10/02/2013

Off to a good start

The availability of capital is a perennial issue for technology start-ups, but for Finance Wales, early stage growth investment is a key part of its investment strategy. Securing a well-structured investment package from the outset can smooth the growth path and contribute to long-term success.

Investment and more

“In the last financial year, we made 30 new investments in IP-rich, technology based businesses, 14 of which were co-investments and this year is equally busy,” Smith continues. “We’re seeing some really strong business plans, impressive technologies as well as more co-investment opportunities.”
 
Finance Wales’ £150 million fund is an attractive proposition and last year, 5 technology-based businesses relocated to Wales to take advantage of investment from Finance Wales. “We can invest or co-invest over a number of rounds and growth stages and that’s really attractive for many early-stage businesses,”  Smith explains. “Wales also offers generous R&D grants, incubators specifically for high-tech businesses and access to university centres of research excellence.”

Ambition, potential - pass go

Finance Wales can invest up to £1 million in innovative businesses developing and commercialising novel IP-based technologies targeted at growing markets. It can also follow its investment as the business grows.

Finance Wales has invested £365,000 over two rounds in Ocelus, a medical devices company developing a needle-free way of administering drugs. Ocelus used this investment to develop its proof-of-concept and pre-production prototype. It also received Welsh Assembly Government R&D grants of £197,000.

Invest to make a difference

“We’re focussed on sectors such as advanced engineering, clean technologies, medical devices, future internet-based technologies and ‘plastic’ electronics,” Smith explains. “Securing the right investment package is crucial, so we often co-invest with a number of sector-specific institutional investors.” Portfolio company, Q Chip is commercialising its drug-delivery technology originally developed at Cardiff University. Finance Wales recently concluded a £2 million co-investment round in partnership with Curzon Park Capitol and existing shareholders. 

Clean tech G-volution

G-volution’s patented Optimiser multi-fuel system reduces fuel costs by an estimated 10 to 15 per cent and carbon emissions by around 8 per cent. Using a £400,000 equity investment from Finance Wales, private investors and company founders, G-volution will expand and develop the Optimiser to target other commercial vehicle new sector applications. It aims to capture 10 per cent of the heavy goods vehicle market by 2015.

The current economic conditions have reduced the capital available generally, but for early-stage, technology-based businesses it's gone from bad to worse as most don't fit the risk profile of the banks or institutional investors. And I don't really see this situation improving in the near future.

Steve SmithDirector, Technology Venture Investments