Brexit fails to prevent VC pumping £32m into Scots start-ups

Amy Burnett, manager, KPMG Enterprise, with Catherine Burnet, senior partner, Scotland, KPMG. Picture: Contributed
Amy Burnett, manager, KPMG Enterprise, with Catherine Burnet, senior partner, Scotland, KPMG. Picture: Contributed
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Venture capital funding is on the rise in Scotland as investors play down concerns over Brexit.

Just over £32 million of venture capital was pumped into Scottish start-ups in the third quarter of 2019, according to a new report from KPMG. The figure compares with the £23.8m invested in the Q2.

Amy Burnett, manager, KPMG Enterprise, with Catherine Burnet, senior partner, Scotland, KPMG. Picture: Contributed

Amy Burnett, manager, KPMG Enterprise, with Catherine Burnet, senior partner, Scotland, KPMG. Picture: Contributed

However, the figures, compiled by Pitchbook, reveal that deal volume dipped slightly, from 16 deals in the second quarter to 13 in the third.

The start-ups that benefited from funding in the latest period included life sciences business, firms focused on agri-tech and manufacturing business, with nine based in Edinburgh and the Borders, three in Glasgow and west central Scotland and one in Dundee.

The most sizeable deal in the third quarter involved pharmaceutical and biotech firm MedAnnex. The Edinburgh-based business raised more than £11m in venture capital backing, to assist it with its pioneering work, developing treatments for conditions including autoimmune diseases.

UK-wide, venture capital investments were also on the rise, up 19 per cent quarter-on-quarter to more than £2.4 billion.

Robust

Amy Burnett, manager in KPMG’s enterprise team, said: “Venture capital investment in Scotland’s fast-growth businesses is as robust as ever and it appears Brexit and other uncertainties have failed to slow the appetite for supporting tech-focused industry disrupters.

“One of the biggest challenges many start-up founders often discuss is the lack of access to funding and investment support, as it’s primarily centred on London.

“But, Scotland has begun to develop a reputation for collaborative tech start-up hubs and that has helped to unlock funding support from around the world.”

She added: “Looking ahead, we’re entering a period of great volatility, which will undoubtedly have some degree of impact.

“But, the venture capital market is in a robust position, with significant liquidity, which should ensure continued success for Scotland’s growth-hungry new businesses.”

MedAnnex secured £1m follow-on funding from long-standing partner the Scottish Investment Bank (SIB), adding to a recent £10m scale-up investment by major life sciences backer Morningside Ventures.

MedAnnex’s management team includes biotech entrepreneur Chris Wood, who founded Nasdaq-listed NuCana and Bioenvision.

READ MORE: Life sciences scale-up MedAnnex gets £11m cash injection