iMultiply Spotlight: Focus on Scotland's Private Equity sector

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Scotland's private equity sector is the place to go for fast-developing companies who need finance to scale their operations past the prototype stage and enter the market in a concerted fashion. We caught up with David Ovens, chief operating officer of Archangel Investors Limited, the professional business angels syndicate whose success stories include Optos, Administrate and Touch Bionics.  

Question: Can you tell us a bit about the size and value of Archangel’s deals?

Answer: We do one to two new deals and around 15 follow-on investments a year, investing a total of £7 million to £8 million, but we get co-investors to leverage this figure, so that we typically manage between £15 million and £20 million in investment per year. Most of that is follow-on investment in our existing companies.

Question: Is it true what we hear about the challenges early-stage companies face in finding growth funding?

Answer: Yes – it's easier to get startup capital than it is to find the growth capital that gets a company beyond its beginning stage, and lets it really ramp up its team and its marketing. That growth capital would be funding of say £2 million to £3 million, which is often seen as too small for venture capitalists and too large for crowdfunders and angels. Organisations like Archangels, Par Equity and Equity Gap fill that need, because we can provide that growth funding. Some angels run out of steam as their investee companies develop, but we typically make up to six or seven rounds of investment in a portfolio company over seven or eight years before we exit -- usually to a trade purchase or venture capitalist, but sometimes through an IPO.

Question: What about the challenges you face in finding appropriate investee companies -- are there any?

Answer: Actually, yes: it's always challenging to pinpoint the right investee companies. We are selective: we're looking for high-tech companies with deep intellectual property that's patented, and that's potentially disruptive in their sector. Another thing that can be challenging is the founders' valuation aspirations. Founders need to have a realistic expectation of what their companies are worth. If we are putting significant levels of capital into a company, we expect a return on that investment, which means that we will often end up with a significant minority stake.

Question: What other characteristics do you look for in a management team, apart from a realistic idea of valuation?

Answer: It needs to be a management team with people who want to listen and take advice, and who value more than just the capital we provide. One of the biggest manifestations of that is the ability and maturity of the CEO to recognise that they may not be the CEO forever, but may need to step aside after four or five years. This is especially true where the company is a university spin-out headed by academics. Most of our investee companies have had a change in management prior to exit; if a management team feels it can't make that change, their outlook for exit may not be so promising.

Question: Finally – what do you love most about your work?

Answer: There's a real buzz around the high-tech sector where we invest – the ecosystem is growing and more expertise is coming into the sector. That said, there needs to be a policy change in regards to the increased limitations on EIS funding – relaxation of those rules would be helpful in solving the growth capital gap. We need more joined-up thinking from policymakers, funders, and the companies themselves. But this is still a great place to be investing. Some of our investments -- such as Touch Bionics, which provides life-changing prosthetics, and MGB Biopharma who are tackling persistent infections like Clostridium difficile – have the genuine potential to change lives. That's really motivating: it's what drives us and makes us feel so good about the work we do.

For more information on Archangel Investors, visit

About iMultiply

The Spotlight Series is sponsored by iMultiply, the customer service-driven recruitment and executive search company focusing on finance professionals and C- level staff. Recent placements include senior executives in some of Scotland’s top private equity companies. “Private equity companies in particular have a unique requirement for financial staff with exceptional communication skills,” says iMultiply founder Kirsty MacKenzie. “The staff often need to present complex financial statements and data to investors and portfolio companies in a way that’s clearly understood even to non-finance professionals.” For more information, or to speak with iMultiply about your resourcing needs, visit