Scottish scale-ups enjoy twice as much investment from venture capital firms

Amy Burnett (left) of KPMG's consulting team and Catherine Burnet, senior partner at KPMG Scotland. Picture: Stuart Wallace
Amy Burnett (left) of KPMG's consulting team and Catherine Burnet, senior partner at KPMG Scotland. Picture: Stuart Wallace
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Scottish scale-ups benefitted from bumper venture capital (VC) investment last year as funding almost doubled, new figures suggest.

According to KPMG Private Enterprise, the accountancy heavyweight’s business services arm, fast-growth companies in Scotland secured “at least” £197.7 million in VC backing in 2019, a rise of more than 97 per cent from the previous year.

This was partly driven by a busy fourth quarter, which included a £66m investment in Aberdeen-based well decommissioning company Well-Safe Solutions led by MW&L Capital Partners.

The Scottish data mirrors a UK-wide surge in investments, with more than £9 billion pumped into high-growth scale-ups.

Later stage companies, particularly in the financial services, biotech and healthcare sectors, drove the majority of the deals completed, said KPMG.

Amy Burnett, manager with KPMG Private Enterprise in Scotland, said: “It’s been a fantastic year for Scotland’s scale-up businesses. Despite the political uncertainties, entrepreneurs have attracted investment from all over the world, closing significant deals and drawing the attention of VC investors focused on later stage companies.

“While it’s an overwhelmingly positive picture, there is some concern that early and seed stage deals aren’t always getting the support they need to grow, which could slow innovation in the long-term and put Scotland at a competitive disadvantage. But, right now, we’re in a healthy, confident position with strong investor appetite.”

Record unicorn numbers

Last year saw a record number of VC-backed unicorns (companies valued at $1bn), with 110 unicorns created globally, including the UK’s Babylon Health and Cambridge-based CMR Surgical.

The US accounted for more than two thirds of these unicorns. The figures come from KPMG’s Venture Pulse report, in collaboration with data provider PitchBook.

KPMG expects the VC market to remain strong in 2020, along with an active mergers and acquisitions market and a possible increase in initial public offerings.

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Tim Kay, director with KPMG Private Enterprise, added: “As the UK enters negotiations about its future relationship with the EU, disruptive businesses in the UK will be watching closely to ensure the essential flow of talent to the UK continues.

“Whatever outcome Brexit may ultimately have, the fact that negotiations are now moving may have assuaged some investor concerns in terms of their willingness to participate in deals, and we can expect to see large volumes of investment continue to find its way to our innovative ecosystems across the UK.”