Scottish scale-ups bag bumper backing from investors

High growth companies in Scotland attracted record venture capital backing in the third quarter of the year in a strong vote of confidence for the nation’s innovators.

Innovative companies in sectors including technology and healthcare are continuing to attract investment from venture capital firms.

Latest figures show that more than £197 million was invested in Scottish scale-up businesses during the summer, with firms including Edinburgh’s Current Health and Dundee’s Snappy Shopper among the biggest beneficiaries.

A total of 57 transactions involving Scottish firms were recorded by KMPG’s Venture Pulse report which is based on data supplied by PitchBook.

The third quarter tally points towards growing investment in Scottish firms, with the total raised coming in higher than the same period in 2020 when £71.6m was raised and the £32m recorded in Q3 2019.

KMPG said the roll out of the Covid-19 vaccination programme, greater business confidence in the post-Brexit environment and the opening up of most sectors had resulted in a busy summer of transactions. Later stage deals continued to attract the most investment in Scotland, but interest in earlier stage deals grew with more businesses beginning to raise Series A and smaller rounds.

Remote healthcare developer Current Health, which has since been acquired by a US buyer, saw the largest deal, raising £32m in Series B funding led by Northpond Ventures.

Renewco Power, an Edinburgh based developer of utility scale renewable power projects across Europe, attracted £24m of corporate financing from Perth-headquartered energy group SSE via Corran Capital. In another significant deal, Snappy Shopper which has developed a grocery delivery app, raised £19.5m in Series A funding led by PayPoint.

Amy Burnett, senior manager for KPMG Private Enterprise, said the growing levels of deal volume and value in the quarter had “cemented Scotland’s credentials as an incubator and rapid developer of exciting, innovative businesses”.

“As we emerge from the pandemic it’s clear to see that several scaleups have flourished in areas of growing consumer demand, including remote healthcare technology, home delivery services and renewables,” she said.

“Scotland’s vibrant tech community and highly skilled workforce continues to be a draw for investors hungry to invest in our pool of fast growth businesses. To maintain these record levels of investment, it’s important that we continue to support start-ups and scale ups to be as attractive as possible for VC investment, and to ensure their long-term growth.”

In the UK as a whole, over £6.5 billion was invested in scale-up businesses during the quarter.

The biggest deals included virtual event platform Hopin which raised £330m, electric vehicle subscription service Onto (£175m), AI accelerator company Graphcore (£162m), and flower delivery service Bloom & Wild (£125m).

Bina Mehta, chair of KPMG UK, said: “The strength of the UK innovation brand is flying high with areas such as AI, cybersecurity and fintech attracting interest and finance from greater numbers of new players to the UK market, driving up valuations for our most sought-after innovators.

"The increased dependence we all have on technology has seen large amounts of funding flow towards fast growth businesses with a success story to tell around new products and services that are helping us all to adapt to a new remote world.”

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