Global tech advisory firm GP Bullhound visited Edinburgh last week on the latest leg of a whistle-stop tour to promote its Titans of Tech report. Looking at Europe as a whole, GP Bullhound noted that with more billion-dollar tech companies than ever before and a record 12 months of fundraising, Europe can rival the US and Asia as a hub for the best tech companies on the planet.
Fast forward a week and Faang stocks in the US - Facebook, Apple, Amazon, Netflix and Google - had $1 trillion wiped off their market value (around half the value of the FTSE 100) from yearly highs, spreading a chill over stock markets worldwide and turning bull markets bearish overnight. The European ecosystem has yet to produce tech titans of Faang stature, although Sweden’s music streaming platform Spotify is showing signs of closing the gap with a valuation close to $30 billion.
The Scottish tech reality is probably best put into the context of what is happening elsewhere in the UK – rather than against the rest of Europe, never mind the States or Asia. If you believe in the corporate mantra that “only the paranoid survive”, perhaps it’s time we admit to a bit of anxiety that we could be falling behind other tech hubs in the British Isles.
Most venture capitalists admit that Manchester has overtaken Edinburgh in unicorn-creating potential. Not only has it produced more – think Boohoo, The Hut Group and Onthebeach.com – but, perhaps more importantly, it has a hotbed of pre-unicorn quality start-ups primed to prance towards sky-high valuations.
So, how is it that Manchester is socking it to us on the tech front? Pool of staff is definitely a factor, with Greater Manchester boasting a population close to three million. It is also just two hours from London’s critical mass of tech investors and their prized chequebooks, considerably closer than Edinburgh and Glasgow.
Former senior Skyscanner executive Richard Lennox wrote in this column a fortnight ago that we shouldn’t measure tech success by unicorns, rather we should concentrate on “small giants” - “companies who focus on being great over big and look to create sustainable, profitable, medium-sized enterprises”. Of course, if you create more small giants you boost your chances of producing billion-dollar firms like Skyscanner, FanDuel or Rockstar North.
Mark Logan, Skyscanner’s former chief operating officer, is now sharing his scale-up wisdom as an adviser and non-executive with Scotland’s promising early stage tech firms. Much fancied healthtech Care Sourcer, up for three awards at this week’s inaugural Scottish Startup Awards, is one name on Logan’s growing non-executive director portfolio. With investor backing from Accelerated Digital Ventures (ADV), close observers view the start-up as a soon-to-be small giant and probable unicorn contender.
Back at GP Bullhound’s Titans of Tech event, hosted by Informatics Ventures at the Bayes Centre, other Scottish tech stories of recent times - including Aim-quoted Craneware (now with a valuation within touching distance of £1bn) and wealth management platform FNZ (which changed hands earlier this year in a deal valuing the firm at £1.6bn) - were discussed during a Q&A with key players from the Scottish ecosystem.
Participants included Glasgow-based venture capital firm Scottish Equity Partners (SEP) - original backers of Craneware and Skyscanner - whose MD Calum Paterson said: “The UK is now home to a third of all technology unicorns in Europe and accounts for 30 per cent of all European venture capital investment. We have a supportive ecosystem for technological innovation and the emergence of an increasingly large and impressive pool of dynamic and agile technology companies right across the country - not just in London, but in regional hubs such as Cambridge, Manchester, Belfast and Edinburgh.”
- Nick Freer, founding director, the Freer Consultancy and Full Circle Partners