🧀 CB Tech Acquisition, Triyit, MiAlgae Raise, new AI Accelerator Cohort
Plus the legal lowdown on EMI.
Thanks everyone who supported me by backing the Kickstarter for our board game last week. We managed to hit our goal in the first hour and it’s still growing. 🙏 Thank you.
Here's your Campfire for the 23rd of September, 2024.
💼 Want to create template legal agreements in minutes for free? Check out what Shepherd and Wedderburn making available for Campfire readers below in the ‘Asks and Offers section’. Also follow the Start to Scale LinkedIn page for useful videos and posts designed to help founders.
🌊 Updates
🏙️ Glasgow-based Smart Things Accelerator Centre (STAC) has launched "thebeyond," a new 22,000-square-foot hub at Glasgow's Skypark, aimed at supporting smart startups and investors. The campus features an electronics lab, fabrication lab, R&D space, media lab, event area, and coworking spaces, and is set to become Europe’s largest "smart things" hub. TS FS SBN IN DGT
💰Livingston-based CB Technology (a specialist electronics contract manufacturer) has been acquired by Elite Electronic Systems for an undisclosed sum, creating one of the largest ECM operators in the UK with a combined turnover of over £50 million. The acquisition boosts Elite’s presence in the UK and expands its ability to provide electronics for harsh environments. SBN
📈 Glasgow-based marketing platform Triyit raised £1.1 million in growth funding primarily from the Investment Fund for Scotland (IFS), managed by Maven Capital Partners and delivered by the British Business Bank, and the Scottish Enterprise Growth Fund as it prepares for global expansion. Specialising in connecting FMCG brands with target consumers, Triyit currently only operates in the UK, and works with brands like Kellogg’s, Mars, and Corona. DGT SBN
🪸 Heriot-Watt University based MiAlgae raised £14 million in funding to scale its production of NaturAlgae, a marine Omega-3 product. New investors SWEN Blue Ocean, Clay Capital, and Rabo Ventures joined existing backers, including Equity Gap, Old College Capital, and Scottish Enterprise. DGT IN ACS
🚀 The University of Edinburgh has announced the latest cohort for its AI Accelerator, featuring 13 global companies using AI to drive positive impact in health, climate, and social issues. Cohort members include Edinburgh-based Lovat (AI-powered tax management software), Fyne Labs (AI graphical app builder), and ProfessorMe (Edtech training). Full list here. Now in its sixth year, previous cohort members have raised a cumulative £71 million in funding. DGT
📢 Building in Green Hydrogen? The Scottish Government announced ‘up to £7 million’ to support green hydrogen projects across the country. The funding will cover development costs for projects ranging from 5 to 400 megawatts, enough to heat over 16,000 homes, while also ‘supporting the hydrogen supply chain and storage solutions to help the industry scale up to meet growing market demand’. DGT
🌱 Cupar-based Growers Garden, a business producing broccoli crisps, secured a distribution deal with Aldi in Scotland. Its 'wonky' veg products will be available in all 106 Aldi stores across the country. The company is collaborating with 16 farming families in Fife who have been growing vegetables for over four generations. IN
🍶 It’s IoT Cheese, Gromit! CENSIS, Scotland's National IoT innovation centre, is helping Appleby Creamery integrate IoT technology to improve energy monitoring and temperature control at its Eden Valley site. The award-winning cheese maker aims to modernise its traditional methods and make production more sustainable through this initiative, which is part of the Digital Dairy Chain project led by SRUC (Rural College) and delivered via CENSIS's Milk Round accelerator. FS
📣 Asks & Offers
🚨Start to Scale by Shepherd and Wedderburn is offering eligible subscribers of Campfire exclusive access to their ‘Start to Scale Hub’ which helps companies create template legal agreements in minutes for free. To learn more and request access click here.
📢 Una Watch is hiring! Una Watch, an innovative start-up focused on creating a unique, modular, repairable, and upgradeable GPS running watch, is hiring a Digital Marketing Manager. As they prepare for their Kickstarter launch in early 2025, they’re looking for someone to lead their digital marketing efforts. Interested candidates should send their CV and cover letter to admin@unawatch.com. For more details, click here.
