Exclusive:Q&A - Remaining optimistic 'a challenge', say investors, but 2025 could be big year for Scotland

“A willingness to recognise and applaud successes, without straying into boosterism, will also help to inspire the next generation of Scottish entrepreneurs” - Patrick Graham, BGF

Patrick Graham is head of the Scotland and Northern Ireland team at BGF (formerly known as Business Growth Fund), an independent investment company with a balance sheet of more than £2.5 billion that supports earlier-stage and established private businesses, and smaller listed companies.

Looking ahead to 2025, what are the key trends and shifts you anticipate for Scottish business and investments?

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Businesses across Scotland have had a bit of a rollercoaster year, and I anticipate a level of uncertainty will continue in the new year.

Various tax changes mean many Scottish family businesses in particular may assess their options in 2025. Rising taxes and costs will put greater scrutiny on hiring and investment decisions and could result in businesses delaying making investments needed for growth. There is also now the overarching question of whether to pass the business on to the next generation versus exiting.

Patrick Graham, Head of Scotland and Northern Ireland at Business Growth FundPatrick Graham, Head of Scotland and Northern Ireland at Business Growth Fund
Patrick Graham, Head of Scotland and Northern Ireland at Business Growth Fund | Lisa Ferguson

Therefore companies will need to remain innovative and forward-thinking and be ready to adapt, and despite ongoing challenges, the BGF team remains positive for the Scottish market in the year ahead. There remains a solid core of very strong companies. We provide growth capital that can enable these businesses to continue to grow and invest. We are also flexible when it comes to exit whether that is via trade, private equity, listing or passing to the next generation.

How does Business Growth Fund plan to adapt, what's your focus for the New Year?

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BGF has invested over £400 million in more than 50 companies across Scotland since 2011 and the ability to adapt our support to emerging sectors and business models has been vital – but some truths remain for the Scottish market. Family businesses will continue to be drivers of entrepreneurial activity, and being able to effectively deploy capital to support shifting pressures on these types of business is something we’re constantly looking at.

The Chancellor of the Exchequer Rachel Reeves announced an increase in employers’ National Insurance contributions in her inaugural Budget. The Chancellor of the Exchequer Rachel Reeves announced an increase in employers’ National Insurance contributions in her inaugural Budget.
The Chancellor of the Exchequer Rachel Reeves announced an increase in employers’ National Insurance contributions in her inaugural Budget. | Peter Byrne/PA Wire

The number of Scottish businesses scaling up still isn’t high enough, but my message is that there is now capital and support in the market - it’s just a case of ambitious businesses having a clear vision and knowing where to look.

We’ve always taken a relationship-based approach to investing, and this will continue to be our focus in the new year. We’ll also continue our focus across the whole of Scotland that has seen us invest in companies from every major Scottish city, and beyond.

With a degree of uncertainty and changing economic headwinds seeming to be fact of life, we like to uncover the management teams that are ready to meet these challenges head on and support them to realise their ambitions. We pride ourselves on building strong relationships with management teams and delivering more than just funding and broader support - both of which ultimately underpin our whole approach.

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What challenges do you foresee for industry in Scotland in 2025, and what needs done? How influential will huge global political and economic changes be?

At a domestic level, the impact of employers’ National Insurance increases will be a prominent consideration in businesses’ decisions for the year ahead and risks curtailing growth and/or investment.

More broadly, the US is an important market for many Scottish exporting businesses, so I expect businesses will want to understand the implications of the incoming US President’s economic choices and what longer term impact these will have.

Graham warned economic uncertainty prompted by a chance in the White House could have a knock on effect here at home.Graham warned economic uncertainty prompted by a chance in the White House could have a knock on effect here at home.
Graham warned economic uncertainty prompted by a chance in the White House could have a knock on effect here at home. | Getty Images

BGF will continue to play an important role in enabling businesses to address these challenges head-on and facilitating continued growth. Our view is that the right backing allows businesses to pursue a strategic long-term approach that is vital to riding out short term challenges. Our focus in 2025 and beyond is very much on continuing to invest in and support Scottish businesses in delivering their growth plans.

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What emerging technologies and innovations will be significant?

We’re watching the data and AI, energy transition, and advanced manufacturing sectors in Scotland, which sit alongside established strengths in manufacturing, professional services, energy and food and drink.

What one wish would you have for the Scottish economy and business community in 2025?

Remaining optimistic is undoubtedly a challenge when times are tougher, but we cannot lose sight of the positives in the Scottish market.

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Patrick Graham of BGFPatrick Graham of BGF
Patrick Graham of BGF | Johnston Press

Recent foreign direct investment figures show that outside observers still believe Scotland is a good place to invest, with plenty of talent and innovation to draw upon, but our own business community can sometimes be less good at acknowledging and celebrating these demonstrable strengths.

Our smaller ecosystem presents plenty of knowledge-sharing opportunities amongst entrepreneurs, but it also means it can be harder for us all to raise our heads if the prevailing mood is gloomy.

We have seen that business owners with credible confidence in their approach can build companies of real scale that are at the forefront of their respective sectors or markets. A willingness to recognise and applaud successes, without straying into boosterism, will also help to inspire the next generation of Scottish entrepreneurs. All too often, Scottish companies sell arguably too early, with founders perhaps unaware of other routes to de-risking their position.

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