Scotland needs more high-growth entrepreneurial businesses to improve productivity, create new green jobs and put innovation at the heart of the economy.
In north-east Scotland, the ONE Enterprise Fund supports entrepreneurs and founders leading some of the region’s most dynamic and innovative SMEs.
The £2 million private-sector loan fund created by Opportunity North East (ONE) and the Andrew Salvesen Family Trust is a significant addition to the entrepreneurial ecosystem.
What does the fund do?
Launched in November 2019, the ONE Enterprise Fund provides interest-free loans to ambitious businesses at critical points in their growth. It fuels investment in new technology, high-value manufacturing, production capacity, and new jobs.
It has approved more than £1 million in loans for 25 digital, energy, food, drink and agriculture businesses. The fund has also helped early-stage companies to secure equity investment.
Representatives from the Andrew Salvesen Family Trust, ONE and other senior business leaders sit on the Fund assessment panel.
The loans are repayable within five years, and recipients also benefit from engagement in the transformational projects and programmes co-created, developed, co-funded and delivered by ONE in digital tech, food, drink and agriculture, life sciences and tourism.
Two early loan recipients have already fully repaid their loans, and others are being repaid.
‘Loans meet a critical need’
Kevin Milne, formerly group treasurer with Aberdeen Asset Management, chairs the ONE Enterprise Fund assessment panel and believes it is filling a gap in the market.
He said: “The loans meet a need that other funding sources haven’t been addressing. It is a combination of timing – where the business is on its development trajectory – and the funding scale.
“Our loans are typically in the £20k to £50k range, beyond the family and friends source that early-stage businesses might tap into but lower than other funders might consider.
“The loans meet a critical need, enabling automation in a manufacturing process or bringing essential skills into a business or field rails to prove a product.
“The loans have also been vital for businesses to secure other funding or subsequent investment. There’s a lot of experience across investment, finance, business growth, tech and key sectors on the assessment panel.
“If the fund and ONE have backed it, people look at a business and think it is a serious proposition.”
What are the criteria?
The fund applies a rigorous but simple process to its loans.
“We are essentially looking at three things. Is there a market for the product or service? Does the management team have the ambition and skills to achieve its goals? Is the business likely to be able to repay the loan? Our process is rigorous but straightforward and doesn’t come with fees attached,” said Mr Milne.
“The fund is also highly differentiated because the loans are interest-free, and we don’t take equity or shares in the businesses. The return on investment we seek is their growth and contribution to the economy.”
‘Evergreen’ fund renewal
The panel has been particularly impressed by the quality of businesses in the region.
“We are essentially looking for three key attributes. Is there a realistic market for the product or service? Does the management team have the ambition and skills to achieve its goals? Is the business likely to be able to repay the loan?
“That’s important because the fund is evergreen, and the repaid loans go back into the fund for future loans. Our process is rigorous but straightforward and doesn’t come with prohibitive fees attached,” explained Mr Milne.
“The fund is also highly differentiated because the loans are interest-free, and we don’t take equity or shares in the businesses. The return on investment we seek is their growth and contribution to the economy.”
The assessment panel has been particularly impressed by the quality of businesses in the region.
“We’ve been delighted by the quality and number of businesses coming forward with great ideas and products. That reflects the entrepreneurial nature that exists in the north-east, and it is very encouraging. You can clearly see the potential for the next generation of high-growth businesses here,” said Mr Milne.
“Entrepreneurial growth is more important than ever, and we see the Fund playing a key role in backing that going forward.”
Support from the Fund is transformational to businesses across the region’s established and emerging industry sectors.
A little Kindness goes a long way
The Kindness Bakery, based in New Deer, has automated processes to boost productivity. It used a ONE Enterprise Fund loan to purchase a faster and more environmentally efficient product packing machine, enabling it to fulfil new and larger orders.
The award-winning business manufactures own-label oatcakes for Aldi stores across Scotland and sells its Kindness range UK-wide.
Director Mark Kindness explained: “The support from the ONE Enterprise Fund enabled us to introduce more efficient, better looking, more customer friendly and greener product packaging.
“We shifted from packing 36 oatcakes into an acetate tray to four sleeves of nine oatcakes. It was a win for everyone, and we’ve produced more units faster than we previously could. Our year-on-year sales in Aldi across Scotland are up 23%.
“There’s also been a positive impact on our Kindness range. We’ve rebranded, got better-looking packs and are growing our product sales across the UK. Building on that is a priority for us.
“The loan was crucial to achieving all of this, but it wasn’t purely financial. The wider expert food industry support we’ve accessed at ONE is really important. You deal with people who know and understand your business and the sector. It’s a great resource to draw on.
“Having fresh eyes to look at opportunities or problems is helpful. The honest, impartial advice is what I value most,” said Mr Kindness.
Businesses in the region’s growing digital tech sector account for more than one-third of loan recipients.
High-flying growth
Fennex specialises in developing AI-driven software solutions to accelerate digital transformation in the offshore energy sector. It used its loan to commercialise and scale up an industry-first digital safety solution.
Co-founder Nassima Brown said: “Fennex is going through a period of growth driven by successful innovative tech. Access to funding has enabled us to thrive and accelerate the trajectory.
“The ONE Enterprise Fund helped us to grow our team and accelerate our growth. We have doubled the team size in the last year, onboarded new international clients and accelerated our research and development efforts to expand our offerings.
“Our innovative digital tech is helping teams to transform the execution of critical offshore safety processes and delivering unprecedented improvement in safety performance efficiently and sustainably. This is driving our ongoing accelerated growth,” explained Ms Brown.
Smart on the farm
Agriculture is an increasing area of focus for tech development. With safety an industry priority, farmer Marc Skivington devised an innovative solution to manage machinery, which can ultimately save lives.
His multi-award-winning Smart Farmer is a cloud-based software and mobile app tool. It uses a traffic light system to help farmers run checks on machinery before starting a job and manage maintenance and servicing. He used a ONE Enterprise Fund loan to enhance the app with additional features.
“The ONE Enterprise Fund recognises the value and potential of start-up agritech businesses. It’s all well having an idea and proving an early success, but scaling and growth come with additional cashflow challenges. The loan with a flexible payback option over five years is great to get the project fired up, and when generating profits, you can pay it back,” said Mr Skivington.
“It’s made a big difference to the business, and growth is starting to scale. We are currently in talks with NFU Risk Management, building a partnership reaching into an existing market.
“The team at ONE are also fantastic. The advice received from the people I’ve engaged with in the fund and the food, drink, agriculture, and digital tech teams is second to none,” said Skivington.
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