🥃 Are you a problem-solver driven by curiosity and a passion for your work? Do you thrive on deep, meaningful conversations and value fostering long-lasting relationships? Do you love whisky? If so, we invite you to become a founding member of Dram & Discourse. Learn more here
🦅 Barclays Eagle Labs launched their new Eagle Labs Academy, funded by the UK Government. The Academy provides access to free learning content and entrepreneurship training from different sources. Aiming for those starting their journey to those wanting to scale. Aside from the content, Eagle Labs has partnerships and access opportunities with the Department for Science, Innovation, and Technology, and their Demo Directory. Find out more here.
👭 Interested in connecting with possible co-founders? Fill in your listing on Cofounder Curious today! Connect with others for possible cofounder matching here.
👷Are you hiring? Send us a blurb and we’ll include it in the next newsletter!
✍️ Want to write something for Campfire? Have an opinion you'd like to share? get in touch!
EMI: what you need to know
By Robert Gelb supported by Shepherd and Wedderburn
Last time we learned the basics of share incentives and the different ways founders can think about the process. If you haven't read it yet, you can find it here. One of the big factors for considering what kind of incentive you want to offer was the dreaded 3 letter word: tax.
This week, I'm back with Stephen and Rodger from Shepherd and Wedderburn, and we're diving into another set of three letters that should help with the former: EMI.
What is EMI?
When I think of EMI, to be honest, my first thought is the record label. For Stephen and Rodger however, it's an acronym that helps startups make a different kind of music (see what I did there? sorry/notsorry).
EMI stands for Enterprise Management Incentives and, as Rodger says, it's "pretty much one of the most advantageous, tax “approved” option arrangements in the world. Its limits are that generous. It's easy to structure, and there are so few restrictions on how it works."
Well, someone's a fanboy.
Okay so how does EMI work?
EMI allows each individual to get granted options over shares that are valued up to £250,000 at the time of the grant that have special rules. Often this gives you easier access to 'Business Asset Disposal Relief' (formerly known as Entrepreneurs’ Relief) which can lower the rate of tax the employee needs to pay on those shares.
As Rodger explains, this means for an employee "with qualifying EMI share options, they’d normally pay no income tax, no national insurance, and their only tax liabilities are a capital gains tax (CGT) charge (potentially at a 10% rate) on disposal. This can be compared to an “unapproved” option where all or a significant part of the gain realised by the individual is likely to be subject to income tax and national insurance."
Basically, in normal circumstances, the only tax liability arising in connection with an EMI option will be CGT when you eventually get rid of the shares.
The company also benefits, as Stephen adds, "The corporation tax relief for share options in the UK is typically the amount equal to the gains the individual makes on exercise, so these things can be pretty valuable for both the employee and the company."
Okay okay, if EMI is so great, what's the catch?
Basically, because EMI is so generous, you need to be very careful about approaching it properly, as there are a few things that can trip folks up.
One of these areas is around meeting the various qualifying and compliance requirements set out in the legislation. "There's such a focus on due diligence regarding EMI share options because the difference between getting it right and getting it wrong, from an individual's perspective, can be absolutely enormous," Rodger says.
Stephen adds, "It's fundamentally self-policing. While HMRC might not be conducting audits to determine whether or not a scheme is qualifying, instead when there's a financing round or an acquisition, the counterparty is going to look pretty closely at the arrangements that are in place. Because ultimately, if the arrangements in place aren't correct and implemented properly, that's a problem, and the liability then can flow back to the target company, which makes it the buyer or the investor's problem indirectly."
So why take the implementation and compliance process seriously? Aside from just wanting to get it right, Stephen says getting it wrong might mean HMRC in the future could say, "hold on, what about all this stuff that happened two years ago? You now owe several hundred thousand/ a million pounds worth of tax, together with interest and penalties."
