Edinburgh-based angel investment syndicate Equity Gap named Scotland's most frequent backer of women-owned firms

The study from Young Company Finance (YCF), which looks to provide in-depth information on the financing of early-stage companies in Scotland, found that Equity Gap between 2018 and 2023 backed 12 equity investment rounds in female-led businesses – 30 per cent of the total rounds during this period. However, the YCF Diversity Data Report also highlighted the continuing disparity in investment for women-owned businesses in Scotland overall, stating that only 5.4 per cent of total funding rounds last year went to such firms, and the median amount raised by women per round of funding in the period was £254,000 compared to exactly £1 million for men.

Commenting on the report, Equity Gap managing director Fraser Lusty said: “The new YCF report confirms our long-held conviction that Equity Gap is at the forefront of investing in and adding value to women-led businesses. Our investment process is designed to be member-led, inclusive, and accessible, allowing members to find the best early-stage investment opportunities. There is no investment committee or screening process where individual biases might creep in, which is very different to institutional investors.” The syndicate in fact believes that if other Scottish investors adopted its approach, which it says enables more women to participate both as investors and founders, female-led companies could access ten times more funding.

Lusty, who is also a Women’s Enterprise Scotland ambassador, championing diversity in the Scottish angel investment sector, added: “Equity Gap is proud to have supported more than 75 women investors, achieved gender diversity within our board and operating team, and is a long-standing signatory of the Investing in Women Code. We look forward to working with more women-owned businesses to inject critical early-stage investment.”

Equity Gap points out that its members have invested in excess of £6m directly into 13 female-led companies, leveraging £40m of total funding for them, with recent relevant investments including My Smash Media, an artificial intelligence matchmaking platform for the creative industries, and global drug research firm Cytochroma, while existing portfolio companies supported include digital booking solution Appointedd and hydrogen vehicle specialist UlemCo.

The angel investment syndicate was set up in 2010 by Scottish rugby international turned business leader Jock Millican, aiming to help match investors with entrepreneurs looking for early-stage business funding. Its investor members typically plough sums of about £100,000 to £500,000 into ordinary shares at initial or seed investment stage, which can be supplemented by parties including Scottish Enterprise, the Scottish National Investment Bank (SNIB), the University of Edinburgh's venture investment fund Old College Capital, and BGF (formerly known as the Business Growth Fund).

Equity Gap explains that it has now invested in more than 40 companies altogether, leveraging at least £200m in total investment into the portfolio, and has created more than 600 high-quality jobs, primarily in Scotland, across a range of sectors including clean/green technologies, life sciences, manufacturing, digital technologies and food and drink. Additionally, it was in December 2023 announced as ranking fifth in the UK's top ten most active angel networks by private company data source Beauhurst.

Alex Lusty, head of operations and compliance at Equity Gap, who joined the investment specialist in 2019 after a 25-year career in banking, last year said: “What I’ve been keen to do is help us as an organisation recognise what was already in place to support female-led businesses, and female investors, and give a bit more of a lens and a spotlight onto that activity. Equity Gap has always had a vision of being inclusive and accessible, and it was very much set up as a member-led organisation, so designed to help bring people together to collaborate.”

Alison Grieve of YCF (which found that Fife-based Eos Advisory provided the greatest funding in terms of total amount, with the four rounds it led or supported totalling £11.6m) has now said: “[We have] been tracking funding going into start-ups and scale-ups in Scotland for over 25 years. We felt a responsibility to analyse that data through the lens of diversity, specifically the individuals who own and control these companies. Although the overall results revealed continuing disparities in funding allocation, it was encouraging to discover that Equity Gap was the most frequent backer of women-owned businesses, as a member-led group of investors that has been backing women-owned businesses from its first year of formation.”

The YCF report sits against a backdrop of broader research on and efforts to boost female entrepreneurship in Scotland. Female founders’ network AccelerateHer recently revealed the results of a UK-wide poll revealing that firms of this type are showing strong appetite for growth, but require more support in key areas cited as lagging to help them flourish and power up their contribution to the economy. About two in five said they were actively seeking investment to catalyse their companies.

Separately, following the publication in February 2023 of independent review Pathways: A New Approach for Women in Entrepreneurship by Eos Advisory partner Ana Stewart and tech expert Mark Logan, Pathways Forward was launched the following September to drive an action-led approach towards realising key aims of the report. Last month, Pathways Forward launched its Pledge initiative, with AccelerateHer, CivTech, CodeBase, Deloitte, Eos Advisory, Scottish Edge, and the SNIB signed up as its first members, committing to actionable steps and their performance measured over a 12-month period.