The report, Investing in Ambition: Scotland’s Risk Capital Market in Context, identifies 446 equity deals completed in Scotland during 2020, compared to 428 in 2019.

It places Scotland third behind London in top spot (2,986 deals) and South East England in second (725 deals). It was the fourth year in a row Scotland attracted more than £400 million of equity investment, although the total amount invested decreased from 2019’s figure of £485 million to £430 million.

The Digital and IT sector accounted for 30% of the deals, followed by Business Services (21%) and Technology and Engineering (19%). The remaining deals were spread across several sectors, with Life Sciences and Food and Drink well represented.

Jan Robertson, interim director of growth investments at Scottish Enterprise, said: “Scotland’s equity investment market held up well last year, demonstrating the strength of Scotland’s entrepreneurial ecosystem and the quality of investment opportunities.”

At the very early stage of the market, deals below £500,000 saw a slight year-on-year increase, in terms of both number and amount invested. In comparison, these figures fell by 12% and 14% respectively across the UK.

This can be attributed partly to the 90 investments made by Scottish Enterprise through the Early Stage Growth Challenge Fund which was established by the Scottish Government to support emerging businesses through the pandemic. The country also benefited from the activities of its well-established business angel networks and its track record in attracting corporate and venture capital investment.

However, in another indicator of the performance of the early stage investment market, both Scotland and the rest of the UK recorded decreases in the number of companies securing equity investment for the first time.

Across the UK, 29% of all deals completed in 2020 were first-time equity investments, compared with 33% in 2019. In Scotland, it fell from 29% in 2019 to 24% in 2020.

Jan Robertson added: “Scotland’s early stage businesses will play a huge part in the country’s recovery from Covid-19 Many of them operate in sectors of significant economic opportunity like low carbon, digital, and health and care, and their development needs to be nurtured carefully.

“With our data pointing to the growing impact of the pandemic on investment in emerging businesses, Scottish Enterprise remains focused on supporting that area of the economy. Through continued co-investment alongside investors in the private sector and by providing access to specialist advice, we’ll help early stage businesses secure the patient capital and expertise needed to fuel their growth.”