'Resilient' Scottish tech start-ups target investment from outside Scotland

Scottish tech businesses remain resilient in the face of economic headwinds, though the vast majority are targeting investors outside Scotland, a new survey reveals.

While 89 per cent of respondents to the sixth annual Scottish Start-up Survey said they are concerned by the global economic outlook, 88 per cent said their start-up had grown in 2022. However, 68 per cent of those questioned said Brexit had slowed growth.

Some 93 per cent noted that Scotland is a good place to launch a business, although 88 per cent of start-ups are targeting investors outside Scotland. London and the rest of the UK (46 per cent), followed by North America (30 per cent), and Europe (21 per cent) are the most targeted investor regions.

The survey is run by the EIE Investor Readiness Programme at the University of Edinburgh’s Bayes Centre in association with the Freer Consultancy. The sample included the current EIE22 cohort, EIE alumni companies and a number of other early to later stage start-ups from across Scotland.

Karen Wood, director of enterprise at EIE, Bayes Centre, said: “EIE is Scotland’s leading tech investor programme, punctuated by our annual showcase that is designed to build stronger connections between our brightest lights in the start-up firmament, and investors in the UK and across the globe.

“This year’s start-up survey informs these audiences and other stakeholders, giving them a snapshot of sentiment from tech founders here.”

The survey also found that Scottish tech founders are targeting venture capital and angel firms in roughly equal measure (83 per cent versus 80 per cent). About 71 per cent of start-ups say they have come out of the pandemic in a stronger position to achieve growth, while 87 per cent have allowed their employees to decide where they want to work from.

Nick Freer, founding director of the Freer Consultancy, said: “Now in its sixth year, our hope is that the findings are instructive and provide insight for both the Scottish tech ecosystem and investors, and other interested parties from tech hubs outside Scotland.

EIE - standing for Engage Invest Exploit - has helped more than 540 companies raise in excess of £1.1 billion since the investor-readiness programme was launched in 2008. Picture: Stewart Attwood

“One of this year’s more revealing findings is that, alongside targeting homegrown investors, so many of our start-ups are looking for investment outside Scotland. And, that matches what we’ve seen in recent times, in terms of an increasing number of rest of the UK and international investors backing start-ups based here.”

Michael Moore, director general, British Private Equity & Venture Capital Association (BVCA), added: “Scotland’s tech scene is increasingly vibrant and this survey also highlights its resilience as economic conditions change. The results are very encouraging and show that the EIE programme is developing a strong portfolio of businesses, founded in Scotland, but with a global outlook.”

Last month, the EIE team revealed that keynote speakers at this year’s annual tech investor conference on October 6 include Scotland’s chief entrepreneur Mark Logan, Women in Enterprise Review chair Ana Stewart, and newly appointed techUK president Sheila Flavell.

The EIE Investor Readiness Programme delivered by the Bayes Centre has helped more than 540 companies raise in excess of £1.1 billion since 2008.