THE Scottish networking firm that ran Dragons' Den-style events for technology entrepreneurs has been forced to close after struggling with mounting debts.
In what will be seen as a significant blow to the Scottish technology sector, Connect Scotland has ceased trading and has had to lay off all seven staff.
The company, chaired by technology investor Ian Ritchie, sent an e-mail to members late la
st week, saying the technology market has "matured" since it launched 12 years ago, and it has recently found it difficult to secure enough new sources of income.
The Edinburgh-based organisation was mainly funded by its membership but has also applied for European Union and other grants in the past.
"As you'll have recognised, Connect has undertaken additional activities in order to bring greater variety in terms of revenues streams, regrettably they have not generated sufficient funds to allow us to continue within the current market environment," the e-mail states. "It is therefore with reluctance that the board has decided Connect has no choice but to cease trading."
Scotland's technology sector experienced several fallow investment years following the dotcom downturn in 2000-2001, while private equity and venture capital investment on the whole has seen a sharp decline in the UK since the start of the credit crunch. The value of buy-out deals fell to £10.9bn in the first six months of this year compared with £24.5bn in the first half of 2007.
Accounts filed at Companies House show Connect, which helped attract more than £220m of private equity investment to the Scottish technology sector since 1996, was struggling with growing debts. The latest accounts available show a loss of £112,397 in the year ending May 31 2007, up from £68,967 the year before.
The company was to hold its annual investment conference in Edinburgh at the end of October. Up-and-coming tech firms were due to pitch to business angels and venture capitalists in a similar set-up to the TV programme, Dragons' Den. Previous success stories from the conference include Wolfson Microelectronics, the Edinburgh University spin-out that supplies audio chips for Apple iPhones, AIM-listed Stem Cell Sciences, and MTEM, which sold for £257m last summer, just 18 months after it started up with seed funding of £15m.
Connect managing director Stephen Morris said the firm still hopes to continue in some form and said negotiations are ongoing.
He wrote in the e-mail: "The possibility of preserving the Connect brand and some of the activity is being explored with other organisations and, if possible, we will inform you if current discussions and negotiations are successful."
The full article contains 453 words and appears in Scotland On Sunday newspaper.
