High-growth potential tech firms in Scotland and across the north of the UK will be supported by a new £100m venture capital fund.
Par Equity announced its first close of £67m for the fund, with investments from Scottish National Investment Bank, Strathclyde Pension Fund and British Business Investments.
The University of Strathclyde, several family offices and a ‘significant number’ of Par Equity’s angel community also backed the fund – designed to accelerate some of Scotland and the North of the UK’s most promising tech scale-ups.
The Par Equity Ventures I LP fund will continue to raise towards its £100m target, which will provide ‘necessary capital and strengthen the talent pools in the region’.
The fund is a significant boost to the prospects of scale-up companies in Scotland, coinciding with a more challenging fundraising environment for tech firms. Access to funding was highlighted as a barrier to the sector reaching its full potential in Mark Logan’s Review of the Scottish tech ecosystem.
Helping to unlock that potential and the global competitiveness of Scotland’s technology sector, the fund will be managed from Par Equity’s Edinburgh office and will lead or support Series A funding rounds of £5m to £20m across the North of England, Northern Ireland and Scotland.
The venture capital firm seeks to partner with early-stage companies, operating B2B business models and with strong IP. Many of these companies are innovating in the fields of health-tech, climate-tech and industrial-tech, often driven by new technologies such as robotics, photonics, advanced materials and artificial intelligence.
Launched in 2008 by Paul Munn, Robert Higginson, Paul Atkinson and Andrew Castell, Par Equity has invested over £160m into 77 early-stage technology companies to date, with 30 realisations, including Edinburgh-based Current Health, which was Europe’s second-largest digital health exit ever following its sale to Best Buy.
The launch of the fund will see Par Equity add further resources and capabilities to its existing offer as it seeks to build a better venture capital programme for companies across the north of the UK.
Par Equity achieved B-Corp certification earlier this year, which is that businesses must meet the highest standards of verified social and environmental performance, public transparency, and legal accountability to balance profit and purpose.
The firm has committed to reinvest a substantial amount of its profits from the fund back into the tech ecosystem. Initiatives that are likely to be supported include increasing computer science participation in schools and improving gender representation in the tech sector.
Paul Munn, managing partner at Par Equity said: “We are delighted to announce the fund to accelerate innovation in Scotland and the North of the UK. Championing Scottish talent has been our aim since we launched Par Equity, and we firmly believe in the potential to nurture successful leaders right here in Scotland.
Andrew Noble, partner at Par Equity, who led the fund’s launch, added: “We are surrounded by incredible innovation, and we must now turn these fledgling start-ups into global category leaders. We look forward to working with these companies to unlock those ambitions.”
Jimmy Williamson, executive director at Scottish National Investment Bank, said: “The Bank’s cornerstone investment will enable significant access to crucial scale-up funding to drive growth in the Scottish tech sector, delivering real impact by catalysing innovation and supporting the critical development of the locally-based venture capital industry.
“Working with Par and its new fund is complementary and additive to the Bank’s own direct investing activities and directly aligns with our mission to harness innovation, investing in the industries of the future.”
Neil Gray, Scottish cabinet secretary for wellbeing economy, fair work and energy, said: “Increasing the investment available to Scottish businesses represents an important step towards achieving our vision of becoming one of Europe’s leading start-up economies. I welcome this announcement and recognise the benefits it will have both to innovative companies and our wider ecosystem.”
Mark Logan, chief entrepreneurial advisor to Scottish Government, added: “Scotland’s tech sector produces an ever-larger number of high-quality tech start-ups, but the ecosystem has been previously constrained by a lack of focus on the region from VCs able to provide scaling capital.
“A key recommendation of the Scottish Technology Ecosystem Review was therefore to provide a major stimulus in this area through public-private partnership. That stimulus has just arrived, and it’s a breakthrough moment for Scotland. Par Equity has again demonstrated its commitment to supporting the nation’s start-up ecosystem through its leadership in securing this scale-up fund.”