A former senior Skyscanner executive has warned that an ‘explosion’ of tech startups in Scotland risks creating a growth bottleneck.
Shane Corstorphine, former chief financial officer for the travel giant, has said the growing startup tech ecosystem is potentially starving those ready to expand of talent and resources.
Corstorphine, who now runs a ‘scaleup’ consulting firm, has entered into the debate about Scotland’s tech ecosystem following the publication in March of the first annual report on the Scottish Government’s flagship Techscaler programme.
There were criticisms that fledgling tech companies taking part in the nationwide scheme – set up following the recommendations of Mark Logan’s Scottish Technology Ecosystem Review (STER) – had only raised just over £52 million in seed capital between its 500 members.
Now, Corstorphine, a former colleague of Logan’s, has pointed to the ‘unintended consequences’ of focusing so much effort on startups that it starves the businesses ready to scale of talent, funding, the ability to develop and expand its product and markets.
In a LinkedIn post, he wrote: “Since the report was produced in 2020 there has been a clear and deliberate effort to drive more support into the start-up end of the funnel. At the same time, I would claim, that the unintended consequences of these efforts have further starved scale-ups across the four key needs of a Scale-up Ecosystem.”
He therefore claimed that companies are hitting a bottleneck and risked ‘death by constipation’, adding: “Scotland has done well – and must keep the support it offers the Pre Start-up and Start-up stages – but must also start to rapidly intervene at the Scale-up stages. Otherwise, we will see these fledgling scale-ups start to stall and never reach their potential as future world class businesses celebrated around the world.”
Corstorphine said it was vital that there was more clarity around what constitutes a startup and scaleup – because if one becomes more competent than the other, it can work against the ecosystem.
He said: “I believe we, in Scotland, need to work with some urgency to pre-empt this happening – avoiding a world where the explosion in the start-up scene inevitably hits a bottle neck in moving through to scale-up and beyond (global / market leader).”
Corstorphine, chair of digital consultancy xDesign, also warned startups should focus relentlessly on achieving ‘product market fit’ (PMF) before scaling.
He said: “If a start-up prematurely tries to operate as a scale-up it’s highly likely that it will run out of money prematurely and it will die. Scale infrastructure is necessary but can be expensive. In my experience, finding PMF takes an unknown period of time, so all resources should be saved for achieving PMF and not spent on scaling.
“Likewise, if a start-up is emerging as a scale-up but the ecosystem isn’t there to support them there is also a heightened risk of failure.”
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