Member News | 10.12.2015
By Karen Meechan
TWO $1billion digital technology companies - Skyscanner and FanDuel - have dominated the headlines this year, but where will the next Scottish superstars come from?
OPEN a newspaper or surf the internet this year and it’s been hard to get away from FanDuel and Skyscanner, Scotland’s two “unicorns”, or digital technology companies that have been valued at $1 billion. FanDuel allows fans to place wagers on the outcome of fantasy sports, while Skyscanner runs a flight price comparison website.
The massive valuations for the two businesses has shone a light on the tech “ecosystem” in Edinburgh and other parts of Scotland, highlighting the work being done by incubation centres, business angels, economic development agencies, universities and others to grow companies of scale. But where will the next generation of unicorns come from and from which sectors will they emerge?
One man who has been there, done that and got the T-shirt is Chris van der Kuyl, chairman of Entrepreneurial Scotland, the organisation created through the merger of the Entrepreneurial Exchange and the Saltire Foundation.
Van der Kuyl shot to fame in the late 1990s as chief executive of video games company VIS Entertainment and is now chairman of 4J Studios, the games developer behind Minecraft for the Xbox 360.
He says there is “no easy answer” when considering from where the next FanDuel or Skyscanner will emerge, but he points to the work of Entrepreneurial Scotland. “We’re beginning to see evidence that our much-admired Saltire Fellowship programme is providing individuals with the skills and mind-set they need to succeed globally. We’re confident that the fellowship, our peer networks and mentoring programmes are making a difference – so watch this space,” says van der Kuyl.
“There is huge potential in Scotland and a much stronger ecosystem to support those who can spot the gaps, identify the opportunities and grow businesses.
“Alongside the work we are doing, there are some key players who are making a difference. For example, Informatics Ventures is a veritable powerhouse that connects initiatives across the whole ecosystem.
“There are some key areas that are worth watching including data analytics – the so-called ‘big data’ area of tech – with companies like the Data Lab, Sumerian and TV Squared looking very impressive.”
Another person who is well-placed to make predictions is Gordon Stuart, director of operations at Informatics Ventures in Edinburgh.
His organisation encourages and supports tech companies throughout Scotland through running training and networking events, and by organising Engage Invest Exploit (EIE), a technology showcase at which companies pitch to potential investors.
Over the eight years that EIE has been running, the companies that have pitched at its events have raised £140 million in total from a host of different investors, some of which they met in Edinburgh. EIE has also spread its wings to London, helping Scottish companies to access finance on a larger scale.
Accessing funds in London will be an important part in growing the next unicorns because Scottish companies often struggle to bridge the “venture capital gap” when they need to raise figures between £2m and £5m.
While Scotland has a well-developed business angel community to fund start-up companies, finding the cash necessary to fuel further growth is one of the challenges that Informatics Venture is trying to address.
Stuart points to organisations like Entrepreneurial Spark – the chain of incubation centres backed by Royal Bank of Scotland and entrepreneurs including Sir Tom Hunter and Willie Haughey – for helping to spread the upbeat messages to other parts of the tech ecosystem throughout Scotland.
“We Scots have never been known for being overly optimistic, but I think that Jim Duffy and his team at Entrepreneurial Spark have brought back some of that ‘can do’ attitude with them from America,” he says. “It’s been a bit of a culture shift, which has been great.”
In terms of companies to watch, Stuart singles out Pure LiFi at Edinburgh University, which is using rays of light to transmit information, such as internet data, instead of the radio waves used in existing wifi systems.
Polly Purvis, chief executive at trade body ScotlandIS, thinks that a broad range of sectors will be producing the next wave of businesses. “You’ll see exciting companies emerging in areas such as financial technology (fintech), analytics, health informatics, cyber security, the ‘internet of things’, smart retail, and power and renewables,” she says.
“There are a lot of new companies coming through with the potential to do really well. For example, in fintech, businesses such as Nucleus Financial, FreeAgent and Agenor are all worth watching.
“In analytics and visualisation, key ones to keep an eye on include Aquila Insight, Aridhia and Stipso, and the same for Zonefox, Miicard and My1Login in the security space.
“In retail, Mallzee, NN4M and Clear Returns are all showing great promise, and in power and renewables, watch out for Ecometrica and Smarter Grid Solutions.”
If you were to put your money on the table for a wager on where the next unicorns might appear then Scotland’s universities could be a safe bet.
Postgraduate students who have an idea for a business are being pointed in the direction of Enterprise Campus, a new body set up by Aberdeen, Edinburgh and Strathclyde universities with support from the Scottish Funding Council.
The organisation offers help with everything from business plans through to raising investment, using one-to-one advice, workshops and bootcamps.
Natasha Lobley, an enterprise executive at Enterprise Campus, highlights the role that FanDuel and Skyscanner are playing by inspiring the next generation of digital technology entrepreneurs.
“Having successful companies such as these two is really important for the creation of new enterprise,” she says. “Success breeds interest and huge success does tend to incite action.”
Lobley highlights the wide range of companies that are being set up by postgraduate students, from computer science and mobile app-based businesses through to Studio 2080 at Strathclyde, which makes the Power A Life portable USB power bank that is helping children in the Gambia and Senegal, and EuroBiotix, a social enterprise started by students from the Aberdeen University to support clinicians treating Clostridium difficile (C diff).
Source : The Scotsman
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