Growing a customer base, attracting investment and hiring talent are the biggest challenges for Scotland’s fledgling tech businesses, an industry survey has found.
The results of the second annual Scottish Startup Survey were revealed to coincide with the 2018 Engage, Invest Exploit (EIE) showcase which takes place in Edinburgh today.
The event will see 60 young data driven businesses pitch live to an audience of investors from all over the world.
Respondents to the survey rated the start-up scene north of the Border as growing in confidence, with companies recognising that they are pitching in an increasingly competitive market.
Among their peers, respondents identified e-learning software specialist Administrate, fashion shopping app Mallzee, identity and compliance software developer Amiqus and recently launched eSports venture Flick, co-founded by the team behind FanDuel, as the start-ups rated as having the best chance to achieve unicorn or billion-dollar valuation status over the next few years.
On the subject of Brexit, 37.6 per cent of the survey said they were “more worried” by Brexit in 2018 than they were last year, 9.9 per cent are “less worried” and 52.5 per cent are “unchanged.” 38.6 per cent of respondents said they are undertaking Brexit planning.
The survey was carried out by EIE organisers Informatic Ventures in association with Freer Consultants.
Introducing the findings, Dr Steve Ewing, director of operations at Informatics Ventures, said: “The survey tells us that Scotland is a great place to start a business but that we could be doing more and doing it faster. Access to finance and getting the right people on board remain issues for our most promising early stage tech startups.”
It’s an opinion shared by Susanne Mitschke, CEO and cofounder of MindMate, a free mobile health app used by over half a million people who suffer from Alzheimer’s disease.
“Scotland is becoming a startup powerhouse and, as a nation, is a fantastic example of how government can support entrepreneurship,” she said.
“Grant funding is a differentiator for our startup community, it’s just not something you see in the US or the rest of Europe, and it allows entrepreneurship to flourish and corporate ambitions to be realised. That is reflected in the survey with 71.3 per cent of founders looking for grant funding in the next 12 months and 18.6 per cent saying government support is the biggest benefit of being based in Scotland.”
“At the same time, a high percentage of entrepreneurs also state that their biggest challenge in Scotland is access to finance. I can relate to this as MindMate was not able to raise in Scotland. Our investors for our recent $2m funding round are almost all from the US, with the exception of one fund from London. However, given the fantastic support to start a business, there should be no excuses why you should not be an entrepreneur and live your dreams in Scotland.”
71.3 per cent of the survey respondents are actively considering government grant funding, 47.5 per cent are planning for angel investment, 41.6 per cent are targeting venture capital funding. Only 8.9 per cent said they will not require any additional external monies over the next twelve months.
Now in its 10th year, over 400 companies have pitched at EIE and it has been a springboard to over £550 million in seed and later stage funding. FanDuel, Mallzee, Celtic Renewables, ZoneFox, pureLiFi and MindMate are a few of the companies to come through the EIE programme in recent years.