Startup founders who joined the Scottish Government’s flagship tech development programme have raised £52 million in its first year of operation, according to new figures.
Members of the nationwide Techscaler network – operated by CodeBase – secured the investment after joining the £42 million Scottish Government scheme.
Wellbeing economy secretary Mairi McAllan congratulated the founders and the programme today at the launch of the programme’s first annual report in Edinburgh.
Speaking to an audience at the city’s YOTEL venue on Queen Street, she said: “By empowering startups, we are creating a strong economy built on entrepreneurship, innovation, and sustainable growth. The Techscaler programme continues to be one of our most ambitious economic initiatives. Indeed, there is no other programme of its kind in Europe.
“Entrepreneurship is at the heart of our National Strategy for Economic Transformation. We are creating one of the finest state-funded entrepreneurial systems in the world dedicated to the creation of high-growth businesses and the first annual report shows we are already seeing a return on our investment.”
She added: “Scotland has the potential to become a leading start-up nation and this government’s clear aim is to unleash innovation and entrepreneurial talent from all walks of life and in all parts of the country. That Techscaler participants have raised a combined £301 million in lifetime capital so far shows the enormous economic potential of our startup community, and we will continue to help them capitalise on this success.”
Mark Logan, the author of the Scottish Technology Ecosystem Review, which was instrumental in the setup of the Techscaler programme, delivered a pre-recorded video message to the event.
He praised the success of the founders and said they had played a part in a programme that is now a “fantastic and internationally recognised” tech ecosystem. He also celebrated the fact that Techscaler has forged over 50 partnerships with other organisations to further the impact of technology in the wider economy.
He added: “In its first year of operation, Techscaler has already established itself as a vital part of Scotland’s entrepreneurial support infrastructure, and this is only the beginning. Expect major developments in 2024, as the Techscaler platform continues to consolidate, integrate, and evolve. In the meantime, I commend the CodeBase team for its outstanding progress to date.”
Techscaler was launched to help fledgling companies and entrepreneurs start and scale-up their businesses through education programmes, expert mentoring and a growing network of physical hubs. More than a third of those enrolling in one the programme’s education courses were women, compared to the startup industry average of 20 per cent, the report noted.
Stephen Coleman, CodeBase chief executive, added: “At its heart, Techscaler aims to make Scotland the best place in the world for founders to launch and grow a tech startup.
“At CodeBase, we’ve been privileged to propel this groundbreaking ecosystem-building programme into existence for the Scottish Government. We can’t wait to build on this foundation in year two.”
However, some appeared to downplay the programme’s achievements. Chris Herd, chief executive and founder of Firstbase, a remote work platform that has raised $50 million in Series B funding round, kickstarted a debate on LinkedIn.
The New York-based entrepreneur, who comes from Aberdeen, equated the £52 million raised by 500 Techscaler members to just £100,000 each, a fraction of what should be expected in a pre-seed fundraising round.
He said that he had written to the Scottish Government to try and drum up support for a trip from “world-leading investors” to come to Scotland – but got a stock email in reply.
He said: “Their response today was basically: ‘Thanks for your email. Here are all the awesome things we are doing that are barely making a dent! Have you thought about reaching out to them for help?’
“Having spent the last two weeks taking a victory lap on the back of one of their flagship policies seeing 500 start-ups in total raising the equivalent of a single large Series B (£50 million) in 2023 – which they see as a massive success – you’d think the opportunity to welcome many Tier 1 Venture Capital investors with over $5 billion of assets under management might be interesting.”
He said that the Scottish Government actually needed help from people who have built large businesses “from £0 to at least tens of millions of £ in revenue”, and suggested that the ones they were getting help from were “larping” – videogame slang for live action role playing, or pretending – to be entrepreneurs.
The post sparked a huge debate on the social media site, with over 150 comments, many of them from Scottish founders agreeing with Herd’s conclusion, that “it’s no wonder they don’t stay in Scotland to build their companies here”.
Despite the criticism, some of the founders who have joined Techscaler, have realised the benefits, particularly since the opening of the Silicon Valley hub.
The venture is designed to support Scottish tech firms looking to expand into the world’s biggest technology market.
CEO and founder of Playmaker Alex Gordon-Furse said: “The support that Techscaler provides to startups at all stages of their journey has been really influential in the ecosystem over the last year. I was part of the cohort of founders who went out to San Francisco in February as part of Techscaler Silicon Valley, and the experience was exactly what I needed, at exactly the right time.
“It’s helped bring about a step-change in how I’m developing my product, and brought me together with a group of ambitious founders that I know will provide valuable peer support throughout my startup journey.”
Success in numbers:
According to the annual report, the Techscaler programme has delivered:
643 individual members
£52.12 million raised in capital investment
369 members enrolled in education programmes
517 startup and scale up companies
9,696 Techscaler event attendees
56 formal Techscaler partners
304 members mentored
2,403 Techscaler digital community members
11 Techscaler hubs launched
Access the annual report here.