Avoiding foot-faults
I asked Stephen and Rodger about the most common issues they see, and often it comes down to rushing through things or not giving enough thought and timescale to the order of certain operations. As Rodger puts it, "There’s a fairly detailed set of criteria that you have to adhere to, in terms of the structure of the company, in terms of the working pattern of the individual, in terms of the process around granting and notifying these things to HMRC. While EMI is a fairly relaxed regime in terms of how you structure the options, it's everything else that goes around it that often trips people up."
Common examples they’ve seen that then need correcting include trying to grant EMI options to non-exec directors, option agreements not signed correctly, people putting the wrong number of shares in the agreements, and failing to notify HMRC in correct timeframes. Putting percentages in instead of share numbers is one that Rodger noted can be common, "They thought, well, this is an option for a c-suite and should be over 4% of the issue share capital. So, we'll just write 4% in." (that's a no-no by the way).
Not getting in touch with HMRC to agree a valuation before a particular transaction is one of the biggest issues however that’s more complex to fix. "After writing to HMRC and agreeing a valuation, HMRC will then say it's valid as long as your EMI options are granted within the next 60 or 90 days. The number of times companies miss that window is amazing. If they think they can just backdate grant dates, they then find that it doesn't work that way," Rodger explains.
Then there’s this awkward dance that companies sometimes do when trying to get an HMRC valuation done and options issued before going through a funding round or acquisition. As Stephen says, "if you look at the timeline of a company's history, quite often they'll have granted a big batch of EMI options and then, coincidentally, five weeks later, there's a big financing round that comes in at a different valuation. Questions then could be raised about whether or not you were able to conclude that financing round super quickly or in fact, had you been in discussions and been speaking about those valuations long before the options were granted, but you didn't in fact disclose that to HMRC as part of the valuation process? Founders sometimes think that will just be fine, and it isn't always."
"I've had loads of clients come to me and say, we meant to do this a couple of years ago, so surely we can treat it as though it did happen a couple of years ago?" Rodger says, "To which I gently say no, that would be fraud..."
Stephen and Rodger are quick to say that issues can normally be fixed, and not to worry too much about the complexity when starting out with EMI, just pay attention. "People think foot-faults are completely trivial, and generally they are completely trivial, but the consequence of getting things wrong in the future can be so significant, it's worth practicing some good hygiene and taking this process seriously.”
Why would you not want to grant EMI?
When I asked them why a startup wouldn't want to go for EMI, there are basically two reasons: if employees are not based in the UK, or if the type of business couldn’t receive or award the benefit.
When I asked Rodger, he said, "In the last several years I can only really think of one example of a client who could grant EMI options, but actually chose not to, and that was because they were planning to become a bank at some point in the future which would have been a disqualifying event, so we helped them set up something else."
EMI schemes are an advantageous way that founders can set up incentives for their employees. As long as you take the process seriously, it's not super complicated. Next time, we'll go into more detail about Stephen and Rodger's tips and tricks for approaching share incentives.
This is part two of a three-part series about Share Incentives in collaboration with Shepherd and Wedderburn, who sponsor Campfire. Part one covered the basics of share incentives, and part three will showcase tips, tricks, and strategies that companies can use when thinking about the best structure for their business. To find out more about how Shepherd and Wedderburn can help you design a share incentive scheme that works for both you and your team members, reach out to them here.
