How to make Scotland’s tech sector international - Nick Freer

Earlier this month, Scottish Enterprise reached a milestone with its early stage co-investment activity leveraging over £2 billion of private sector investment since 2003.

IGS announced its £42 million Series B round at COP26 last November

In a blog to mark the news, Scottish Enterprise’s Kerry Sharp, Director of Entrepreneurship and Investment, broke down some of the numbers. Overall, Scottish Enterprise has invested around £770 million into early stage businesses, delivering roughly £6 of economic impact for every £1 invested.

Sharp picked out two companies that have made an impression on her from the hundreds of startups and spin-outs Scottish Enterprise has backed over the years - University of Edinburgh spin-out Speech Graphics, now a scale-up specialising in facial animation technology that counts Warner Brothers and Microsoft among its client base, and Roslin Innovation Centre-based life sciences company Carcinotech.

Constrained by a blog format, Kerry admitted she could have identified many more, but I think she made a couple of strong picks. Getting to hang out with Speech Graphic’s CEO Gregor Hofer recently at EIE London, and managing PR around for Ishani Malhotra-led Carcinotech’s investment announcement last month, both companies undoubtedly add richness to Scotland’s startup tapestry.

Nick Freer is the founding director of strategic communications agency the Freer Consultancy

In advising some of Scotland’s prominent investment firms who back early stage companies here as co-investors with Scottish Enterprise - firms like Eos Advisory, TRICAPITAL, and Par Equity - I’ve observed a few trends that indicate our startup to scale-up scene is headed in the right direction.

While, on the face of it, 2021 saw a record level of investment into Scotland’s startup and scale-up scene, scratching the surface I’ve definitely noticed more participation in deals from investors and venture capitalists (VCs) from both the rest of the UK, and further afield.

In the year that COP26 came to Scotland, two investment deals secured by scale-ups with sustainability at their core are noteworthy. In June, vegan protein startup Enough, formerly named 3FBio and a former University of Strathclyde spin-out that was first backed by St Andrews investment firm Eos, raised £36 million in a Series B funding round represented by investors from the Netherlands, France, and Greece.

In November, on the occasion of COP in Glasgow, vertical farming startup Intelligent Growth Solutions (IGS) announced a £42 million Series B funding round, backed by institutional investors from Dundee, Chicago, and Switzerland.

We know Scotland can produce innovative technologies that can address global challenges and make impact at scale. ENOUGH and IGS are two shining examples, and by securing chunky Series B rounds from tier one VCs, they can really go after top people talent, scale at speed, and even look to grow by acquisition.

So, we know we have a strong pipeline of innovative companies emerging, a strong network of angel syndicates and a supportive enterprise agency to fund our early stage tech companies, and then the bigger cheques from VCs are clearly there when companies have proven they can scale.

What will be illuminating over the next few years, is how many companies we can get from the early stage level to the IGS or ENOUGH category. Speaking to a well known investment firm last week, its team believe we need better local funding options at Series A to C, and only then will we really start to internationalise our tech sector.

Nick Freer is the founding director of strategic corporate communications agency the Freer Consultancy