Equity investment into smaller businesses in Scotland’s technology industry reached £163 million by the end of the third quarter of 2021, 36% higher than 2020’s total of £121 million, according to analysis from the British Business Bank.
The life sciences sector became the most popular destination for equity investment into tech-focussed smaller businesses in Scotland, as the Covid-19 pandemic increased interest in healthcare technology.
Using Beauhurst data that tracks equity investment in high-growth businesses, the bank found that investment in Scotland’s smaller life sciences companies reached £61 million during the first nine months of 2021 – 42% higher than the £43 million figure for the whole of 2020.
Life sciences was ahead of software for investment in smaller businesses in Scotland’s technology sector, representing 37% of the total figure.
Software accounted for £37 million, a 23% share, during the nine months to the end of September 2021 – on track to exceed the £43 million total for 2020.
The findings follow the British Business Bank’s Small Business Finance Markets report, which recently found that total equity investment in Scotland’s smaller businesses had reached £403 million during the first three quarters of 2021 – exceeding the entire previous year’s £279 million by 44%.
Mark Sterritt, UK network director, Scotland at the British Business Bank, said: “It is highly encouraging to see a significant increase to equity investment in Scotland’s smaller tech businesses.
“These are the high-growth, innovative companies that will help drive the wider economy in the years ahead and that they are looking to equity as a way of funding recovery and growth points towards a renewed sense of optimism after a highly challenging 2020.
“Although there are clear headwinds in the form of cost inflation, supply chain pressures, and geopolitical tension, 2022 will hopefully see a return to more normal trading conditions as the year progresses.
“With that, we would also hope to see more companies switch to focus on growth having understandably been in survival mode for much of the past two years.
“Wherever high-growth potential businesses are based in the UK, it is more important than ever that they can access funding to achieve their goals.
“We have a range of programmes across the country already in place to address geographical funding gaps – with details of our £150 million fund for Scotland to be announced in due course.
“In addition, last year we launched our Future Fund: Breakthrough programme to support innovative smaller companies with high growth potential across Scotland and the UK.”