Fight for survival
High growth firms warn: ‘we will fail without support’
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.”
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