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Scottish Investment Bank

The Scottish Investment Bank (SIB) is the investment arm of Scottish Enterprise, working in partnership with HIE.

What is it?

The SIB helps companies to identify appropriate sources of finance, engage with funders and secure the investment they need to grow their business. 

The SIB operates a number of equity funds on a shared risk co-investment basis with UK and international investors, including business angels, angel syndicates, venture capital groups and corporate investors.

Where equity investment is provided, Scottish Enterprise becomes a shareholder in the business. 

Who's it for? 

Companies with growth aspirations and export potential from across the whole of Scotland are eligible for investment through SIB’s funds.

Find out more below about the different funding and loan options, or visit the Scottish Enterprise website >

Find out more

More information on the Scottish Investment Bank can be found on the Scottish Enterprise website.

Visit the Scottish Enterprise website here

Scottish Venture Fund

The Scottish Venture Fund (SVF) invests £10k to £2m, alongside private sector investors, in company finance deals of between £20k and £10m.

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Scottish Co-Investment Fund

The Scottish Co-investment Fund (SCF) is a £72m equity investment fund that invests from £10k to £1.5m in company finance deals of £20k to £10m.

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Scottish Loan Scheme

The Scottish Loan Scheme can provide loan funding of £250,000 to £2 million (and up to £5 million in exceptional circumstances) to growth focused Scottish companies that have a viable business plan and a clear ability to repay the debt.

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Investment requirements explained

When you are looking for investment funding, it’s important to understand what the people you’ll be seeking investment from will be looking for in return for parting with their cash. This list is not exhaustive and is intended as a guide only, but it should help you anticipate what to expect and plan more effectively for your discussions with potential investors.

Warranties

These are assurances given to investors that the business in which they are investing is what the company and management say it is. These assurances will be given by the company and executives and will be tailored to the terms of the investment and subject to market-standard limitations including, for example, caps on liability and time periods for bringing any claims for breach of warranty.

Investor consents

A list of decisions that the company will need to seek investors’ approval for in advance of implementing them. This is required in order to protect the value of their investment. This list will typically include matters such as: issuing new shares; amending the business plan; changes to the board; and selling the business, etc.

Right of first refusal on subsequent investments

All shareholders, including the founders, should have the right (but are not obliged) to invest in future financing rounds in advance of any proposed new shareholders to allow them to avoid being diluted (i.e. reducing their percentage shareholding of the company) and to allow them to continue participating in the success of the company.

Right of first refusal on share transfers

If any shareholder wants to sell their shares to someone else, the existing shareholders have the option to buy those shares before they are offered externally.

Drag-along

If shareholders owning a significant percentage of the shares of the company (the percentage of which will be determined in each deal based on shareholder composition post-completion) want to sell their shares then all other shareholders can be required to also sell their shares on the same terms. This provides significant shareholders/investors with some comfort around their ability to exit and helps facilitate a smooth exit process.

Tag-along

If certain shareholders (typically those holding a certain majority of the shares in the company but determined in each deal based on shareholder composition post-completion) want to sell their shares then all other shareholders must also be given the right to sell their shares on the same terms. This provides minority shareholders with some comfort that significant shareholders/founders will not exit the company and leave them behind.

Restrictive covenants

Investors don’t want any key personnel of the company to start a competitive business or to leave and take team members with them to another business even if it’s not competitive. For this reason, the investment documents will normally contain restrictions which prevent them from doing so. These restrictions will apply for the duration of the relevant person’s employment by the company and for an appropriate period (determined on a deal by deal basis) after that. Investors often expect restrictive covenants to be included in both the investment documents as well as the service/employment agreements of the key personnel.

Leaver provisions

Investments are made based on an assessment of the company and of the people running it and investors therefore seek protection against the management leaving the business. They are fundamentally investing in the management team to fulfil the business proposal put to them. The investment documents therefore include leaver provisions which provide that if any member of management should leave the business, then they can be required to sell their shares at a price to be determined (typically based on the circumstances under which the relevant founder leaves).

Board of directors and observer representation

Investors normally require to be granted the right to appoint a non-executive director to the board of the company. They may not elect to exercise the right to appoint a director. However, where they do so they will seek to appoint an individual who they believe is an appropriate fit for the company, and the company will be required to bear the cost of remuneration of this person. In addition, investors may also require the right to send an observer to attend board meetings of the company, with such attendance being potentially by phone or in person.

Information rights

In order to manage their investment, investors need regular information from the company including: monthly financial reports together with copies of the company’s annual accounts, the business plan and certain other information which may be requested from time to time. Sometimes investors will provide a template for the company to use in supplying this information, so it is in the preferred format of the investors.