Tech startup numbers in Scotland rise by 77%

Industry News | 05.04.2018

Tech startup numbers in Scotland rise by 77%

Technology companies startups in Scotland rose by 77% last year, as the country proved to one of the biggest drivers of new software and programming businesses.

There were 440 incorporated tech firms in Scotland in 2017, against 249 in the previous year with universities credited with being the engine for growth.

UK-wide,10,016 technology businesses were set up, with year-on-year rises recorded in every region. 

The figures, produced by RSM, validate the Chancellor’s claim during the Spring Statement that a tech firm is set up in the UK every hour. 

Commenting on the figures, Ross Stupart, partner at RSM in Edinburgh, said: “These figures show very clearly that despite the fears of a post-referendum slowdown, Scotland’s tech sector is growing at a healthy rate.”

He said there are a number of reasons for this explosion in tech companies, including a key rle played by Scottish universities in developing and nurturing talent.

Organisations such as EIE, Turing Festival and Entrepreneurial Scotland are also contributing significantly in creating a vibrant and supportive tech eco-system, he said.

Entrepreneurs are able to gain good access to finance, either through traditional sources of debt at relatively cheap rates, or from venture capitalists, angel networks and private equity funds.

“The UK’s tax regime is also proving to be an incredibly powerful tool in encouraging tech businesses, who take advantage of legitimate tax saving and incentive programmes,” said Mr Stupart, noting the attraction of research & development tax credits, video games tax relief and the Patent Box regime.

The Enterprise Investment Scheme also provides valuable tax reliefs to investors which helps earlier stage tech businesses raise funding.

“There is undoubtedly the political will to build momentum and generate further growth as part of the government’s overall industrial strategy,” said Mr Stupart.

“However, there are some clouds on the horizon. While many in the sector will be cheered by the news that EU nationals will continue to be able to come and work in the UK during the transition period, the longer term position is as yet unclear.

“As interest rates starts to rise, we may also see a shift away from venture capital and private equity as investors seek returns from safer investments. For now though, the funding environment is incredibly benign.”

 

Year of incorporation

2016

2017

Region

Total

Total

% change

East Midlands (England)

225

337

50

East of England

452

660

46

London

2407

4238

76

North East (England)

97

173

78

North West (England)

550

707

29

Northern Ireland

98

119

21

Scotland

249

440

77

South East (England)

925

1296

40

South West (England)

354

503

42

Wales

122

155

27

West Midlands (England)

272

470

73

Yorkshire and The Humber

245

408

67

Other

304

      510

Source: Daily Business 

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