Scotland’s equity investment market remained robust in 2020

Scotland retained its strong position as one of the most active equity investment markets in the UK last year, with a record number of deals completed, according to a report published today.

Scottish Enterprise has unveiled the Investing in Ambition: Scotland’s Risk Capital Market in Context study, flagging 446 equity deals completed in Scotland last year – ahead of the 428 achieved in 2019.

The organisation – Scotland's national economic development agency – said this places Scotland third behind London in the top spot (with 2,986 deals) and South-east England, which racked up 725 deals.

It also said it was the fourth year in a row that Scotland attracted more than £400 million of equity investment, although the total amount invested was down from 2019’s figure of £485m to £430m.

Jan Robertson of Scottish Enterprise flags 'the strength of Scotland’s entrepreneurial ecosystem'. Picture: Alan McAteer.

The digital and IT sector accounted for just under a third of deals, followed by business services (21 per cent) and technology and engineering (19 per cent). Life sciences and food and drink were also “well represented”.

Jan Robertson, interim director of growth investments at Scottish Enterprise, said: “Scotland’s equity investment market held up well last year, demonstrating the strength of Scotland’s entrepreneurial ecosystem and the quality of investment opportunities.”

At the very early stage of the market, deals below £500,000 saw a slight year-on-year increase, in terms of both number and amount invested.

This was due in part to the fact that 90 investments were made by Scottish Enterprise through the Early Stage Growth Challenge Fund, which was established by the Scottish Government to support emerging businesses through the pandemic.

However, Scotland recorded a drop in the number of companies securing equity investment for the first time – at 24 per cent of all deals completed in 2020, compared with 29 per cent in 2019.

Ms Robertson added: “Scotland’s early-stage businesses will play a huge part in the country’s recovery from Covid-19. Many of them operate in sectors of significant economic opportunity like low carbon, digital, and health and care, and their development needs to be nurtured carefully.

“With our data pointing to the growing impact of the pandemic on investment in emerging businesses, Scottish Enterprise remains focused on supporting that area of the economy... we’ll help early-stage businesses secure the patient capital and expertise needed to fuel their growth.”

A message from the Editor:

Thank you for reading this article. We're more reliant on your support than ever as the shift in consumer habits brought about by coronavirus impacts our advertisers.

If you haven't already, please consider supporting our trusted, fact-checked journalism by taking out a digital subscription.