Investment Strategy
The Bank’s investment strategy forms part of the core strategic framework through which the Bank is governed, operates and reports.
In line with the Shareholder Relationship Framework, the strategy is reviewed and approved annually by the Bank Board, and updated where necessary to reflect any material changes to the Bank’s responsibilities or operating environment.
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Investment Strategy 2026 - 2027
Introduction
The Investment Strategy for 2026–2027 reflects the next stage in the Bank’s development as Scotland’s national development bank. Building on more than five years of investing, the strategy sets out a disciplined approach to deploying capital while continuing to deliver long-term economic, environmental and societal impact.
The strategy reaffirms the Bank’s role as a mission-led, patient capital investor with a higher risk appetite than traditional investors. We balance ambitious impact objectives with robust commercial investment decisions, ensuring the portfolio continues to mature while supporting Scotland’s long-term prosperity.
For the coming year, we have refined the focus of each of our three missions:
- Innovation – supporting ambitious Scottish businesses with proven growth potential across all sectors.
- Place – addressing Scotland’s housing emergency while investing in communities, infrastructure and wellbeing.
- Net Zero – strengthening Scotland’s energy security, infrastructure and industrial transition.
Alongside these priorities, the strategy introduces a refreshed approach to portfolio management, clearer mission objectives and updated investment criteria designed to maximise long-term impact and commercial returns.
We also continue to support a diverse investment ecosystem through initiatives including the planned Scottish Universities Fund, helping more high-growth businesses emerge from Scotland’s world-leading research base.
As the Bank enters its next phase, the strategy provides greater clarity for businesses, projects and investors seeking capital while continuing to build a resilient, perpetual investment fund for Scotland.
Investment key principles
Our investment activity continues to be guided by four core principles.
Mission impact
We invest to deliver commercial, societal and environmental impact aligned to the Bank’s three missions.
Patient capital investor
Where appropriate, we invest over longer time horizons to enable businesses and projects to achieve sustainable long-term growth.
Crowding in
The Bank seeks to catalyse economic activity by investing alongside private sector investment, or ‘crowding in’.
Commercial terms
We invest between £1 million and £50 million in businesses and projects across Scotland on commercial terms through debt, equity and, where appropriate, fund investments.
Investment criteria
Priority sectors
Every investment is assessed against consistent commercial and impact criteria.
Across all investment opportunities we look for:
- Investment between £1 million and £50 million
- Strong, experienced management teams
- Demonstrable product-market fit and revenue generation where appropriate
- Appropriate technology readiness
- Co-investment alongside aligned investors
- A significant presence in Scotland, or a clear commitment to establish one alongside Bank investment.
Net Zero
For Net Zero investments we focus on businesses and projects that:
- Strengthen Scotland’s energy resilience
- Support sustainable industrial transition
- Improve energy infrastructure and security
- Have commercially viable technologies with clear routes to market
- Deliver long-term economic and environmental impact.
Innovation
For Innovation investments we are looking for businesses that:
- Demonstrate sustained revenue growth
- Have experienced management and governance
- Can evidence product-market fit
- Are seeking larger investment rounds alongside co-investors
- Have a clear route to long-term commercial growth.
Place
For Place investments we prioritise opportunities that:
- Increase housing supply across Scotland
- Support regeneration and enabling infrastructure
- Strengthen the housing supply chain
- Improve health, wellbeing and social inclusion
- Crowd in additional investment from public and private partners.
Investment strategy principles
We invest for impact
Every investment is aligned with one or more of the Bank’s missions and wider environmental and social objectives.
We are an ethical and responsible investor, using our Responsible & Ethical Investment Policy and ESG standards to guide investment decisions. We continue to integrate impact throughout the investment lifecycle and work alongside other impact investors to strengthen impact measurement and grow Scotland’s impact investment ecosystem.
We invest on commercial terms
All investments are made on commercial terms with appropriate returns expected across the portfolio.
The Bank invests between £1 million and £50 million through debt, equity and, where appropriate, fund investments. We remain a patient investor, recognising that long-term impact often requires longer investment horizons.
We continue to build a resilient portfolio capable of generating sustainable commercial returns while delivering meaningful impact. Subject to shareholder approval, repaid capital and profits will be reinvested to support the Bank’s ambition of becoming a perpetual investment fund for Scotland.
We invest alongside others
We actively seek to crowd in private investment and work alongside partners across the investment ecosystem.
Where appropriate, we invest through funds to increase market reach, access specialist expertise and support sectors that may otherwise be difficult to access through direct investment alone.
What we don’t do:
- Provide grant or sub-commercial funding
- Provide guarantees
- Invest in distressed businesses or emergency financial support
- Provide retail banking services or deposits to individuals or micro businesses
Managing our portfolio
The Bank takes an active approach to portfolio management, working closely with businesses and projects to support long-term growth while delivering commercial returns and mission impact.
As the portfolio continues to mature, investment decisions will increasingly focus on creating value through strong performance, effective risk management and disciplined capital allocation. Follow-on investment will be considered where there is clear evidence of progress against agreed objectives and opportunities to generate further impact.
Alongside supporting investees to achieve sustainable growth, the Bank will continue to prepare businesses for future investment and exit opportunities, helping them access additional expertise and capital where appropriate.
The Bank will also support portfolio companies to adopt emerging technologies, including artificial intelligence, where these can improve productivity, efficiency and long-term competitiveness.
By actively managing its portfolio throughout the investment lifecycle, the Bank aims to build