More than 40% of Scotland’s tech start-ups and scale-ups are targeting the US market for growth but have found access to finance the biggest barrier to their ambitious plans.
The issue is one of the key findings from a survey of 100 data-driven tech start-ups and scale-ups, undertaken ahead of this year’s Engage Invest Exploit (EIE) by the event’s organiser Informatics Ventures, and conference sponsor TalentSpark.
EIE, the international technology investor event for data-driven innovation, is expected to attract 1,000 delegates to Edinburgh when it takes place at the city’s historic McEwan Hall on 24t April.
The survey findings, published today, also reveal that 52% of respondents are targeting angel investment to fund their growth which is expected to fuel job creation across Scotland’s tech sector. 86% of the start-up and scaleup businesses who responded are looking to add talent to their teams this year.
Nearly a quarter of the businesses surveyed have a team where more than half of employees are non-UK nationals, showcasing how attractive a location Scotland is for those developing a tech business, or seeking a career in this sector.
Strong governmental support was highlighted in this year’s survey responses, with over 70% of those surveyed naming Scottish Enterprise or Business Gateway as vital organisations on their journey. Many others noted the important part played by Scotland’s entrepreneurially minded universities, with nearly 36% mentioning Informatics Ventures among the key players.
Other findings include:
-Around 70% of respondents had raised less than £500k in equity, with almost half being solely grant or self-funded
-Of those that had raised investment (and almost 8% had raised in excess of £3M) the mainstay of funding had come from Scotland and the rest of the UK, but 4% had taken European money – and a further 3% had raised money in the US
-64% claimed to be revenue generating
-62% of businesses had undertaken no Brexit planning
-46% of respondents had more than 6 members of staff
Digital health/medtech/biotech made up 24% of respondents
Steve Ewing, director of operations at EIE, said:“Scotland boasts a hotbed of tech and data talent. The combination of academic excellence in data science, a vibrant start-up community, excellent government support and additional expertise in areas like biosciences, financial services and marketing analytics creates an ideal environment for data-driven businesses to succeed.
“The aspirations to establish Edinburgh as the data capital of Europe and a renewed focus on entrepreneurship ensures Edinburgh remains synonymous with company creation and quality deal flow for investors. I look forward to Informatics Ventures and EIE remaining at the heart of that, and to supporting the future new businesses the Data Driven Innovation Programme will create.
“The companies at this year’s EIE range from very early stage to 5+ years, and each of them will use the opportunity to pitch to a panel of global investors; many have ambitions of a level that would have been unthinkable just a few years ago.”
Guy Martin, founding director of Eden Scott, the company behind TalentSpark commented:“Scotland is home to a wealth of talent and following outcomes from the likes of Skyscanner, Fanduel and FreeAgent, we’re starting to see that talent recycled through the ecosystem. The experience of people who’ve been there and done it is invaluable in shaping the growth businesses and entrepreneurial leaders of tomorrow.
“Engage Invest Exploit provides an unrivalled opportunity for Scottish businesses to pitch to an international audience of investors, with significant success. In the past decade the event has grown exponentially. Over 300+ companies having taken part and gone on to secure over £550 million of seed and following on funding, without which they would be unable to compete in the global fight for talent.
“Attracting the right investment, developing a customer base and building the relevant skills remain high on the list of priorities for our entrepreneurs. The grass might sometimes seem greener elsewhere, but all things considered, the general feeling is that Scotland remains to be one of the best places to start up and grow new companies.”
Ian Stevenson,chief executive of Edinburgh-based cybersecurity start up Cyan Forensics, who will be pitching to investors at EIE19, said: “I’m delighted that Scotland manages to maintain a welcome brand for potential employees. Building a global business is tough but Scotland provides access to a unique skills base, and events like EIE support our ability to attract the right people.”