Greater focus needed for scaleup businesses
Scotland has an established reputation as an ideal place to launch a new business with a thriving start-up eco-system. We see regular evidence of this, from last month’s announcement by the University of Edinburgh that it would be supporting more than 100 student-led start-ups over the next 12 months to 2021’s report by Dealroom, Tech Nation and the UK’s Digital Economy Council showing investment in emerging Scottish technology companies hit a record £53.3m.
These are just a couple examples of the supportive landscape that exists here in Scotland for newly created companies. While these are welcome developments, there is a current gap in how we support scale-up businesses, those with strong, often global, growth potential.
Many revenue-generating Scottish companies with significant scalability face real challenges attracting next stage investment to help them make that difficult transition into world-leading businesses. As a result, far too many of these businesses either fail to reach their full potential or they are sold off before they’re able to do so and unable to deliver the associated economic benefits for Scotland that come with this.
This issue extends beyond our borders – last year’s Scale Up Institute Review reported how the UK was failing to make enough headway to close the market access gap. At a time when growing skills shortages are holding many scalable companies back, securing investment is often critical in attracting the talent required for significant growth. With a large portion of scale-up investment focused on London and the South East of England, companies in Scotland as well as other more remote UK regions often struggle to access this crucial external capital.
Recognising this current shortcoming within Scotland’s entrepreneurial eco-system has led to the launch of the first-ever Invest2Scale, event being staged in in Edinburgh on 2 November. The event was conceived by a group of leading Scottish corporate operators including Eden Scott, accountants Chiene + Tait, law firm MBM Commercial, and the Scottish business angels’ organisation LINC Scotland. Using our collective networks, we aim to connect some of Scotland’s most scalable companies with business growth experts and other key figures from the UK and international investor community.
TC Biopharm (TCB) and Current Health have provided recent examples of how scalable Scottish companies can reach the next level. After securing initial investment in 2013 from the likes of Investing Women Angels and Scottish Enterprise, TCB went on to leverage further capital from international investors with the company going public on Nasdaq in February. Meanwhile Current Health received is first external investment in 2016, led by Par Equity and Scottish Enterprise, before securing a final round of £31m in capital in 2021 prior to its sale to US-owned Best Buy for $400m.
While investment is essential for many scale-ups in helping them achieve their growth ambitions, some businesses also require a different style of leadership to take them to that higher level. As a small nation we can struggle to always find people with this level of expertise, but the sale of unicorn businesses like Skyscanner has changed that by releasing talented individuals with the right skills and experience. This can be put to use in supporting the founders of emerging Scottish companies who are looking to follow in their footsteps.
Michelle Lownie, founding Director and CEO of recruitment specialists Eden Scott
