Scottish EDGE secures extra £1m from leading business luminaries
SEVEN of Scotland’s leading entrepreneurs have committed an additional £1 million to support Scottish EDGE following a dramatic increase in applications to the start-up funding competition.
The new money is a mix of grants and loans led by a £500,000 commitment from Sir Tom Hunter. The Ayrshire entrepreneur’s Hunter Foundation has backed the Scottish EDGE initiative since its inception in 2015, when it was established to support early-stage businesses with high growth potential.
Scottish EDGE runs two competitive rounds per year with each typically producing 12 winners who receive an average of £60,000 in grant and loan money. The programme is currently in its 17th funding round, with the winners to be named on May 11.
The fresh cash injection means there will be capacity to support up to 20 winners in rounds 18, 19, 20 and 21.
“This is a classic case of high-quality demand outstripping funding supply – we all need to step up, as entrepreneurs and government,” Sir Tom said.
“As we look for ways to help solve the problem of poor economic growth in Scotland, it’s clear that early-stage, high-growth businesses will play a key role in driving this change – both in rebuilding the economy and providing employment opportunities.”
Sir Tom is providing £300,000 in grants and £200,000 in loans.
Others providing loans of £100,000 each are: Kevin Dorren, chief executive of the newly-floated Parsley Box; transport tycoon Sir Brian Souter; Brewdog co-founder James Watt; Lord and Lady Haughey of City Refrigeration Holdings; and games entrepreneurs
Chris van der Kuyl and Paddy Burns through Chroma Ventures, the investment arm of their 4J Studios development business.
Evelyn Mcdonald, chief executive of Scottish EDGE, said all are in the form of “soft loans” free of interest and fees. They are due to be paid back within five years, minus any grant money provided to firms that go bust and are thus unable to repay their grant awards.
However, Ms Mcdonald noted that of the 428 businesses that received a total of £16m up through the 16th round of the awards, 360 are still trading.
Applications for the current round of awards have reached record levels, with job losses and a lack of employment persuading many to strike out on their own. Overall applications rose by 24 per cent, with almost half coming from pre-trading businesses.
“Demand has gone up,” Ms Mcdonald said. “When we first started running EGDE we had about 200 applications at each round. Now looking at round 17, we are at 305 applications.
“And the quality is high – the rise in demand has not come with a reduction in quality.”
The fundraising comes after a report published earlier this month by Oxford Economics, which was commissioned by The Hunter Foundation, indicated that radical policy changes are required if Scotland’s economic performance is to be significantly boosted within the next 15 years. The report addressed issues such low productivity, the poor business birth rate and a lack of scale-ups that have left gross domestic product (GDP) per head in Scotland at just 44% of that of Singapore, 48% of Ireland’s level, 68% or Norway’s, and 75% of Denmark’s.
“Supporting high-growth start-ups is essential to economic dynamism by spurring innovation and encouraging competition,” said Mr Dorren of Parsley Box. “Ambitious early-stage businesses can, with the right support, have a direct impact on the cities that they make their homes and scale up to create ripples of growth for the local economy.”
David Shearer, chairman of Scottish EDGE, said the fact that the fundraising was achieved in just two days was “unequivocal testament” to the programme’s impact. He added that he hopes it will stimulate further constructive debate within the Scottish Government about how to focus its financial resources to maximise economic growth.
Along with The Hunter Foundation, Scottish EDGE is supported by the Royal Bank of Scotland, the Scottish Government and Scottish Enterprise, plus award-specific partners in each round. “Start-ups are good, but scale-ups are great – they move the economic dial,” Sir Tom added. “Scottish EDGE’S track record speaks for itself and scaling it up is, in common parlance, a no-brainer.”
Start-ups are good, but scale-ups are great – they move the economic dial