The first point of contact in TRICAPITAL for companies seeking investment is Kathy Kinder, Investment Manager. Kathy is happy to have initial discussions about TRICAPITAL, our investment approach and about your company’s business plan and investment needs.
Our Investment Approach
As TRICAPITAL is based in the Scottish Borders, members are particularly interested in businesses that are located in the Borders, Lothians and North of England, or are considering relocation to the area. We are however open to approaches from companies based elsewhere which display potential for high growth and attractive financial returns.
Each investment opportunity is considered on an individual basis and on its fit with TRICAPITAL’s approach. We take pride in being open and friendly, as well as thorough. We are also prepared to play a long game, working with companies both prior to and after investments to ensure that each party gets the most out of the relationship and that there are no surprises for anyone.
Typical Investee Company
Although the syndicate was created to invest in Borders-based businesses, we quickly found that we needed to expand our spatial reach to find a suitable number and range of investee companies. Within this, whilst we try to maintain a geographical spread of a reasonable travel distance from Melrose, we now have a portfolio stretching from Aberdeen to St Boswells and to Glasgow, though with a concentration in East Central Scotland. We continue to give preference to Borders-based businesses.
Strategically, we do not invest in specific sectors. Rather, we provide the average investing member with the opportunity to create a reasonably balanced portfolio of SME businesses.
While our preference is for early stage businesses, our portfolio ranges from spin outs and start-ups to established businesses looking to expand. In our home territory of the Scottish Borders, we have also funded a management buy-in and a buy-out from an administrator, thus helping to preserve employment in our local area.
While we prefer to hold a small (but meaningful) minority stake, our share of an investment ranges from almost 70% to less than 10% – mainly where we have co-invested with other angel syndicates or institutional investors and/or have been involved in a number of rounds.
We have held many of our investee companies now for more than three years, and are approaching the stage at which they could be sold, should a buyer be found. Several are working towards IPO/trade sale, and with others, we are looking to realise value in other ways.
Overview of Investment Vehicles
TRICAPITAL is not a fund, and members invest on an individual basis. We expect that this will continue on a largely equity basis in EIS/SEIS compliant businesses, or those suitable for co-investment with Scottish Enterprise/The Scottish Investment Bank. Many of our investments will be alongside other angel syndicates whose members invest on the same basis as TRICAP members.
Our preferred deals are EIS/SEIS compliant, straight ordinary equity investments. However, on occasion, members have used Convertible Loan Stock and interest bearing loans which, where possible, are secured over the company’s assets. Deals can include management/staff options (usually exit-based) and while we do not favour ratchet agreements, they usefully provide management incentivisation where we have difficulty agreeing a valuation.