How more funding and more women could get Scotland's start-ups back on track

An accelerator programme has been launched in a bid to help Scottish tech start-ups secure lifeline investment after a slump in early-stage funding.

The new initiative is being delivered by CodeBase-run Techscaler, in partnership with Focused for Business, and is a three-month programme designed for start-ups looking to raise their first or second rounds of equity investment, in the £100,000 to £1 million range.

The move comes after research indicates that while early-stage start-up funding in the UK dropped by just 7 per cent in the first quarter of 2024 against the closing three months of 2023, the year-on-year quarterly decline was closer to 25 per cent.

The Funding Accelerator programme is designed for start-ups looking to raise their first or second rounds of equity investment, in the £100,000 to £1 million range.

Founders and executives on the pilot programme will be exposed to areas including valuation and financial planning, investor engagement, pitching, building “data rooms” for investors and maximising advisory services, as well as negotiating and closing deals. The first funding accelerator cohort numbers ten start-up businesses - Seeker, 20 Photos, PracTest, Rethink Carbon, Raven, beEmbedded, Nursery Story, Tax Torch, Afterword and Unbaggaged.

Lauren Wilson, scale-up programme manager at CodeBase, said: “Scotland’s tech start-up scene is going from strength to strength, but getting early-stage funding can feel like a major uphill battle. It is also time consuming and can take founders away from running the business. So, we want to give them the knowledge, tools and networks to navigate the investor community, with a view to giving them the best chance of success.”

Zoe Russell, co-founder and chief operating officer at Aviemore-based Rethink Carbon, a start-up that has developed a technology platform to maximise sustainable land management, said: “As a start-up planning to raise investment, Funding Accelerator ticks a lot of boxes for us - specifically the focus on financial forecasting, investor outreach, and understating valuations. We also love the collaborative working environment with other founders and their insights. By the end of the programme, our goal is to finalise a terms sheet with investors.”

The new accelerator has been rolled out as another initiative looks to attract more businesswomen into early-stage angel investing. Scotland’s first all-female business angel syndicate, Investing Women Angels (IWA), and its sister organisation AccelerateHER hope to demystify investment and harness the “echo effect” to help female-founded businesses thrive.

Jackie Waring is the founder of Investing Women Angels (IWA). Picture: Sandy Young

The initiative - dubbed W2W - is being touted as a first for Scotland, which will bring together existing female investors and entrepreneurs on an “investment journey” with emerging female-led companies from across the country. It will be led by experienced female founders who have previously raised multiple investment rounds, and investors from IWA and other angel syndicates.

W2W is being delivered as a direct response to the 2023 Pathways Report authored by businesswoman Ana Stewart and Scotland’s former chief entrepreneur, Mark Logan. The report highlighted the yawning equity gap in Scotland where start-ups founded by women receive just 2 per cent of overall investment capital despite the fact that one in five businesses north of the Border is female-led.

With women currently accounting for less than 15 per cent of Scotland’s business angel investors, the initiative will follow a similar model developed by the Springboard Programme set up in Washington, DC. It contributed to what became known as the “echo effect” delivering a near 40 per cent increase in the number of women angel investors and a corresponding rise in the level of investment going into US female-led businesses.

The W2W programme will commence from December 12 and run through to the middle of January with ongoing follow-up support for all its participant companies.

Jackie Waring, founder of IWA, said: “We’re very excited to be rolling out the W2W programme across Scotland, which is fully focused on further promoting entrepreneurship amongst women and helping female founders scale their businesses on a global level.”

Among the women leading the sessions will be Gwen Edwards, joint managing director of the Silicon Valley chapter of US investment group Golden Seeds. As an acclaimed expert in increasing investment into female-founded companies and an active angel investor, Edwards has built close links with IWA and AccelerateHER. Together they have supported a number of high-growth, female-founded Scottish companies, including life sciences innovators Carcinotech and Cytochroma.

Edwards and the team aim to “demystify” angel investment across the initiative’s month-long series of events. Further support will be provided by W2W legal partner Burness Paull along with entrepreneurship ecosystem partners. The group will work alongside people from female-led start-ups, including spin-out companies from both Strathclyde University and the University of Edinburgh, sharing their knowledge and practical real-life experiences to promote greater awareness and understanding of the equity investment process.

Edwards, W2W international partner, said: “I’m very energised about the W2W programme. Increasing the numbers of women angel investors has been an incredibly effective strategy in the US, which has created an echo effect significantly benefitting female-founded companies. Through this programme, we can replicate the US model in Scotland where there is a strong entrepreneurial ecosystem and so many inspiring and innovative female-led businesses.”

Peter Lawson, chairman of Burness Paull, added: “We are proud to be partnering with the W2W programme which aligns with our firm’s wider commitment towards supporting more female founders and helping them raise growth investment. By increasing the numbers of women angels in the marketplace, this programme has huge potential to drive female entrepreneurship through a long term, strategic approach.”

New research from wealth manager Charles Stanley suggests that almost half (49 per cent) of female business owners are either the sole or primary breadwinner in their family.

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