Scotland’s founders have a diverse set of approaches when it comes to how they engage with and support founders and companies. The following are examples of positive aspects and behaviours of investors in Scotland that should serve as positive examples for investors throughout the ecosystem.
This was a common refrain among founders when describing the ideal balance of engagement from their investors. Another described it as:
“They don’t try to control, they have helped empower”
“They’re helpful when needed and otherwise let us get on with it. The best kind of early stage investor; they [let me execute the vision].”
The best investors anticipate further growth outside of Scotland, aligning their terms of investment with that in mind. They also have a community and network for fundraising outside of Scotland for further rounds.
“They aren't difficult when new investors are joining the company - they don't kick up a fuss. They're happy to see more investment in the company.”
The increased use of Advanced Subscription Agreements (ASAs) and convertible notes are also welcome. They were found to encourage further investment, reduce the risk (slightly) of under or over valuing, allow the founder to raise quickly, and vastly reduce the legal costs associated with the early stage fundraise.
The best investors understand the high levels of risk involved in starting potentially high-growth opportunities, and don’t require external investor buy-in in order to make a decision to invest. Importantly, this doesn’t mean they are reckless with their investments, nor will they always cover a complete investment round, rather that the decision about whether to invest or not doesn’t require additional de-risking. This is an incredibly powerful tool for founders to be able to use when fundraising: to know they have an investor behind them allows them to show that conviction to get other potential investors on board.