Investment in Scottish start-ups sees 70 per cent growth

A total of £430 million was invested in risk capital in Scotland last year, according to Scottish Enterprise figures.

The data revealed that more start-up firms found a willingness from investors to back their ambitious plans and marks a 70 per cent increase on the previous year and an almost fourfold rise on 2012.

The Risk Capital Market in Scotland (2015) report found a 118 per cent increase to £350m in investments by venture capitalists (VC) and institutions in spite of the number of deals in which they participated falling from 65 to 61.

The announcement was made as Kerry Sharp, head of Scottish Investment Bank, led a delegation of Scottish companies at the EIE technology investor showcase event in London.

Scotland’s presence at the event reflects the growing attractiveness of Scottish start-ups to London’s investment community, and follows a recent trip to EIE Hong Kong & Shenzhen last month.

During 2015, VCs based outside of the UK invested some £290m (80 per cent of VC investment) into Scottish SMEs, building on over £50m from the rest of the UK.

The Risk Capital Market in Scotland (2015), commissioned by Scottish Enterprise and undertaken by Young Company Finance, also found that 2015 was a record year for business angel investment in Scotland, with over £30m investment from this source, representing a 15 per cent increase on 2014.

The report, the latest in a series from Scottish Enterprise, provides detailed analysis of the early stage risk capital market in Scotland.

Key findings from 2015 include:

Commenting on the report, Ms Sharp said: “This report highlights that ambitious Scottish companies continue to attract significant investment; a terrific result, reflecting ongoing demand for investment from growth-oriented companies, matched by growing interest in Scottish propositions from new and existing investment partners.

“On the supply side, we remain focused on maintaining a buoyant risk capital market environment, and continue to seek new investment partners to work alongside our existing partners and co-invest in the next generation of ambitious Scottish companies.”

Jonathan Harris, editor of Young Company Finance and director of Research and Communications at LINC Scotland, added: “The risk capital market in Scotland has consolidated considerably in the past couple of years, with more funding available to young companies, from a wide range of sources including business angels and angel syndicates, crowdfunding, venture capital (VC) firms, and corporate venturers. Most months see new investors arriving on the scene, adding to the variety of funding sources. And Scotland is now beginning to see some very large investment deals - still few in number, but no longer entirely unique.”

The EIE London 2016 investor showcase, running as part of NOAH London, takes place at Old Billingsgate, and provides a unique opportunity to showcase some of Scotland’s top tech companies. With around 350-400 VC and private equity investors expected to attend, the Scottish delegation is hoping to make its mark on the London investment community. The ten Scottish start-ups selected by Informatics Ventures to represent Scotland at EIE London are: Comcarde, Hermes Apps, SnapDragonIP, snap40, Make it Social, Cognitive Geology, Krotos, Digital Sports Arena, Talking Medicines and The ID Co. In addition to the Scottish startups, EIE London also features early stage tech companies from across the UK and Europe.

The companies attending the London event hope to emulate the success of the trip to EIE China last month, where 11 Scottish companies pitched to over 200 international investors at events in Hong Kong and Shenzhen, and had a number of positive follow up meetings and conversations while out in market.