Meet the investor: Jan Rutherford, Scottish Equity Partners
A partner at the tech VC fund for over 10 years, Rutherford outlines what she looks for in a business and what to avoid when asking for investment...
Firm: Scottish Equity Partners (SEP)
Name: Jan Rutherford
Where are you based?
I’m based in the firm’s London office but also work out of our Glasgow and Edinburgh offices. I frequently travel across the UK meeting companies seeking investment and working with existing portfolio companies.
What kind of investor are you?
We are one of the UK’s leading venture capital firms. We make equity investments of up to £20m in innovative high growth technology companies. My own background is in healthcare and so I tend to get involved in reviewing businesses with a healthcare angle while also working on broader technology transactions.
What kind of deals do you finance?
We normally make equity investments in growth-stage technology businesses which are at, or close to, profitability, have a proven product or service and are operating in a large or growing market.
How many deals do you expect to complete each year?
We usually complete around five or six growth-stage deals per year however we are not driven by set deal targets in any one year, rather by the desire to back the best technology businesses as and when we find them.
And how many business plans do you see to get to that number?
We receive literally hundreds of business plans every year. A number of these will be ruled out on the basis of geography, sector or stage but a large part of our time is spent limiting our pipeline of potential opportunities to those which best meet our investment criteria.
What kind of person do you invest in?
We look to back inspirational management teams who have the talent and tenacity to build world class companies. I am always excited to meet entrepreneurs as our own experience dictates that business success is largely down to the quality of leadership.
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How big is your portfolio and many successful exits have you had?
Our current portfolio consists of around 35 companies and over the years we have secured more than 110 exits. We are currently working on a number of realisations from within our portfolio. The merger and acquisition market is definitely healthier than it has been for a number of years.
How do you source prospects?
The level of experience within SEP is very high, especially at partner level. All of us have had the opportunity to build strong personal networks of contacts within the high growth technology sectors. I spent eight years in operational and commercial roles in the pharmaceutical industry before moving into investment in 2000 and I still find the industry network incredibly valuable in sourcing and evaluating prospects.
Our CEOs and NXDs often refer opportunities to us and as our networks extend into the technology advisory and corporate communities, these also provide a large proportion of our deal pipeline. We draw all of this activity together under our own in house deal origination function.
What is your ideal investment?
For me, an ideal investment is one that meets or exceeds plans, is really innovative in terms of what it delivers to the market and will eventually secure a great return for its shareholders.
What are your USPs?
As a firm we have a very long track record of successful investing and supporting companies with their growth and expansion plans. We obviously have a particular appreciation of technology sectors and the challenges and dynamics in these markets. I think the management teams we back find us to be very fair, positive and engaged investment partners – but maybe you should ask them!
What are the hot sectors?
There are many interesting sectors right now and technology as a whole remains very buoyant. Fintech in particular is attracting a lot of investor attention and large amounts of capital. There is also increasing interest in digital health as broader technology trends such as mobile and social networking drive increasing consumer power at the same time as data analytics allows for a more personalized approach to medicine.
We are reviewing a number of exciting data-driven businesses across the consumer internet sector right now. We tend to concentrate on finding great companies rather than being too concerned about which sectors are hot.
Three things a company should be able to offer an investor?
- A robust, credible and exciting business plan
- A high calibre, honest and committed management team
- The prospects for an attractive return on investment, relative to the level of risk, within a time frame compatible with fund life
What is the cardinal sin when looking for investment?
There are actually quite a few potential pitfalls:
- Being unable to qualify and quantify the addressable market and to clearly articulate the company’s positioning within it
- Not having the underlying assumptions and detail to hand to back up the business plan
- Stepping over the line from entrepreneurial optimism to unrealistic projections
- And of course, being unrealistic about valuation.
What continuing involvement do you like in an investment?
We will generally appoint one of our partners as a non-executive director to the board post-investment. As investors we don’t run businesses but we do work closely with management on a broad range of areas from recruitment of senior staff to business strategy and budget setting, leveraging our sector and industry networks. We bring a significant track record of growing companies and the successes and challenges we have faced along that journey allow us to provide informed, professional and pragmatic assistance to our portfolio companies.
What has been your best performing investment to date?
I was closely involved with our investment in Biovex; a biotechnology company developing a new class of potent biologics for the treatment of cancer and prevention of infectious disease. It was acquired in January 2011 by NASDAQ-listed Amgen for a price of up to $1bn – a great result for an outstanding team.