Thoughts and Observations from a year in the Scottish Startup scene
I have been enjoying the sunshine this week and looking forward to heading to Majorca for my hols next Saturday. This will also mark a year since I left my previous firm and started looking for Startups in Scotland. I still feel like a bit of a newcomer and there is a ton of great things happening across the ecosystem so it is hard to keep up. So I offer a few thoughts and conclusions very tentatively….
First and foremost, there is a fantastic level of energy, innovation and freshness. There are lots of great companies with inspiring founders, strong teams, viable ideas and the passion to make things happen. I have had so many good meetings with people that just demand to be heard and I have seen many of these businesses make great progress even in the short time I have been around. At recent events like EIE, Opportunity Knocks and the Scottish Edge Awards this message has been emphatically driven home by the quality of opportunities being pitched. I saw it again last week as a judge at the Scottish Digital Technology Awards. I have tended to focus on the tech companies, especially those with a mobile aspect but there are also great Startups in green energy, life sciences, manufacturing, services, health and many other sectors.
The seeds of a business renaissance have clearly been sown. The initial fertiliser to feed growth is also largely in place. Very early stage seed funding flows through universities and two very active business incubator schemes, ESpark and Codebase, which attract both public and private funding. There is also a thriving angel community with many active syndicates offering slightly different focus and a fair number of individuals also joining in. For amounts between £100,000 and £1 million plenty of options exist. These funds are supported from the public purse in two ways. The UK’s Enterprise Investment Scheme (EIS) and Seed Enterprise Investment Scheme (SEIS) offer generous tax incentive. Scottish Enterprise provides a range of grants and through the Scottish Investment Bank (SIB) matches monies raised by those angel syndicates which are co-investment partners.
What is needed to get from these early shoots to a flourishing ecosystem? Firstly, I think it needs to be one ecosystem. Glasgow, Edinburgh, Aberdeen and Dundee do not have the muscle or scale to be individual hubs. Scotland has its own identity, we can offer incredible lifestyle options in the Highlands and Islands as well as vibrant cities and great culture so lets operate as one Scottish hub. I know from personal experience that those already in the ecosystem are open, warm and welcoming so lets work together to grow. This might also allow us to harness the output of our world class universities more effectively, something that is only just beginning to happen right now.
We also need to harness the knowledge, experience and networks of the wider community. Angels are good at providing finance and there are some great mentors out there but nowhere near enough. It would be great if we could create a forum where the expertise and connections of the whole community could be accessed by Startups. Ideally, we should cast the net as wide as possible including both those in Scotland who are not currently involved, usually because they don’t have the resources to invest, and the global expat community of successful Scots.
The rest is harder. I was brought up to believe that Scots were people who went out into the world and punched above their weight. I am completely convinced that we have the talent and passion to do this again but we seem to have lost something. I have heard people talk about lack of money, shortage of ambition and so on but these are not quite right. Whatever happens on 18 September, we need to get our global mojo back and then everyone else watch out!
Kenny Fraser is the Director of Sunstone Communication and a personal investor in startups.