Investing in Scotland: the rise of a thriving tech industry
I’ve been a part of the Scottish tech community for almost 25 years, and can confidently say there’s never been a better time to be a Scottish tech company.
Things have changed dramatically in that time. When I started my first company in 1995 there were a handful of venture-funded companies and a few struggling start-ups. Whereas now, it is hard to keep up with the number of interesting tech companies – large and small – across a variety of sectors.
More importantly, we now see well-established companies, who’ve grown to become world-leading in their sector, from Skyscanner, Blackcircles and FanDuel, to gaming giants such as 4J Studios and Rockstar North.
These great companies – and their founders – not only provide budding entrepreneurs with examples of what is possible, but they also create the investment experience, and often generate the angel funding to pass on to the next generation.
Success breeds success. When you continue to create new and exciting ventures – and more importantly, successful exits – you build the critical mass needed to set up a thriving tech hub.
Silicon Valley has created a billion-dollar company every year since 1974, regardless of recessions. While Scotland has a long way to go to match that record, only by continuing to develop great start-ups will we create the environment and the experience to scale up the already vibrant community.
So, what makes Scotland such an attractive base for tech companies?
Funding the Future
While Scotland will likely never be in the same league as Silicon Valley or London when it comes to accessing venture capital, there are more than enough routes to funding to get any tech start-up off the ground.
With an ever-increasing angel community, seed funds like The Scottish Investment Bank, investors for all stages of growth such as Par Equity, Scottish Equity Partners, and the Business Growth Fund, there really is no shortage of options.
Equally, London-based venture funds are all easily accessible and are always in strong attendance at investor events like Engage Invest Exploit (EIE).
Another big change impacting Scottish start-ups is the number of U.S. funds that look beyond their own shores for new investment opportunities. While many still have rules that stop them from investing outside of the U.S., there are a large number that have seen success in Europe – particularly in the UK. This means there is a larger pool of capital available for big series A or B rounds.
Stellar Tech Community
Scotland has a wide variety of incubator and accelerator programmes that offer valuable guidance and mentoring to early stage businesses.
Edinburgh-based CodeBase is the UK’s largest tech incubator, providing co-working spaces, learning/training sessions, networking events and even investor meet-and-greets. While, Seed Haus, an accelerator on a mission to create the next Scottish unicorn, is recruiting tech start-ups to receive pre-seed investment, office space, and mentoring.
I’d be remiss if I didn’t mention the contributions of Scottish Enterprise, Scotland’s main economic development agency. Although not solely focused on tech, it is an invaluable resource for growing companies – especially when it comes to expanding outside the country, and having the talent and investment to do so successfully.
Wealth of STEM Talent
With the Scottish government’s initiative to attract more STEM talent, as well as our proximity to world-class universities, there has never been a shortage of STEM professionals. These people are, in many ways, the core of a successful tech company. Not only that, but I believe Scotland is at the forefront of making STEM a more diverse field.
I’ve met – and hired – some of the most innovative engineers straight out of Scottish education. We’ve also seen an influx of more experienced STEM professionals making their way to work in the Scottish tech space. To say the STEM community is thriving here would be an understatement. In fact, Tech City UK recently found that more than 23,000 people take part in at least 88 Edinburgh Tech Meetup groups.
The increasing lack of physical restrictions in the tech world means businesses can be based anywhere and still have the potential for global reach. The opportunities for international engagements for Scottish tech companies are huge, with 82% already exporting to overseas markets or planning to do so in the near future.
In the past, entrepreneurs may have felt the need to relocate to “traditional” business centres, such as London, to seek success. But many are now increasingly developing products that reach into global markets without ever leaving Scotland.
Take my company, for example. TVSquared is proud to be a Scottish-based business and we’re one of the fastest growing tech firms in the North, but we’re a global company. Our products work in every country in the world and more than 80% of our business is outside of the UK. While headquartered in Edinburgh, we have offices in London, Munich, Los Angeles and New York; the latter now accounting for the location of almost half of our staff.
It is, of course, interesting that while we set up in Scotland and are headquartered here, we only have one customer out of more than 700 actually based here. Our investors are split between Scotland and the U.S., and our management team is split evenly across our U.S. and UK locations.
While Scotland is a great place to start a business, we all need to do what our forefathers did and jump on plane – or a ship in those days – to go and find your customers and investors. It is big world out there with amazing opportunities for anyone willing to look beyond their local market.
The Scottish tech sector will continue to go from strength to strength. With unprecedented investment, and an innovative and supportive community, there really has never been a better time to be a tech company in Scotland.
Calum Smeaton is chief executive and founder of TVSquared.