Scotland retains its position as a top performing market in challenging conditions

22 July 2024 | 3 minute read

Scottish Enterprise’s new risk capital market report indicates that despite challenging market conditions, Scotland has retained its position as one of the UK’s top performing markets in 2023, with significant continued investment.

The report – ‘Investing in Ambition – Scotland’s Risk Capital Market: Benchmark Analysis 2023’ –  shows that 2023 saw a total investment of £575 million into 354 deals across Scotland. 

Although these figures are impressive, Scotland’s risk capital market was not immune to the challenges and increasing investor caution seen across global markets over the past year. The total value of investments across Scotland reflected levels last seen in 2019, and was consistent with a decrease in investment and deals transacted across the UK. 

Despite these challenging market conditions, Scotland retained its position as the top performing market for investment in the UK outside London and the two surrounding regions of the South East of England and the East of England (an area collectively known as the Golden Triangle).

Scottish companies attract investment from a diverse investor base

In 2023, Scotland’s companies continued to attract significant international investment. Venture capital and private equity firms participated in 84 deals, with a total value of £241 million – once again the strongest performance in the UK after the Golden Triangle.   

Scottish university spinouts also saw strong investment levels in 2023. The deal numbers came in just behind those of London and the South East of England, and the total investment value was surpassed only by that of the Golden Triangle. The attractiveness of Scottish spinouts – many of which secure international investment – reflects the research excellence of Scottish universities.  

Scotland once again benefited from the activities of its well-established and supportive business angels and angel networks. In 2023, Scotland was second only to London for attracting deals from these investor types.

Early-stage investment: challenges and next steps

Although Scotland’s risk capital market demonstrated a degree of resilience in 2023, challenges still exist. Globally and across the UK, there is a continued drift away from early stage and higher risk opportunities, reinforcing the importance of having a diverse mix of investors active in the Scottish market.  

Particular areas of concern include growing the very early stages of the market and the number of innovative and high growth companies able to raise equity finance for the first time. This highlights the continued need to provide guidance and support to early-stage businesses at the very start of their scaling journey.