As well as taking a potentially lucrative punt on the success of CyDen, the backers had an added incentive to commit their cash. The money was invested through the enterprise investment scheme (EIS), which allows investors to offset 20 per cent of the investment against their tax bill.

The Chancellor made the EIS an even more attractive proposition in last month’s Budget. In his drive to encourage investment in small businesses, he doubled the annual limit on EIS investments to £400,000 from April 6.

Ron Peterson, the chief executive of CyDen, is clear about how important the EIS funding was. “It allowed us to start manufacturing iPulse and within months we had orders in the UK and from overseas.”

He says that iPulse, which uses intense pulsed light technology, is in high demand because the treatment is safer and quicker than laser treatment. “While lasers are very safe in the hands of qualified practitioners, you would never want to point a laser in your eye. If you pointed an iPulse device towards your eyes, you’d see black dots for a while, but you’d be fine. Also, laser machines can treat only a very small area at a time. The iPulse machine can treat a 9cm-squared patch each time.”

The iPulse machine can be used to improve skin conditions such as age spots and acne as well as removing unwanted hair.

CyDen’s four founders — Marc Clement, professor of innovation at the University of Wales Swansea, Michael Kiernan, Jan Simonsen and Kevin Smith — took only five months to develop iPulse. “We all worked in phototherapy and knew there was a prospect there; we just had to find it,” Professor Clement says.

The foursome used their own money to fund the manufacture of iPulse prototypes but realised that they needed a big injection of cash to start marketing their new design.

They approached Longbow Capital LLP, a private equity firm. The quartet was so impressed with Longbow that they asked Mr Peterson, a partner at Longbow, to take over the running of the company.

CyDen initially employed two specialists to assemble the devices, but the firm quickly expanded because of growing demand from distributors in the UK and overseas. It now employs 27 people.

Mr Peterson says: “We sell the machines to distributors for about £5,000. They then sell them on to beauty clinics or medical centres.”

The shareholders have been impressed with the company’s performance so far. Last year turnover was £1.3 million and it is on course to turn over more than £4 million this year. “We are blessed that, in the year-and-a-half since securing funding, the company has achieved everything it set out to do,” Mr Peterson says.

GRÁINNE GILMORE

• CyDen: 01792 485755, www.cyden.co.uk

Expert analysis: Doug Richard

“CyDen is one of those rare companies that are a pleasure to learn about. It has surmounted, with apparent ease, issues that cause many young companies to stumble.

“The list is impressive. They are a group of academics who made the transition into business. They developed the prototype with their own cash. They approached and were welcomed by a reputable investor that was able to co-ordinate and lead a business angel investment round. They leveraged the EIS scheme to maximum effect. They did not confuse their capabilities as founders and inventors with being business managers and were able to cede control to people who have helped the business to grow. Furthermore, they have reached profitability quickly and have developed sales channels effectively.

“I have seen each of these obstacles become fatal for one start up or another. Academics frequently find the transition into a young business to be extremely difficult and the skills that make them successful as academics are anathema among entrepreneurs.

“The ability of CyDen’s founders to be dispassionate about their own talents and invite key Longbow people to manage the company reflects great maturity and helps to explain the apparent ease of their success.

“Starting a company is hard work. Making all the right decisions the first time out and delivering a fast-growing, profitable business is one of those rare events that deserves applause. Well done to CyDen and to Longbow.”

For the latest small business news and advice, visit www.timesonline.co.uk/enterprise.

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