Scotland's tech sector goes global

The pitch selection panel at EIE 16: (left to right) Kerry Sharp, head of Scottish Investment Bank ; John Zai, Cocoon Networks founder and CEO and David Rose, CEO of Gust. Picture: Jane Barlow

There has been much talk of Scotland’s thriving technology industry.

And it’s no wonder when the sector now boasts two billion-dollar companies, an energised start-up scene, 84,000 employees and high levels of optimism – 81 per cent of tech businesses are expecting sales to increase over the next 12 months.

But while industry insiders sing the praises of the technological triumphs in the sector and the huge strides that have been made commercially in the past ten years, they say it’s far too soon for the industry to sit back and congratulate itself. The biggest challenge tech firms face is finding and securing the next-level capital needed to scale up their operations.

EIE 2016, Assembly Rooms. Picture: Jane Barlow

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There is a prominent business angels network in Scotland but a chronic shortage of venture capital.

One of the most significant programmes seeking to address this issue is Engage, Invest, Exploit (EIE).

The annual event for the initiative, held last Thursday in Edinburgh, showcased 60 early stage technology businesses to international investors who have the means to help fund the growth of the firms into global successes.

In the eight years since its inception, the EIE programme – created by mentoring organisation Informatics Ventures – has been a springboard to over £350 million in investment for Scottish start-ups, and it plays a crucial role in getting Scotland on the radar of powerful investors.

An indication of how effective Scotland has been in promoting itself to foreign financiers could be seen in the wide geographic spread of delegates from the Americas, Europe, the Middle East and a significant number of Chinese investors in attendance for the first time.

Investment groups like Chinese capital-backed Cocoon Networks, which is raising a £500m fund to invest in early-stage European technology companies, were among the big names in town.

John Zai, founder and CEO of Cocoon, said; “Investors are starting to realise now that there are great companies in the UK outside of London in cities like Edinburgh. If Scotland can continue to produce investable companies then foreign capital will take notice”

To lure in big fish investors like the Chinese, Scottish tech companies have to be thinking globally from the get-go, says Chris van der Kuyl, a director of Dundee’s 4J Studio, the designers that helped develop hit video game Minecraft.

He said: “If a company wishes to be a global success it’s always far easier to do that with a global investor base.

“The clever companies I know in Scotland have already started to look for and cultivate that base.”

Van der Kuyl, who is on the advisory board of Informatics Ventures, encourages Scotland’s existing high-fliers (the likes of Mashable founder Pete Cashmore and Brewdog) to collaborate with start-ups.

“We need to leverage the success of some of the companies that we have already and some of the expat entrepreneurs that have been involved with big tech businesses globally to come back and help us scale up these businesses.”

He added: “We are in a better position now in terms of tech companies and tech investment than we’ve ever been. The simple answer is we have got to keep going.

“In terms of milestones, the one we’ve not reached yet is a publicly listed tech company. That would take the sector to the next level.”

The Scotsman was a media partner of the EIE16 event.