The angel investment business recorded an unrealised £192,000 gain on the investments in its portfolio in the six months to September.

The gain may not sound significant in absolute terms but the mark up in the valuation points to a marked increase in Braveheart’s confidence in the prospects for its portfolio companies in recent months.

In the year to March the AIM-listed firm recorded an unrealised loss of £378,000 in the valuation of the portfolio. This is made up of firms in areas like technology that have high growth potential.

The outlook for many firms in the sector seemed bleak amid the recession and the credit crunch. All of the firms backed by Braveheart managed to trade through the latest period, during which survey data indicated that the recession may have ended.

“While the economic environment for early stage businesses is challenging, we have been impressed by the resilience and performance of many of our portfolio companies. We recorded a modest, though pleasing, increase in our portfolio valuation at the period end,” said Geoffrey Thomson, chief executive of Braveheart.

The company said several of the portfolio companies are now “demonstrating the characteristics that are a prerequisite of disposal”.

However, Braveheart cautioned: “We believe the financial environment in which we operate will remain difficult for some time.”

In September Thomson told The Herald that banks were starving good firms of money, whatever they may say about maintaining lending, and warned the resulting shortage of cash could take a heavy toll on hopefuls.

Yesterday he said there had been no improvement, with small and medium sized enterprises especially badly affected.

“There’s a lot of good companies out there who can’t get any money.”

Braveheart is in talks with some institutions about developing schemes to help fill the funding gap.

The company recently won accreditation to provide loans supported by government guarantees under the Enterprise Finance Guarantee scheme.

Following the successful integration of the Yorkshire-based Viking Fund Managers business,

Braveheart is keen to buy other investment operations. This would help it grow funds under management and develop additional revenue streams in areas like providing business planning services. Thomson said the company is in talks with “a couple” of potential targets.

In the expectation that the introduction of a 50% tax rate from next April may make high earners more interested in investment products that offer tax breaks Braveheart is launching a new Enterprise Investment Scheme fund next month. This will seek investments of £10,000 to £500,000 from high net worth investors.

The company many benefit from growing interest in angel investing in Scotland, which has a disproportionate share of the UK’s angel investors.

Kelvin Capital, a West of Scotland syndicate of angels, launched recently to focus on firms that are developing technology in the healthcare, energy and renewable sectors.

Angels have been able to maintain activity levels despite the turmoil in the banking sector.

They tend to do smaller deals that are not as reliant on debt funding as the bigger transactions favoured by private equity houses.

The taxpayer-supported Scottish Co-investment Fund has increased Angels’ firepower.

Braveheart’s income increased by 68% to £424,000 in the six months to September, compared with the same period in 2008, helped by the VFM revenues.

Pre-tax losses increased to £415,000 from £391,000 reflecting increased administration costs.

The investment portfolio was valued at £3.9m at 30 September.