Nearly 80% of tech industry bosses in Scotland have revealed they believe the sector will “grow rapidly” in the next five years.
A report by tech publication UKTN sponsored by KPMG surveyed key players in Scotland’s tech industry to generate an inside view of the sector and find out the experiences of those running tech companies and support organisations.
Out of 72 tech leaders surveyed, 79% agreed that the sector look set for growth during the next five years, with 76% stating that Scotland had become “more attractive” to start a tech firm in the past five years.
A total of 86% said they would encourage other similar firms to launch in Scotland and 80% stressed they had received advantages to setting up and running their firms in Scotland.
However, the report claims tech firms in Scotland have suffered from a lack of access to funding, especially at the later growth stages — and claims Scotland “has yet to establish the kind of reputation as a tech hub already seen in places like London.”
The report claims tech in Scotland lacks “a global reputation.”
Amy Burnett, Emerging Giants lead – Scotland, KPMG in the UK, said: “It is great to read such positive noise from business leaders when it comes to the tech industry in Scotland.
“What the results of this report show are that the region is clearly a hotbed for the industry, is open to investment and poised for significant growth in the coming years.”
The report ranked fintech as a strength for Scotland followed closely by health tech, with climate tech and deep tech cited as emerging specialisms.
Tech leaders also highlighted the ability to secure funding as the main challenge in the sector closely followed by hiring the right kind of staff.
Almost a third of respondents said they have personally experienced challenges securing funding for their business.
“More support for entrepreneurs” was cited as the most popular factor that could drive tech growth, with many respondents raising concerns about a mismatch between the skills required in the tech sector and the educational curriculum in schools and colleges, calling for initiatives to reform educational curriculums to meet skills gaps.
Respondents feel that attracting more global tech businesses to Scotland could encourage more strategic partnerships across the tech sector and foster innovation, while encouraging growing businesses to stay in Scotland.
Burnett added: “The tech industry is growing at one and a half times the overall economy; it now includes close to 15,000 firms and 400,000 employees.
“Covering all areas from net zero to clean tech, the scale is wide, the scope epic and the possibilities endless.
“The tech ecosystem has flourished in recent years, and as a result Scotland is really putting itself on the global map. So much so that it is now a vital contributor to the health and wellbeing of our economy.”
Out of 72 survey respondents, more than half (56%) worked in or near Edinburgh, 25% worked in or near Glasgow and the rest were split across Dundee, Aberdeen, Stirling, Dumfries and Inverness.
The majority of respondents (58%) were tech company founders or owners, and respondents otherwise represented business support organisations, service providers, investors, tech event organisers and academics.
Oscar Hornstein, senior reporter at UKTN, said: “Scotland has long had a tradition of innovation, from historical milestones from the likes of Graham Bell and Fleming to the incredible work being done today in areas such as space tech and life science.
“Despite the nation’s history of excellence in science and technology, it has yet to establish the kind of reputation as a tech hub already seen in places like London.
“The pieces, however, are all there for Scottish tech to go from strength to strength, with world-class research and educational institutions nurturing new generations of talent and growing support from local government and industry bodies like fintech Scotland.
“There are, of course, challenges that have held Scotland back. Access to the kind of funding – in particular at later growth stages – that might be more readily available south of the border, limited facilities to meet the demands of the country’s ambitious entrepreneurs and a lack of a global reputation that can draw talent and investors from around the world are all barriers to Scotland achieving the international tech hub status it is capable of.
“Stronger government support, increased efforts in global networking and a greater focus on bringing in a diverse and broad talent base are just some of the ways Scottish tech could leap over those hurdles and cement its place as a European tech powerhouse.”
KPMG added: “The report also showcased that there are 8,680 Scottish registered tech businesses, with tech startups enjoying a value of £16.6 billion.
“Recently, it was revealed that 2023 saw startups in the tech industry share £343 million in venture capital investment.”