Groundbreaking study reveals impact of Scottish angel investing group

The impact on the Scottish economy of the country’s longest-established business angel investment syndicate, Archangel Investors, has been researched in detail for the first time by the Hunter Centre for Entrepreneurship at the University of Strathclyde Business School.

Kerry Sharp Head of the Scottish Investment Bank Kerry Sharp, Head of the Scottish Investment Bank


Since its formation in 1992, Archangels has invested over £90m in 80 Scottish companies, leveraging £27m of co-investment from Scottish Enterprise.

Published on the 4th September, 2015 the first study of its kind, found:

  • Gross Value Add (GVA)* – For every £1 invested by Archangels, its portfolio companies have contributed an estimated £7.08 - £8.94 of GVA to the Scottish economy.
  • Jobs – The companies in which Archangels has invested, all of which are based in Scotland, have created nearly 3,000 jobs since 1992. These are high value, specialised jobs with salaries outperforming the national average.
  • Turnover – Archangels’ companies are estimated to have generated turnover of at least £1.31bn since 1992. This is a multiple of 14.34 x every £1.00 invested – in excess of previously documented US venture capital portfolio companies’ average multiple of 6.27 x every $1.00 invested.
  • Value Creation – Archangels has exited from 18 companies, 12 of which have remained in Scotland, 3 moving overseas and 3 subsequently dissolving. Those companies that remained in Scotland have built on Archangels’ original investment, generating further revenues of £587m and creating a further 240 jobs since Archangels sold.
  • Risk – Of the companies in which Archangels has invested, 44% (by number) have failed. However, these account for only 14.9% of cash invested, as Archangels tended to identify failures early in the lives of these companies.

Archangels was a pioneer of business angel activity in Scotland and, along with LINC Scotland (the national association for business angels in Scotland), was instrumental in the creation of the Scottish Co-Investment Fund (SCF). Archangels is a long term investor, taking an average of eight years to realise a return by successful exits which have realised over £100m from £36m invested.

The SCF, established in 2003, increased the number and size of investments Archangels was able to make, now between 10 and 20 per year. The SCF matches private funds up to a maximum of £1m and this public/private partnership for supporting early stage growth companies in Scotland has seen Scottish Enterprise, through the SCF, investing around £18.9m in Archangels’ active portfolio to date.

Scottish Enterprise has been Archangels’ most important partner to date and has been instrumental in the creation of increased business angel and economic activity since the SCF was established in 2003 (and subsequently the Scottish Venture Fund in 2007).

The study, published today (4th September, 2015), was carried out by Dr Niall MacKenzie and Margaret Coughtrie of the Hunter Centre for Entrepreneurship at the University of Strathclyde Business School. Its objectives were to: (1) understand the economic impact of Archangels’ investment activities between 1992 to 2015; and (2) understand the wider, less tangible impact Archangels’ activities have had within the Scottish economy.

Archangels was established by entrepreneurs, Mike Rutterford and Barry Sealey, following their first investment in what was later to become Optos plc upon its flotation in 2006. Optos was acquired by Nikon earlier this year for £259m.

Speaking at the University of Strathclyde’s Technology and Innovation Centre in Glasgow, where the results of the study were unveiled, Deputy First Minister and Cabinet Secretary for Finance, Constitution and Economy, John Swinney MSP, said:

"Our vision for Scotland to become a world-leading entrepreneurial and innovative nation relies on people and organisations taking risks.

"This report demonstrates what an outstanding success Archangels is, and how instrumental its investment has been in supporting sustainable Scottish businesses, creating high value jobs and contributing to the economy.

"I want to see an increase in the scale of business angel activity in Scotland, and through the tremendous work of Archangels and its partners and the increased support and funding for SMEs in our Programme for Government, I am confident we can meet that aim."

Eric Young, Chairman of Archangels, said:

“The conclusions of this study provide a fascinating insight into the contribution Archangels has made to the Scottish economy over the last 23 years. They represent something of which everyone involved in Archangels, past and present, should be proud.

“We would like to acknowledge the support that we have received from Scottish Government, Scottish Enterprise and the UK Government and, of course, the entrepreneurs we were fortunate enough to back. Early stage investing is all about risk and it is important that we celebrate the Scottish entrepreneurial success stories on which Archangels is founded whilst recognising that without the failures we would not have been pushing hard enough.”

Co-author of the study, Dr Niall MacKenzie, of the Hunter Centre for Entrepreneurship at the University of Strathclyde Business School, said:

“The results of this study underline the significant contributions Archangels makes to Scottish company growth, regional competitiveness and economic development. Our findings should be of particular interest to policymakers and others seeking to better understand the economic impact arising from early stage investment.”

Kerry Sharp, Head of the Scottish Investment Bank, said:

“This groundbreaking business angel research will help us all to raise our understanding of the vital role of risk capital in helping growth potential Scottish companies to launch their products and services onto international markets. The overall Scottish risk capital market has more than doubled over the last three years to some £202m for 2013 and Archangels has played no small part in that success.

“The findings of this report are important and highlight the valuable role that Archangels plays in advising companies at each stage of their development. We look forward to continuing our partnership with Archangels to ensure that the growth plans of many more ambitious Scottish companies are achieved.”

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