Scots equity investment up 26% to record £953m

Kerry Sharp

New research from Scottish Enterprise shows the value of equity investment secured by Scottish businesses in 2022 reached a record £953 million in 2022, an increase of 26% from £754 million in 2021.

Spinouts from Scottish universities continued to attract significant investment with a record £235 million secured by 58 spinouts in 2022.

Based on Beauhurst data, the 2022 Risk Capital Market report confirms that Scotland’s investment market has retained its position as one of the best performing across the nations and regions of the UK, surpassed only by the “Golden Triangle” of London, the South-East and East of England, for both deal numbers and amount raised.

Despite a fall in the number of deals completed to 407 in 2022 from 424 in 2021, the value of investment secured by Scottish businesses was boosted by a number of large deals valued at £50 million or higher.

Three larger deals — £164 million into Borderlink, £50 million into Well-Safe Solutions and £101.3 million into TauRx Pharmaceuticals — lifted the overall value of the year’s activity.

The sectors accounting for the largest share of deals in 2022 were Digital & IT (45%), Technology & Engineering (38%) and Business Services (34%).

“Scotland’s strengths include investment into spinouts and a growing number of companies attracting later stage and international investment,” said Scottish Enterprise.

“Spinouts from Scottish universities continued to attract significant investment with £235 million secured by 58 spinouts making it a record year for spinout value, up 53% on 2021 (£154m).

“Participation by Venture Capitalists is particularly encouraging, again placing Scotland after the Golden Triangle, and testament to the quality of Scottish companies able to attract this mobile international investment.”

Kerry Sharp, Director of Entrepreneurship and Investment at Scottish Enterprise, said: “This latest research shows that Scotland continues to punch above its weight in securing significant investment for its most innovative and ambitious companies.

“Despite these positive headline figures, given the economic headwinds, the risk capital market is facing some challenges.

“We saw investor sentiment impact on market activity in the second half of 2022 and this is likely to continue well into 2023.

“Many equity investors are focusing on the needs of existing portfolios and they are becoming increasingly selective and are showing signs of changing risk appetites.

“That, coupled with deals taking on average five months longer, is inevitably making it harder for start-ups and early-stage companies to secure the funding that they need.

“This year marks the twentieth anniversary of Scottish Enterprise’s co-investment model which was introduced to act as a catalyst for investment into early-stage high growth potential companies.

“Since then, our equity funds have leveraged over £2 billion of private investment into ambitious Scottish companies.

“It is extremely gratifying to see many of our investee companies go from strength to strength through this investment and also the advice and support that is made available to entrepreneurs and young companies here in Scotland.

“Despite the market pressures, there is still significant capital available to invest in great opportunities and Scottish Enterprise is committed to working with private sector investors to create a pipeline of young innovative early-stage companies creating solutions for the future, jobs, wealth and wellbeing for the people of Scotland.”