Scotland

Start-up growth is slower, but still strong

Despite a downturn in venture capital (VC) and expansion funding, Scotland is still a strong performer for start-ups among UK regions outside London and the South East. However, it struggles to maintain high-growth companies – with just 171 high-growth enterprises, it accounts for only a 4% share of these companies nationwide.

Scotland hosts 58 private equity-backed companies. While this number is down from 72 such companies year-on-year, Scotland is still fourth for this metric, outpaced by only the North West (78), South East (115) and London (204).

The number of companies with venture capital funding has also declined year-on-year, from 27 to 25. In this metric, Scotland ties for third with the East of England, behind London (89), South East (54), and Wales (32). Despite this, overall amount of VC funds have increased yearly from £11m to £12m.

171: Number of high-growth companies
£68m: Amount of expansion funding invested

More worryingly, expansion funding in Scotland fell dramatically from the previous year, from 44 companies receiving such support to just 27. The amount of expansion funding also dropped from £96m to £68m. This drastic decrease was unique to Scotland, with many regions seeing smaller shrinkage in expansion funding, if not maintaining or increasing the number of companies with growth funding. The North West, for example, went from 42 companies with expansion capital to 55 in the same year period.

Scotland’s figures reflect national trends, as both VC and expansion funding are down year-on-year across the UK. Entrepreneurial outputs are at their strongest since 2011, but VC and expansion funding have both declined year-on-year nationally as well as in Scotland.

Key findings

National data offers a conflicted snapshot of entrepreneurship, while regional data proffers a promise of diversifying new business activity. London and the South East remain strong incubators, and the North’s entrepreneurial growth is strong. 

Entrepreneurs Index

A barometer of the entrepreneurial environment and activity in the UK. This, the ninth volume, focuses on three main indicators: start-up activity, growth of new business and exits of young enterprises.