Plea for lifeline support as Scottish tech start-ups fall through coronavirus support gap

Scotland’s technology leaders are calling for urgent support amid the Covid-19 emergency as new research suggests that many start-ups risk falling through the gaps for government support.

Just over half of technology start-up founders and senior executives in Scotland say the Scottish Government is currently doing too little to support entrepreneurs. Picture: AP Photo/Marcio Jose Sanchez

Just over half (52 per cent) of technology start-up founders and senior executives in Scotland say the Scottish Government is currently doing too little to support entrepreneurs.

A further 17 per cent say they are unclear about what support is available to businesses, according to a survey of more than 100 tech start-up founders and senior executives conducted by Turing Fest.

Alongside the survey results, in an open letter to the Scottish Government, more than 50 start-up chief executives and founders argue that “the current interventions, from both the Scottish and UK governments, will not adequately address the unique needs of high-growth Scottish tech companies”. They are calling on the Government to “act now to protect Scotland’s entrepreneurial future so we do not lose a generation of high-growth start-ups to Covid-19.”

Brian Corcoran, chief executive of Turing Fest, said: “Tech start-ups can play a key role in rebuilding Scotland’s economy after this pandemic passes, but unless there is immediate intervention from the Scottish Government, many start-ups will not survive and the ecosystem that the Government, and others, have worked so hard to cultivate could be decimated.”

Asked what kind of support the tech sector needs, respondents called for more direct financial support. Almost 80 per cent said they wanted to see ministers offer bridge grants to help businesses maintain their operations, 67 per cent called for expanded research and development (R&D) and innovation grants, while 59 per cent identified employee wage subsidies as a key support mechanism.

Scotland’s digital economy businesses employ almost 100,000 people and contribute an estimated £6.6 billion to the economy. Scottish start-ups also attracted £200 million in venture capital investment last year.

Paul Walton, co-founder and chief technology officer at Boundary, said: “Countries like France and Germany have already announced wide ranging and highly supportive schemes for their tech industry and whilst the UK government’s announcements last week were welcome, the rules of the scheme mean many Scottish companies will not be able to get support from it.”

Ian Stevenson, founder of Cyan Forensics, said: “The current loan scheme seems to be only open to companies profitable enough to demonstrate repayment – which excludes growing equity-backed start-ups.

“The UK government’s Future Fund is a great step for venture capital-backed companies, but at present it’s not clear how it can co-exist with the EIS investment that fuels many early stage companies. We need support tailored for the start-up sector.”