A successful Scots computer software company serving blue chip
multinationals in the oil and chemicals sectors is seriously considering
a move to the US because of an equity gap which has closed the door on
its expansion plans.
No-one, it appears, from the Scottish Office, the local enterprise
company or the banks through venture capital companies to organisations
such as Strathclyde Seed Capital Fund or Dumbarton Enterprise Fund, is
able or willing to come up with investment assistance for a plan the
company says could increase its staff three-fold.
A three-inch thick folder of correspondence on the desk of Stephen
Hornby at ISL Software Services of Kirkintilloch testifies to the
efforts ISL has made this year to raise investment capital.
The company has written to the Prime Minister, Scots Industry Minister
Allan Stewart, and its MP, Sam Galbraith, over what it regards as a
ludicrous chain of events.
At the heart of the problem is a unique software product, which ISL
has already sold to one major oil company, which greatly tightens up
computer systems security particularly in multi-corporate operations.
The US market alone is enormous.
Basically, it limits access to legitimate users and effectively
eliminates the danger of damage, whether deliberately or unwittingly, to
other companies' systems through todays's mesh of interconnecting
electronic links.
ISL, formed by Hornby and his wife, Anne, in 1989 and now employs 10,
has made its name in bespoke software for the oil and chemicals
industries here in Scotland and in the Far East.
However, its new security product, which has aroused considerable
interest in banking and among City stockbrokers, requires an investment
in hardware and the expansion of staff by at least 20.
As a result, ISL approached the Scottish Office for an innovation
grant. That application, made in March, was rejected. A further appeal,
made with Sam Galbraith's help, also failed.
Hornby says: ''The application failed on the grounds that the Scottish
Office considered there was no technological risk involved. That would
appear to suggest that there has to be a risk of failure for a grant to
be given. They appear to believe the product will be a success so there
is no money for that. They should rename it the risky innovation
grant.''
Subsequent, and unsolicited, correspondence from the Sottish Office
has informed ISL that until the company can get a package of financial
support together, ISL will not be eligible for a grant.
Hornby says: ''You have to prove a need, that is, you need money. Now
it appears that the Scottish Office is saying you have to have money
before you get a grant.''
Approaches to local enterprise company, Dunbartonshire Enterprise,
have also proved fruitless.
Anne Hornby throws an inch-thick book furnished by the LEC on to the
table. It contains page after page of funding sources. ''We have been
through it from cover to cover and we appear not to qualify for
anything, '' she says.
Hornby adds: ''Here we have a product conceived and made in Scotland,
a product which will create jobs and also exports. But it looks like we
will be forced out of the country.''
ISL management is going to the US in October to look at opportunities
on the east coast.
David Pearson, director of enterprise development at Dunbartonshire
Enterprise, said the LEC could not comment on individual firms for
reasons of commercial confidentiality. It has to be emphasised that ISL
has not spoken to Mr Pearson directly or he to the company.
Pearson was able to comment on a general hypothesis. He said an
essential aspect for any young company seeking external investors was a
good, solid business plan. His experience over a number of years, was
that small businesses underestimated or neglected this apsect when
hoping to attract external investment.
He added: ''It is not in our interest to turn companies away and where
they require sound professional advice on a business plan we provide 50%
support for the use of a professional.
''Where a company has the right management, a good, solid business
plan and a good idea in the form of a product I do not believe there is
a funding gap in Scotland.''
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