New stats prove Scotland punching above its weight with 1,663 tech start-ups
“The challenge for start-ups in Scotland remains their ability to scale” – Hannah Atchison, RSM
Scotland has bucked the trend as technology company incorporations jumped 5 per cent last year, despite a similar slowdown at the UK level, new figures have revealed.
The data shows a total of 1,663 new tech businesses were incorporated in Scotland in 2024, up from 1,553 the previous year. Most UK regions and areas saw a year-on-year decline, except for Scotland, the north east of England and Northern Ireland. London, which accounts for the highest number of tech incorporations, saw its first annual decline in five years, down 6 per cent from 26,060 in 2023 to 24,455 in 2024, according to analysis of Companies House data by audit, tax and consulting firm RSM UK.
Across the UK as a whole, there were 48,518 incorporations last year, down about 5 per cent from 51,017 in 2023.
Hannah Atchison, associate director at RSM in Edinburgh, said: “It’s fantastic to see Scotland’s growth compared to other UK regions. Scotland, in particular, shines in the gaming industry. Nationally, video games rank among the top five subsectors for incorporation growth, which likely contributes to Scotland's success. Additionally, Edinburgh’s robust fintech sector, rooted in its long-established financial services, is also a significant factor.
“The challenge for start-ups in Scotland remains their ability to scale. There is a lack of later stage capital which hampers faster growth. The common practice of drip-feeding small amounts of capital hinders long-term planning and rapid growth. Additionally, the relative size of the ecosystem makes attracting and retaining talent difficult.”
The RSM study came as KPMG’s latest Venture Pulse report showed that the value of venture capital (VC) investment in Scottish start-ups had risen by 14 per cent in the final three months of 2024. A total of £92.3 million was raised by the country’s start-ups from October to December, up from the £80.9m raised in the third quarter of last year.
Alongside the overall value, the volume of transactions grew to 25, up from 21 in the previous quarter. This was driven by investment activity in Edinburgh, particularly Resolution Therapeutics’ bumper £67m funding round, which significantly boosted overall investment.
Vishal Chopra, Scotland senior partner at KPMG UK, said: “Despite a challenging economic backdrop, the quality and resilience of Scottish businesses continues to shine through, with a strong end to the year in terms of VC investment. Edinburgh’s thriving life sciences and technology sectors have been a key driver of activity, showcasing the city’s ability to attract significant investment even in a cautious market.
“While investors remain measured in their approach, the fundamentals of Scottish businesses remain strong, and the growing focus on innovation and sustainability has put many in a strong position to deliver VC-backed growth this year.”
UK-wide, there was a total of £15.5 billion in venture capital investment undertaken in 2024, with funding in the fourth quarter alone increasing by more than 40 per cent to £4.4bn. Investments in 569 businesses contributed to the end-of-year surge, the data showed.
Comments
Want to join the conversation? Please or to comment on this article.