Scotland’s tech sector accounted for almost half of all equity investment in small firms last year, according to new figures.
Digital companies secured £124m from investors – a 44 per cent share of the equity market for SMEs – new data from the British Business Bank has revealed.
In total, 110 deals were struck with eastern Scotland securing the biggest share – 71 – compared to the south west (33), north east (5) and Highlands and Islands (2).
In terms of how that split between subsectors, software secured 40 deals totalling £43m, life sciences (32 deals) at £44.6m, ‘other’ tech (32) totalling £24.2m and hardware (6) totalling £11.9m.
Overall, analysis from the British Business Bank found that smaller companies in Scotland saw a total of £284 million in equity deals last year.
The number of deals in the tech sector grew by 16% in 2020 – exceeding the UK’s 12% increase.
Mark Sterritt, UK network director, devolved nations at the British Business Bank, said: “Last year saw a record number of small businesses receiving equity investment in Scotland, placing the country ahead of other parts of the UK with the exception of London. Our analysis suggests this has continued on into 2021, as the Scottish economy recovers and investor confidence returns.
“It is particularly encouraging to see the tech and life sciences sectors feature so prominently as destinations for investment. Scotland has a flourishing tech ecosystem and a vibrant life sciences sector, with a broad range of exciting and ambitious companies emerging across the country, with products and services that have global potential.
“The British Business Bank is aiming to support companies in both sectors, and beyond, with a range of initiatives. Among them, Future Fund: Breakthrough, a new £375 million UK-wide programme, is due to launch this summer, which will help address the later stage equity finance gap faced by innovative UK deep tech and R&D-intensive companies.”
Scotland’s share of small business equity investment deals has more than doubled over the last five years, from 5% in 2016 to 12% of the UK total. Activity has been boosted by a variety of exciting new companies emerging and support from the Scottish Government, with two-fifths (42%) of announced equity deals during 2020 involving a government fund.
The Bank said that last year’s strong momentum has continued into Q1 2021, with the total value of equity investment in smaller businesses across the UK reaching £4.5 billion – by far the highest amount ever recorded in a single quarter. Scotland accounted for £90.9 million of this figure.
