This was the take-home message given by Ian Wright, Director of Isle of Barra Oysters, who spoke at today’s Association of Scottish Seafood Growers’ annual conference about setting up a business that is likely to become Scotland’s second largest oyster producer.
Three years into the project, and with the first commercial harvest finally on the horizon, Ian explained the funding options he’d been faced with and which ones were more useful than others.
He was, he admits, fortunate to count on considerable investment from private investors and his parent company, the AP Jess Group. But he also explored a number of conventional funding options for the “high risk/medium return” venture - a tough call given that at least three years is required before any return on the investment is possible.
Indeed, according to Ian, attempts to gain funding from high street banks resulted in both Clydesdale and RBS deeming the venture to be “too risky” to offer a loan; there was no funding available through EFF at the time; and crowd funding was, on investigation, found to be a “potential legal nightmare”.
Thankfully, however, he was able to raise £400,000 from Highlands and Islands Enterprise (HIE) – “half in grants and half as a loan”, which “helped to de-risk our activities”.
Terms and conditions
According to Ian, the key reasons his application was successful were: the job creation aspect - the company currently has 11 full time employees; the potential to generate more than £200,000 per year; the fact he had a good track record with a previous business venture; the export potential offered by the business [Ian told Fish Farming Expert that he is planning to target the Asian market, in particular]; and the sustainability of the sector.
On the downside, however, he mentioned: the lack of application template; the fact it took over a year to complete the application process; and being hit by a bill of £18,000 “in legal fees we weren’t expecting”.
Nevertheless, “overall we are very grateful that HIE stepped up to the plate when no one else would,” he pointed out.
The end result
The company now has “9-10 million oysters in the water”, cultured in suspended rafts, and the capacity to grow 3 million a year – a figure he hopes to increase this to 5 million within a few years, which would make them Scotland's biggest oyster producer after Kyle of Tongue.
Advice to others
Ian admits that the route he has taken may not be open to everyone, and suggests that one way of getting over the “lack of ready capital” available to the industry would be for the Scottish Government to “set up some sort of new entrants’ fund”, similar to that offered to those going into the agriculture industry."