📅 Events
♻️ 24/09, 09:00 🗺️ Edinburgh: Edinburgh Greentech Meetup - Green Web Development: This event is open to anyone with an interest in sustainability or greentech, and you’ll have the opportunity to meet other people in the space and get to know the Edinburgh Greentech community. MORE INFO
🦅 24/09, 10:00 🗺️ Aberdeen: Eagle Has landed - Barclays Eagle labs September Drop in Clinic: Drop in and let’s have an open discussion about your business goals and ambition and learn more about how your ecosystem manager here at Eagle Labs can support you and your business here at One Tech Hub. MORE INFO
🌎 24/09, 12:00 🗺️ Edinburgh: Edinburgh International Connectivity and Expansion Roundtable Discussion: Join us for an exclusive roundtable discussion featuring CEOs, entrepreneurs, and academics passionate about international expansion. MORE INFO
📝 24/09, 17:30 🗺️ Edinburgh: Scottish Notion Meetup: Enjoy excellent chat, with speakers and case studies to develop your Notion knowledge. With free soft drinks and food, this is the perfect post-work hangout. MORE INFO
🏦 25/09, 08:30 🗺️ Edinburgh: Fintech Summit 2024 – Financial Technology Conference: The conference will reflect on the evolution of financial technology against this backdrop of volatility; considering the key trends, challenges and market disruptions, and discussing the opportunity for Fintech to help customers manage the cost of living crisis and help the country to build back better. MORE INFO
🩺 25/09, 11:00 🗺️ Dundee: Barclays Eagle labs at MSIP September Drop-in Clinic 2024: Drop in, Relax and let’s have an open discussion about your business goals and ambition and learn more about how your ecosystem manager here at Barclays Eagle Labs can support you and your business here at MSIP. MORE INFO
🌐 25/09, 12:00 🗺️ Glasgow: Glasgow International Connectivity and Expansion Roundtable Discussion: Join us for an exclusive roundtable discussion featuring CEOs, scale-up entrepreneurs, and academic experts passionate about international expansion. This event will delve into the strategies and challenges of building international connectivity and achieving successful global expansion led by Open University and TIN Ventures in the lead up to the launch of their Business Export Exchange Programme. MORE INFO
💡 25/09, 15:30 🗺️ Kirkcaldy: Lightbulb Sessions: Fife Creative Tech Workshop and Meetup: The Lightbulb Sessions are monthly workshops looking at a different aspects of data driven theatre: From exploring what data driven tech is and how you could/should use it, to IP and contracts, from finding and commissioning technologists, to designing inclusivity and accessibility into new tech, to thinking about security and ecologically responsible tech. MORE INFO
➰ 25/09, 17:30 🗺️ Edinburgh: Prewired: Prewired is here to help enthusiastic young coders of any ability to take their ideas and make it into a software reality. MORE INFO
💰 25/09, 18:00 🗺️ Glasgow: Funding your Startup: From Bootstrapping to Seeking Investment: A panel of entrepreneurs and investors to share their experiences with different funding routes. Is it the great debate? Bootstrapping vs Seeking Investment? Discover which path might be right for you. Then, it's your time to shine during the community open mic session – share your wins, seek advice, and connect with your fellow founders! MORE INFO
🤝 25/09, 18:00 🗺️ Edinburgh: Entrepreneurs Social Club (ESC) - September 2024: Welcome to our monthly Entrepreneurs Social Club (ESC) gathering! Skip the talks, presentations and lectures - in favour of going straight to the bar, where real connections are made! MORE INFO
🏆 25/09, 18:30 🗺️ Edinburgh: Scottish Financial Technology Awards 2024: The awards is an evening to celebrate the development of the Scottish Financial Technology ecosystem, with a series of awards categories designed to recognise outstanding individual and organisational achievements within the sector. MORE INFO
🥐 26/09, 09:00 🗺️ Edinburgh: Barclays Eagle Labs: Networking Breakfast: Get your business cards ready, and start your day with the Barclays Eagle Labs Professional Breakfast! With coffee and a breakfast roll included, this is the best way to start your business day. MORE INFO
🤝 26/09, 09:00 🗺️ Edinburgh: Edinburgh Professionals Networking - Thurs 26th Sep: This month's meetup activity is still being designed, but make sure to bring plenty of business cards as the activity will get you meeting lots of different people! MORE INFO
