Scottish technology firms attracted £200 million worth of VC funding in 2019, according to the latest report from Tech Nation, the growth platform for tech companies and leaders.
The data provides a comprehensive overview of the evolution of the UK’s tech ecosystem, exploring the drivers that underpin and power economic growth within the sector.
This year, the report explores the current state of the UK tech sector, how high value scaleups and tech unicorns are fuelling investment, which UK regions are competing on the international stage, and how the UK is leading the way on cutting-edge technologies.
Tech Nation described 2019 as “an incredibly positive year for the UK tech sector”. Compared to the rest of the UK economy, digital tech grew six times faster than any other industry (the digital tech sector contributed £149 billion to the UK economy in 2018, accounting for 7.7% of UK GVA. This is nearly six times greater than growth across the economy as a whole, which increased by 1.4%).
In 2019 there were 2.9 million people employed in the digital tech economy, an increase of 40% from 2017, with the digital tech economy now accounting for 9% of the national workforce compared to 7% two years ago.
Late stage scaling investment in the UK has boomed over the last year: Series C investment onwards grew by 71%, and Growth Equity (Private Equity) grew by 51%, indicating that the UK tech ecosystem is scaling and companies are ready to take on large sums to enable unicorn style growth.
In 2019, 81.2% of investment into UK tech went to scaling firms, compared to 80% in 2018. A ‘scaleup business’ is defined as a company which has seen average annualised growth of at least 20% over three years with 10 or more employees at the start of the period.
Fintech remains the UK’s largest tech investment sector with a 100% rise from 2018. 44% of Europe’s Fintech unicorns and companies valued between $250 million (£209 million) and $800 million (£671 million) are based in the UK.
UK Digital Secretary Oliver Dowden said: “Investment into Scotland’s tech sector was an impressive £200 million in 2019. We are determined to create the conditions digital businesses in Scotland need to succeed and are investing heavily in gigabit speed broadband, 5G, cyber security, digital skills, and research and development.”
Hazel Jane, entrepreneur engagement manager, Scotland, Tech Nation, commented: “Scotland’s tech sector is growing fast and is attracting considerable amounts of investment. £93 million was invested in emerging technology from 2015 to 2019, and £25 million into Artificial Intelligence. I’m looking forward to seeing continued growth in Scotland’s tech sector, building on our growing reputation in the fintech sector, and in emerging areas of technology too, including Healthtech and Spacetech.”
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Allan Cannon, co-founder & CEO, R3 IoT, commented: “R3 IoT was founded in the summer of 2018, having identified a new approach to delivering remote data from sensors via satellite (Remote Industrial IoT). Although we are still relatively young for a start-up we have great traction and secured some amazing follow on work – in the last six months we’ve doubled our headcount and have generated a seven figure sales pipeline. Being based in Scotland has provided us with a great foundation to generate growth.
“Not only are we surrounded by incredible talent from some of the best universities in the country, we’ve also had some amazing support from the likes of Scottish Enterprise, the UK Space Agency and the CENSIS innovation centre. There is a definite buzz in Scotland’s tech community particularly across Glasgow and Edinburgh and we are excited to be a part of it.”