Scottish scale-ups buck global investment trends with record-breaking year of funding

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Scotland recorded a record-breaking volume of venture capital (VC) investment across 2022 despite heightened economic disruption and tightening investor budgets.

Statistics from KPMG’s latest Venture Pulse survey showed that £705 million was poured into Scottish scale-ups across the year.

Despite a sluggish end to 2022, firms also attracted £82 million in VC investment across 34 deals, with the lion's share involving businesses in Edinburgh (16) and Glasgow (6).

Standout deals during Q4 included a £40.4 million Series C funding round for Forres-based space company Orbex. Similarly, life sciences firm RoslinTech also closed an £11 million Series A during the quarter.

The record-breaking flow of capital into the sector means that Scotland far exceeded its previous high of £626 million in 2021 – bucking both UK and global investment trends with volumes growing by 12% year-on-year.

Stamp of approval for Scottish tech businesses

Amy Burnett, KPMG’s senior manager for private enterprise in Scotland, said the figures show that 2022 firmly cemented Scotland’s reputation as a “place where exciting young companies and born and where investors are backing promising startups”.

“Unlike the rest of the UK, Scotland posted record-breaking VC volumes in 2022,” she said. “While certainly not recession-proof, Scotland’s breadth and depth of scale-up sectors did provide some cover during a challenging 2022.”

A key factor in this performance from Scottish businesses, Burnett suggested, was a lingering hesitancy among investors to back sectors which rely on consumer spending to drive growth.

Increasingly, VC firms are “doubling down” on investments in sectors where technology is addressing “big macro trends such as healthtech and ESG”.

“With an abundance of these businesses being nurtured outside of London, it is good news for Scotland’s deep tech, clean tech, and healthtech firms,” she added.

UK investment dips as VC hesitancy grows

This strong performance for Scotland coincided with a marked decrease in venture capital investment across the UK as a whole, KPMG said, with funding levels falling by almost one-third (30%) to a total of £22.7 billion raised.

KPMG said this dip was primarily fuelled by ongoing global economic turmoil, which has made investors adopt a more cautious approach.

This decrease comes in stark contrast to 2021, which saw more than £29.5 billion raised by UK businesses during a whirlwind year of deals.

Figures from the first half of 2022 suggested that British tech businesses aimed to continue building on a strong performance in the year prior, with more than £14.7 billion raised.

However, levels began to “tail off” in the latter half of the year.


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“On the back of an extraordinary year of post-COVID fundraising in 2021, UK businesses got off to a strong start to 2022. However, investor sentiment was subdued in the final half of the year, driven both by global macroeconomic factors and by the uncertain domestic political situation experienced from the summer onwards,” said Warren Middleton, lead partner for KPMG’s emerging giant centre of excellence.

The year ended with £22.7 billion being raised by UK businesses. Over £3 billion was raised in the final quarter, down on the £7.5 billion raised in the closing quarter of 2021, representing the lowest level of quarterly VC investment since Q2 2020.

The volume of deals also decreased, KPMG revealed, with the number of deals completed in 2022 down by 19% compared to 2021.

Despite a subdued finish to the year, KPMG noted that this still marks the "second-highest level" of annual investment since the Venture Pulse survey began in 2016.

As such, Middleton said there are still many positives to take for the British tech industry.

“Despite the challenges, it was still a very good performance by our UK innovators as the past three years have seen healthy tallies for capital commitments to venture coffers," he said. "With over £22 billion committed, fund managers gathered plenty of capital commitments to fuel dealmaking in the years to come.

“Dry powder is still being deployed - what’s changing is the way it’s being invested."

Ross Kelly
News and Analysis Editor

Ross Kelly is ITPro's News & Analysis Editor, responsible for leading the brand's news output and in-depth reporting on the latest stories from across the business technology landscape. Ross was previously a Staff Writer, during which time he developed a keen interest in cyber security, business leadership, and emerging technologies.

He graduated from Edinburgh Napier University in 2016 with a BA (Hons) in Journalism, and joined ITPro in 2022 after four years working in technology conference research.

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