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Edinburgh vs Glasgow: venture capital trends in Scotland


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In 2017, venture capital activity in Scotland focussed on a trio of cities: Edinburgh, Glasgow, and Aberdeen, and to a lesser extent their surrounding shires. The split of deals reflects the population of each city – these are Scotland’s three largest cities. Uniquely in the UK, Aberdeen is a focal point for the North Sea’s oil and gas industry. Indeed, it has been described as the “oil capital of Europe”.

top local authorities in scotland by number of equity deals in 2017

Edinburgh City Council
Glasgow City Council
North Lanarkshire (bordering glasgow)
Aberdeen City Council
Midlothian Council (bordering edinburgh)

Aberdeen is also home to one of Britain’s best-known startup exports – BrewDog, which is pursuing ambitious expansion plans across the US. BrewDog’s funding rounds dominate the investment scene in Scotland, having raised £213m last April from a large American private equity firm. This contributes to Aberdeenshire’s unusually high showing in the equity finance ranking tables. 

top local authorities in scotland by value of equity deals in 2017

aberdeenshire council
edinburgh city council
glasgow city council
Aberdeen city council
North Lanarkshire council (bordering glasgow)

That being said, of Scotland’s five largest VC/PE deals in 2017, four out of five went to Aberdeen-based companies. The other three apart from BrewDog all operated in the oil and gas sector. Even If you remove BrewDog’s round, Aberdeen/Aberdeenshire companies still drew in more equity finance than those in the Glasgow and Edinburgh city councils over the same period. (Note: in this analysis we are treating city council areas as separate entities from their counties).   

Edinburgh produced Scotland’s other unicorn startup (the nation has produced two) – Skyscanner, whose online flight search engine has now become the first port of call for those trying to find cheap flight options. This business was acquired for £1.4b in 2016 by China’s Ctrip. 

Now, Edinburgh’s most ambitious high-growth company seems to be a potential competitor to BrewDog’s craft beer empire – Innis & Gunn. Valued at £45m in 2016, Innis & Gunn has seen its turnover swell from £12m to £22m over the 2014 – 2017 financial period. In 2017 they followed BrewDog’s precedent and took on £15m of funding from an American private equity firm, L Catterton.

Scottish tech

What about Scotland’s tech scene? If we look specifically at companies developing software products, the funding picture changes somewhat. Aberdeen drops of the ranking table, which is dominated by Glasgow and Edinburgh. Out of the two, Edinburgh is the clear leader, taking in nearly double that of Glasgow in 2017.

top local authorities in scotland by value of software equity deals in 2017

Edinburgh City Council
£37m (67 deals)
Glasgow City Council
£21m (37 deals)
Perth and Kinross Council
£3m (2 deals)
Stirling Council
£3m (4 deals)
Dundee City Council
£1m (3 deals)

Perhaps Edinburgh’s most exciting young tech company is healthtech startup Care Sourcer. Their online platform allows users to search for a variety of care services in their local area. Care sourcer raised £8.5m earlier this year, in a round that valued the company at around £20m.

Glasgow’s leading tech startup is Smarter Grid Solutions, a cleantech software developer and spinout from the University of Strathclyde. Their software products are designed to help electricity grid owners manage new challenges presented by a “distributed energy market” (i.e., an energy market where electricity is generated via lots of smaller generators, like wind farms, instead of a few big generators, like traditional power stations).

The top 5 backers of equity finance deals in Scotland, 2017

Scottish Enterprise
Par Equity
Equity Gap
TRI Capital

Scottish Enterprise’s high level of involvement in Scottish deals should come as no surprise: they participate in many deals through the co-investment mechanisms run by the Scottish Investment Bank. The next four most active investors are angel networks, which demonstrates the continued strength of angel investment in Scotland.

For a more detailed analysis of Scottish investment trends, Scottish Enterprise have just published two reports on Investment Benchmarking Analysis and The Risk Capital Market in Scotland, which both make use of Beauhurst data.

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