novosound

Kate Cameron, Cytochroma

Shahida Imani, Chromacity

Richard Boyd and Andy Herbert, Invizius

Holly J Butler and Matthew J Baker, ClinSpec Diagnostics

Paul Atkinson, PAR Equity

John McNicol, Kelvin Capital

Sandy Finlayson, MBM Commercial

Andrew McNeill and Kevin Grainger, EOS Advisory

Fraser Lusty, Equity Gap

Gillian MacAulay, Gabriel Investment Syndicate

Evelyn McDonald, CEO, Scottish EDGE