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Scottish Scaleup VC Investment Slows in First Quarter

Michael Behr


Scottish scaleup

The fall in Scottish venture capital in the first quarter of this year comes against a background of increased investment across the UK as a whole.

New figures from KPMG have warned that venture capital investment in Scottish scaleup companies slowed during the first quarter of 2021.

According to the latest KPMG Venture Pulse Survey, there were 21 VC deals in Scotland between January and March this year, down from 23 deals in the fourth quarter of 2020.

Meanwhile the combined value was also down from at least £97.6 million to just over £64 million.

Scotland’s entrepreneurial scaleup sector bucked the wider economic downward trend last year when it attracted record levels of investment and deals.

However, KPMG noted, with restrictions easing and the Scottish economy gradually re-opening, it is hoped a return to high confidence levels from investors should see a return to the upward trend in the country’s increasingly important startup and scaleup space.

Glasgow saw the highest number of deals in Q1 with seven, followed by five in Edinburgh and three in Aberdeen.

Commenting on the latest data, Amy Burnett, Senior Manager with KPMG Private Enterprise in Scotland, said: “The figures for Q1 are relatively subdued and disappointing, but it’s clear investors still have an appetite for Scottish scale-ups.

“To some extent, we bucked the global trend towards the end of 2020, with significant deal volume and value, and we’re now seeing that steady off and balance itself out.

“Once again, the data demonstrates that investors are keen on Scotland’s increasingly key sectors – low-carbon energy, pharma and tech. For entrepreneurial business leaders, that provides a golden opportunity to adapt and embrace future opportunities.”

Burnett added: “The country’s economy may be easing its way out of the pandemic, but we’re about to witness some radical transformation away from high carbon and heavy manufacturing. It’s the perfect time for the Scottish scale-up community to shine on the global VC stage.”


The poor first quarter performance of Scottish scaleup companies was at odds with the UK and global trend. A record £5.1 billion of venture capital investment was directed into fast-growth UK businesses over the last three months – up 25% on the previous high of £3.9 billion raised in the fourth quarter of 2020.

While Germany, the Nordics, Spain, and Israel also recorded new investment highs, the UK attracted the lion’s share of large deals, accounting for seven of the top 10 financings taking place in Europe in the opening quarter of the year.

A total of £15.1 billion was raised across Europe in the first quarter of the year, with the UK accounting for more than one-third.

Chair of KPMG UK and Head of KPMG’s Emerging Giants practice, Bina Mehta, commented : “The UK continues to be the powerhouse of Europe when it comes to attracting investment in fast growth innovative companies.

“Whilst the number of deals taking place in the first quarter of the year was down by 23% on Q4 20, it was our ability to grow and nurture large innovative businesses that attracted VC investors from across the globe. Average deal size is larger, continuing a trend in later stage investment.

“The fact that the amount of VC investment coming into the UK from overseas increased in this post-Brexit environment is encouraging, as was the continued strength of Corporate VC investment.”

Michael Behr

Senior Staff Writer

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