Number of firms hits an all-time high, as angels pump in cash

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THE number of companies in Scotland has hit a record high after more people launched their own businesses, according to figures published yesterday, while angel investors pumped even more cash into start-ups.

Waves of job losses across the public and private sectors during the recession have led to redundant staff setting up their own businesses rather than looking for jobs elsewhere.

Figures from the Scottish Government revealed that the number of businesses north of the Border hit 341,360 at the end of March, up just under 10 per cent year-on-year.

The total is the highest since Scotland’s chief statistician began compiling the data 12 years ago. The number of business has increased every year since 2006, including during the financial crisis and ensuing double-dip recession.

Enterprise minister Fergus Ewing said the rising number was “encouraging, especially in the current economic climate”.

He added: “The rise has been driven by start-up enterprises, a sign that Scots are confident enough to go out and make the most of the opportunities available.”

More than 80 per cent of the companies created over the past year were “unregistered businesses”, which are normally sole traders or partnerships and are so small that they don’t have to register to pay value added tax or to take part in the pay-as-you-earn scheme for income tax.

Small businesses – including one-man bands and partnerships – account for 99.3 per cent of all companies in Scotland, highlighting the sector’s importance to the economy.

Meanwhile, data released yesterday by Linc Scotland, the national business angel trade body, showed the amount of cash raised by start-ups jumped by more than a quarter in the first nine months of the year.

Linc said that business angels pumped £15.6 million into companies, up from £12.4m in the same period last year.

Fifteen companies received angel funding for the first time, with 34 businesses securing follow-on investments.

David Grahame, chief executive at Linc Scotland, said: “It would appear that the economic backdrop and challenges faced by companies failing to secure funding from traditional routes, such as the banks, is creating an opportunity for the angel groups to support up-and-coming Scottish talent.

“The results are extremely encouraging; especially the number of new companies that have received angel investment during 2012.”

Public sector investments rose to £6.17m during the period, up from £6.12m.

The 19 business angel syndicates represented by Linc Scotland together pumped £10m into start-ups, up from £7.4m during the opening months of last year.