Philip Petersen: First Impressions of Scotland's Tech Ecosystem

As a newcomer to living in Scotland, I have been delighted to experience the optimism and enthusiasm that characterises the tech sector here. After 30 years in the industry, living in the Thames Valley, working for small and very large corporates with customers in the UK and worldwide, I have found the tech community in the Central belt to be very welcoming and highly interconnected.

Scotlands Tech Ecosystem is doing better than many think Picture: TSPL

I have been lucky enough to meet exceptional people like Paul Atkinson, Kenny Fraser, Ian Ritchie, Chris van der Kuyl, Gordon Stuart, Jock Millican and Kevin Grainger, among many others, who have extensive experience, expertise and networks to leverage on behalf of the start-ups they support, increasing dramatically their chances of success.

The South-East has dominated the tech sector limelight in the UK for decades with London and Cambridge taking centre stage for start-ups. They seem to get most of the media attention and with a lot of emphasis on how much money particular companies raise in investment and on consumer apps and web retail. Let’s not even start on the recurring “How can we create Silicon Valley over here?” articles. Now it’s the ‘U’ word as we obsess over how many companies are valued at more than $1 billion (BTW - Scotland has more per capita than anywhere else outside the USA!). The real story needs to be about innovation, getting from start-up to scale-up, looking to the global market not just the local for customers, profits and job creation. Building scalable businesses and generating profitable revenues is the prize. To do that takes thriving technology ecosystems and Scotland is building its.

Covering the spectrum of universities, innovative R&D, entrepreneurs, incubators, early-stage investors and advisors, I have met some outstanding people and organizations who have been open and eager to discuss their plans for growth. Scottish Enterprise has programmes supporting all stages including commercialising university spin-outs and helping entrepreneurs go from concept to being investment-ready. The associated Scottish Investment Bank provides very welcome matching funding to angel and early stage investment. There is a plethora of angel syndicates, many of them members of the LINC network - groups such as Par Equity, Equity Gap and EOS as well as the long-established Archangels. Most importantly for the investees, these investment networks provide not only capital but the skills and experience which many of the individual investors bring to bear make it ‘smart money’.

I have come across some really exciting companies like Senient, Sunamp, Shotscope, Administrate, ACT Blade, Chromacity, pureLiFi, Cyberhawk, Peach Digital, Sansible and more. These are innovators and often originate from or are associated with universities. The Universities of Edinburgh, St Andrews and Strathclyde, among others, are all working hard to build strong links between academic research and industry in order to create commercial opportunities and they are succeeding. Throw into the mix some fantastic support infrastructure for young businesses ranging across the likes of Informatics Ventures, Codebase, Scotland IS, Entrepreneurial Spark, Acorn Enterprise and you can see that entrepreneurs in Scotland have access to a lot of the resources they need in order to build successful businesses.

Of course, growing businesses need skilled people and many find it hard to recruit the talent they require. This is a UK-wide problem, though, and Scotland is not alone in struggling to retain enough graduates from its universities to feed the demands of its growth businesses. Even more than people, though, companies need customers and often they need more capital than angels alone can provide. There are relatively few venture capital firms operating in Scotland, particularly at the early and series “A” stages. There is Pentech and now Mercia Technologies but not many others. No problem, surely, because there are lots of VCs and investment capital in London which is only a one hour plane ride away. What has surprised me is how few people seem to view that as a viable route, talking about going to the US instead. Apart from the fact there are some active VCs in continental Europe to add to the mix, I would suggest that raising funds in the US is non-trivial unless you have done it before and unless you want to become a US company.

Finding customers is never easy but ambition must lie beyond the borders of Scotland, beyond the UK. For tech companies that want to make a difference they need to be thinking about global opportunities for their products and that means selling hard. Many of the conversations I have had with companies, investors and advisors have revealed that sales skills are in very short supply. Putting together compelling propositions demonstrating the value of your products so that people need and want to buy them is not easy but addressing it cannot be ignored. Yet it is the piece most often missing from pitches.

This is such an exciting time to be an entrepreneur in Scotland and I look forward to contributing to the continued success of the tech ecosystem here.

Philip Petersen is an experienced B2B technology industry executive and entrepreneur, now based in Edinburgh and Fife

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