Comment: Tech firms should look closer to home

Gareth Williams, CO and founder of Skyscanner. Picture: Ian Rutherford

Rather than punishing Facebook and Alphabet (Google’s holding company) for clever tax planning across Europe, our leaders should pay closer attention to how these mammoth corporates got to dominate so much in their various markets. Moritz listed the two European exceptions to his rule as Germany’s Sap and the UK’s Arm Holdings.

As Scots, we are always good at finding a Scottish connection to greatness so let’s take note that Cambridge-based smartphone chip maker Arm had a strong Caledonian streak to its founding team – Jamie Urquhart was one of the company’s co-founders and was present when the venture was started up in the back of a pub in the shadow of the city’s majestic university in 1990. Today, this company powers most of the Apple or Samsung phones that dominate our waking hours.

In each of the past four years more Scottish startups have been funded than Cambridge and Oxford combined while we place second only to London on the same yardstick. Last July, FanDuel raised the largest ever UK venture investment deal at just shy of £200 million and only last month Skyscanner reported its latest funding round well north of £100m. When one or both of these companies come to IPO – in New York by most guesstimates – that’s when Scotland will really feel the boost as hundreds of tech millionaires will be created overnight, many of whom will want to reinvest back into the ecosystem and found startups of their own.

As it happens, Skyscanner co-founders are behind a new social media app that is close to launching from a base in Edinburgh. It’s a further sign of the buzz that keeps building in Scotland’s capital. Last week, London’s Tech City chose e-learning startup Administrate as one of the UK’s highest rated start-ups. Like Administrate, medical software specialist Craneware continues to be one of our fastest growing tech companies and is expected move up a gear on the hiring front this year.

If there is a fulcrum to all the amazing things that are going on in Scottish tech in the 21st century, it is very probably the University of Edinburgh’s School of Informatics. As institutions go, it too flies under the radar but the numbers speak for themselves: number five worldwide and number one in Europe, included in the same conversations as Stanford and MIT and genuinely world-leading in areas like data science, language technology and machine to machine learning. With the serious talent coming out of the Informatics School, it makes the success of the billion dollar valued tech companies right on its doorstep less surprising.

Moritz says the greatest competition in tech over the next 50 years is mostly likely going to come from today’s “garage startups” in China and the US. That makes a lot of sense with or without a tech luminary’s crystal ball but it strikes me that in Scotland we need to take greater notice of markets closer to home. There has been a lot of commentary the last couple of weeks about the opportunity Scotland has when it comes to Europe’s largest market, Germany – both in terms of inward investment and as an export territory.

Commentators in the know say the German people have a great deal of goodwill towards our nation and, more importantly, potentially billions of euros in private wealth that could be tapped for investment purposes to help fuel Scotland’s corporate growth. Perhaps even greater collaboration within Europe will allow us to compete better against the US and Asia. On that note, I’m off to do a bit of German on my Babbel language app (which is a recent Scottish Equity Partners investment by the way)… tschuss!

l Nick Freer is the founder and managing director of the Freer Consultancy @freerconsults