Scotland has hundreds of innovative firms stuck in second gear

Scotland has 358 grant-backed innovators stuck one step short of a deal, figures show.

Graeme Miller of S&W | TSPL

Royal Bank of Scotland analysed the 1,027 Scottish businesses awarded a public innovation grant since 2009.

It found 34.9 per cent are still trading and innovating but have recorded no exit, funding round or scale-up signal.

The data shows a market that keeps companies alive but struggles to finish the job.

Scotland ranks second of the UK's 12 nations and regions for follow-on equity, at 31.1 per cent, behind only London.

Yet it has the lowest exit rate in the UK, at 8.6 per cent, the lowest scaling rate, at 4.2 per cent, and the second-highest share of firms ceasing to trade.

The cohort is stuck at the point where M&A, trade sale interest or scale-up capital should take over.

Businesses at a Scotsman Insider roundtable, held with S&W, warned that businesses leave preparation too late.

Nick Walford, co-founder of Perigon Partners, said: "It's a long process getting a business properly diligence-ready, and I wouldn't underestimate how long it takes."

S&W partner Graeme Miller said clients planning a sale next year had already spent 18 months getting ready.

Founders at the table said giving up control was a bigger barrier than finding capital.

In Glasgow, the Riverside Innovation District is using public money to cover costs the market won't. It is readying vacant land and has opened a shared mass spectrometry facility for scaling life sciences firms.