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Optimism for Scotland’s Scale-ups After VC Investment Growth in 2020

David Paul

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Scotland’s scale-ups

The country’s fast-growth firms accounted for more than 5% of investment across Britain last year.

Scotland’s scale-ups finished 2020 strong, gaining around £100 million in venture capital (VC) investment, according to the latest figures from KPMG.

Despite Covid-19 related restrictions impacting the economy, the latest KPMG Venture Pulse Survey reveals there were 23 VC deals in Scotland between October and December of last year, with a combined value of at least £97.6 million – up from 17 deals valued at approximately £71.6 million in the third quarter of 2020.

In total, Scotland accounted for almost 6% of VC investment in the UK, which has witnessed a record year for deals, totalling more than £3.8 billion.

Scotland’s biggest deals included Aberdeen-based decommissioning company, Well-Safe Solutions, which secured more than £33 million in investment, and space-firm, Orbex, receiving almost £24 million to support the development of a satellite launching spaceport in Sutherland.

Commenting on the latest data, Amy Burnett, Senior Manager with KPMG Private Enterprise in Scotland, said: “While Scotland’s share of the UK VC investment space remains relatively low, it’s absolutely clear that there’s a real appetite for supporting the aspirations for Scottish scale-ups.

“We’ve seen deal value rise every quarter, which is incredibly impressive, given the challenges Brexit and Covid-19 have created for the overall economy.

“The data appears to demonstrate that investors are focusing on some of Scotland’s most promising sectors – from energy decommissioning and clean energy to technology and life sciences.

“Entrepreneurial businesses with a clear vision and strategy are riding out the current storm and laying down roots for sectors that could produce significant financial gain and sustainability in Scotland’s future economy.”

Across the UK, 2020 broke new records with more than £11.7bn of VC investment made into UK scale-up businesses across 1969 deals.

The UK was the ‘jewel in the European crown’ for attracting VC investment in the fourth quarter of last year, with six of the top 10 largest European deals involving UK scale-ups.

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Commenting on the findings, Bina Mehta, Head of KPMG’s Emerging Giants practice, said: “The venture capital market has not been immune to Covid-19 and with economic challenges continuing at least for the first half of 2021, VC investors will continue to assess how consumer behaviours are changing, which could affect the viability of different products, services, and business models in the future.

“With venture fundraises continuing at a pace we expect the coming year to be a positive year for growing and scaling businesses. Looking ahead, big bets will continue to revolve around healthtech, biotech, fintech and B2B solutions.

Mehta continued: “With Brexit now concluded and a world-leading vaccine roll-out across the UK, we expect strong investment levels, especially for those that have demonstrated robust and resilient business models through the crisis.

“Management teams who can show they were able to grow and adapt over the last few months will be in a strong position when it comes to fundraising in 2021.”

David Paul

Staff Writer, DIGIT

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