Scaling Scotland report sets out bold agenda for growth

Last month saw the publication of an independent report led by former Skyscanner executive Shane Corstorphine calling for urgent action to bridge the gap in support for scale-up companies.

I was honoured to contribute to Scaling Scotland: Building the Engine for the Next 50 Years of Prosperity as a panel member as it sets out a bold agenda on how to help power economic development by developing more Scottish-based scale-ups.

Unlike a start-up business, a scale-up company is more fully established, yet still increasing its revenue and/or employees by over 20 per cent per year for at least three years. It has a demonstrably proven product and business model with a firmly identified market or markets.

Scotland currently has around 1,500 smaller businesses generating sub-£5m revenues, with approximately 280 firms achieving up to £10m. A further 250 scale-ups currently operate in the £10m-£50m range with only 85 generating annual incomes of more than £50m.

The report highlights a key point: the ecosystem for scale-ups is not a homogeneous, one-size-fits-all environment for businesses with significant global growth potential. A fast-growing software company will have very different needs and timescales than an EV manufacturer, although both might have strong scale-up potential.

Scaling Scotland’s 15 key recommendations include the creation of a national Scale-Up Enablement Hub, concierge-style support for founders, reformed public co-investment models, and fast-tracked government processes for scaling firms.

Just like old-style Christmas tree lights which only function if all the bulbs are in place, these recommendations are interdependent and build upon each other. To achieve maximum effect, we must address all of the points of friction set out in Mr Corstorphine’s report.

This includes evolving culture, ambition and risk appetite within the wider business community. This will require a stratified approach with an acknowledgement that businesses without scale-up potential still need talent and capital, but ideally not at the expense of the different needs of those which could achieve significant global growth.

Velocity, focused in the right direction, is key in scale-up success. In some cases, support and capital continues to be provided to post start-up businesses that lack sufficient momentum or capability to reach scale-up. We should consider the potential of quicker exits for those which are not scalable or encourage earlier pivots to rejuvenate a company’s global market prospects.

In terms of the public sector’s role, it is encouraging to see the Scottish Government commissioning this report, underlining its recognition of Scotland’s opportunity. Whilst there are clear challenges that have hampered the prevalence of scale-up businesses in Scotland, we do have a strong platform in building start-ups.

While governments can’t create global businesses, they have the ability to shape markets and support an ecosystem to leverage the private sector through organisations like Scottish Enterprise and the Scottish National Investment Bank.

Government and its agencies can also help both companies and investors navigate the business ecosystem. The Scaling Scotland recommendation of creating a Scottish Scale-Up Enablement Hub is an example of how this could work.

Furthermore, capturing the zeitgeist and developing a scalable, AI-powered resource could allow first-time founders to better understand the complexities of building a scale-up business from the start.

The Scaling Scotland report should be commended for setting out a bold vision, where ambition is normal, not exceptional. ScaleUp Institute data shows that increasing the capacity of scale-up businesses could create more than 100,000 high-value jobs and generate over £20bn annually to Scotland’s economy. It’s vital that we embrace the report’s recommendations quickly and comprehensively.

Paul Mason is Corporate Finance partner at accountants CT and was a panel member contributing to the Scaling Scotland report