🌐 26/09, 10:00 🗺️ Aberdeen: Aberdeen Horizon Europe Ecosystem Session: The session will focus on ecosystem development in Aberdeen, bringing together stakeholders from the region who are interested in taking part in Horizon Europe project partnerships. Funding Call Calendar here. MORE INFO
🎯 26/09, 17:15 🗺️ Edinburgh: Barclays Eagle Labs and CodeBase monthly Quiz - Edinburgh (September): Dave, from Barclays Eagle Labs, and Sarah, from CodeBase, will be hosting a pub quiz each month from the CodeBase, Edinburgh, event space. The winning team will receive a trophy that they can display proudly in their office/on their desk for the month, until someone else tries to win it at the next quiz! MORE INFO
☀️ 27/09, 08:30 🗺️ Dundee: Breakfast Networking at the Flour Mill: Open to everyone, join us in Dundee's Flour Mill to connect with members of the local tech and business community and those who use the Flour Mill. Come along for coffee, breakfast and networking! MORE INFO
💻 27/09, 09:30 🗺️ Online: Online Coworking Session - Week 2: This event is designed to foster accountability and provide a sense of community as participants work together towards their goals. Whether you're a freelancer, entrepreneur, or remote worker, this virtual coworking session offers a platform to share ideas, seek advice, and celebrate achievements. MORE INFO
🤝 27/09, 10:30 🗺️ Dundee: Coworking at the Flour Mill: Join us at the Flour Mill Dundee for a day of free coworking in their space. This is a great opportunity to connect with the local tech and business community, use the excellent facilities available and get an extra dose of Friday motivation. MORE INFO
🤝 01/10, 17:30 🗺️ Edinburgh: Tech Meetup Edinburgh - October 2024: The Tech Meetup is a monthly excuse for the tech community around Scotland to network, learn and share new ideas! Come along to enjoy informative presentations from your peers, listen to exciting projects in the community and make some new connections. MORE INFO
☕ Series: Unfiltered: An in-person and informal catch-up with the Scottish Codebase community! Come join us for a coffee!
⛾ 02/09, 08:30 🗺️ Stirling , MORE INFO
⛾ 02/09, 08:30 🗺️ Inverness , MORE INFO
⛾ 02/09, 08:30 🗺️ Edinburgh , MORE INFO
⛾ 02/09, 08:30 🗺️ Glasgow , MORE INFO
⛾ 02/09, 08:30 🗺️ Aberdeen , MORE INFO
⛺ 02/10, 09:00 🗺️ Glasgow: Ideation Bootcamp Programme | Glasgow: Join us for an intensive 3-day bootcamp designed to empower BAME entrepreneurs with the skills and knowledge to launch successful startups. MORE INFO
♻️ 02/10, 16:00 🗺️ Online: Scottish Enterprise Clean Heat Strategic Workforce Development Fund: Are you looking to diversify into the Clean Heat Market, join this Webinar learn about the Clean Heat Strategic Workforce Development Fund. MORE INFO
➰ 02/10, 17:30 🗺️ Edinburgh: Prewired: Prewired is here to help enthusiastic young coders of any ability to take their ideas and make it into a software reality. MORE INFO
🤝 03/10, 18:00 🗺️ Glasgow: Tech Meetup Glasgow - October 2024: All are welcome and there is no requirement to have any level of tech knowledge or experience to attend, just a desire to learn. Come along (bring your friends), network and learn something new with us! MORE INFO
💼 09/10, 09:00 🗺️ Aberdeen: Planned Maintenance & Asset Management: Learn to think lean as we support you through the development of a continuous improvement plan aligned with energy transition priorities. MORE INFO
🎤 10/10, 10:00 🗺️ Dundee: Pitch Perfect Presentation Skills: This will be a full day programme from 10:00 till 16:00 with a talk and workshop from Greg Summers on pitching and public speaking and a chance for people to present their practice pitches in the afternoon. MORE INFO
🤝 11/10, 09:30 🗺️ Online: Online Coworking Session - Week 3: This event is designed to foster accountability and provide a sense of community as participants work together towards their goals. Whether you're a freelancer, entrepreneur, or remote worker, this virtual coworking session offers a platform to share ideas, seek advice, and celebrate achievements. MORE INFO
🎯 Deadlines
📣 Foras has teamed up with Britain's Got Startups to represent Scotland and connect local start-ups and scale-ups with a broad network of investors. Scottish businesses have the chance to showcase their ventures to a range of investors by applying to the Scotland-wide pitching competition, with the deadline on October 1st. Find out more here.
🇬🇧 Upcoming Innovate UK deadlines:
Innovate UK Smart grants: July 2024 Applications close 23 October
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That’s all for this week - have a great one!
Team 🔥 Campfire