Edinburgh Startup Scene: Investors Predict Hockey-Stick Growth

Scotland's Growing Startup Ecosystem

The startup landscape within Scotland is experiencing a period of sustained growth and increasing recognition throughout the United Kingdom. Data from Tech Nation indicates that Scottish startups collectively secured £345 million in funding during 2020.

With approximately 2,500 startups currently operating, Scotland possesses the largest concentration of emerging tech companies outside of London. Furthermore, venture capital fundraising activities demonstrate a consistent upward trend annually.

Edinburgh: A Hub for Innovation

Edinburgh, the capital city of Scotland, presents a compelling environment for business establishment. It features a picturesque, undulating terrain, a well-developed educational infrastructure, and readily available funding opportunities from both public and private sources.

Its position as a leading financial center within the U.K. further enhances its appeal to entrepreneurs. This combination of factors makes Edinburgh an attractive location for launching a new venture.

Key Sectors in Edinburgh's Tech Scene

To gain insight into the Edinburgh startup environment, discussions were held with six founders, executives, and investors. The city’s technological ecosystem demonstrates strength in several areas.

These include machine learning, artificial intelligence, biomedicine, fintech, travel tech, the energy sectors of oil and renewables, e-commerce, gaming, health tech, deep tech, space tech, and insurtech.

However, the Edinburgh tech community currently shows less activity in areas such as legal tech, blockchain, and directly consumer-focused technologies.

Successful Companies and Investment Landscape

Edinburgh has already fostered the development of successful companies like Skyscanner and FanDuel. Currently, a number of promising startups are emerging.

Notable examples include Desana, Continuum Industries, Parsley Box, Current Health, Boundary, Zumo, Appointedd, Criton, Mallzee, TravelNest, TVSquared, Care Sourcer, Stampede, For-Sight, Vistalworks, Reath, InfraCost, Speech Graphics, and Cyan Forensics.

The local business-angel investor network in Edinburgh is notably robust. Despite this, founders sometimes encounter challenges in attracting the attention of investors based in London.

Scottish investors are often described as being relatively cautious and risk-averse, although exceptions to this trend do exist.

Survey Participants

The following individuals contributed to this assessment:

• Wendy Lamin, Managing Director, Holoxica
• Andrew Noble, Partner, Par Equity
• Danae Shell, Co-founder and CEO, Valla
• Allan Nelson, Co-founder and CEO, For-Sight
• Lysimachos Zografos, Founder, Parkure
• Bertie Wilson, Co-founder, currently in stealth mode

Wendy Lamin, Managing Director, Holoxica

In what industries does Edinburgh’s technology landscape excel? What developments are you particularly enthusiastic about, and what areas require improvement?
The ecosystem demonstrates significant strength in the areas of space technology, biomedicine, financial technology (fintech), and insurance technology (insurtech), alongside advancements in artificial intelligence (AI).

Could you describe the characteristics of tech investors operating in Edinburgh? What are their primary investment interests?
Scotland boasts what is reported to be the largest business-angel network in Europe. Securing the attention of investors based in London can prove challenging, as investment decisions are often influenced by a company’s geographical location.

How has the rise of remote work impacted Edinburgh’s talent pool? Do you anticipate a net retention or outflow of residents, and will the city attract new individuals?
The expectation is that individuals will remain in Edinburgh. Attracting people to relocate to Scotland isn't always straightforward. Despite being consistently ranked among the most desirable cities to reside in within the U.K., Edinburgh sometimes faces unwarranted preconceptions.

Who are the prominent figures driving innovation within Edinburgh’s startup community – including investors, founders, legal professionals, and designers?
There's a welcome increase in attention being given to impact investing. Par Equity stands out as a major investment firm in Edinburgh, while Archangels is a leading angel investor. Poonam Malik is a champion for diversity and supports female entrepreneurs; she serves on the Scottish Enterprise board and is both a social entrepreneur and investor.

What is your vision for the future of Edinburgh’s tech sector over the next five years?
A period of growth and prosperity is anticipated. Governmental initiatives are actively supporting the technology sector. However, current educational provisions in technology represent a challenge. It is hoped that the effects of Brexit will be minimal.

Andrew Noble, Partner at Par Equity

What are the prominent sectors within Edinburgh’s tech landscape? What areas generate the most enthusiasm, and where are the gaps? The ecosystem demonstrates particular strength in areas like financial technology, health technology, data science, and deep tech. Currently, significant excitement surrounds advancements in quantum computing, novel materials, and the application of artificial intelligence within Edinburgh.

However, the city currently exhibits relative weakness in the realms of blockchain technology and direct-to-consumer applications.

Notable Edinburgh Startups

Could you highlight some of the most compelling startups currently operating in Edinburgh? Several companies stand out, including Current Health, which is innovating in healthcare.

InfraCost, Speech Graphics, and Cyan Forensics are also demonstrating significant potential and attracting attention within the tech community.

Investment Landscape in Edinburgh

How would you characterize the tech investors in Edinburgh? What are their primary investment priorities? Investment activity is robust at the seed stage, with funding readily available up to £1 million.

Pre-Series A funding, ranging from £1 million to £3 million, is accessible, though less abundant. However, Series A funding (£3 million to £10 million) remains largely unavailable.

The overall quality of investors is steadily improving, with Par Equity actively taking a leading role in driving this positive trend.

Remote Work and Population Shifts

Considering the increasing prevalence of remote work, what impact do you foresee on Edinburgh’s talent pool? Will residents remain, or will there be an outflow? Conversely, will the city attract new residents?

Edinburgh has experienced an influx of new talent since the onset of the COVID-19 pandemic. The city’s desirability as a place to live continues to be a major draw.

Recent additions to the city’s resident population include Aaron Ross, author of “Predictable Revenue,” and Jules Pursuad, a former early employee at Airbnb who now serves as VP at Omio.

Key Individuals Shaping Edinburgh’s Startup Scene

Who are the pivotal figures driving the startup ecosystem in Edinburgh – encompassing investors, founders, legal professionals, and designers?

Par Equity plays a crucial role as an investor. Key individuals include Paul Atkinson, Alistair Forbes, and Mark Logan.

Founders such as Lesley Eccles and Chris McCann are also instrumental, alongside the support provided by CodeBase.

Future Outlook for Edinburgh’s Tech Scene

What is your vision for Edinburgh’s tech scene over the next five years? The expectation is that Edinburgh will see the emergence of one or two new unicorn companies.

A significant number of high-growth technology companies are poised for expansion. Furthermore, the investor landscape, particularly in the Series A funding space, is anticipated to become considerably more developed and sophisticated.

Danae Shell, Co-founder and CEO of Valla

What are the prominent sectors within Edinburgh’s technology landscape? What developments generate the most enthusiasm, and where are the gaps?
Edinburgh demonstrates considerable strength in the fintech sector, largely due to its close ties with numerous financial institutions and banking organizations. Furthermore, the city boasts a thriving community of gaming technology firms, building upon a rich legacy in game development. However, the law tech industry, Valla’s specific domain, remains comparatively underdeveloped.

Could you highlight some of the most promising startups currently operating in Edinburgh?
Vistalworks is making waves in the consumer technology space. Sustainably is a noteworthy player in fintech. Reath is focused on advancements within the sustainable technology sector.

What characterizes the investment climate for tech companies in Edinburgh? What are the primary areas of investor interest?
Generally speaking, investors in Scotland tend to adopt a cautious approach, exhibiting a degree of risk aversion. Techstart Ventures represents a notable exception to this pattern, based on observed experience.

Considering the increasing prevalence of remote work, how do you anticipate this will impact Edinburgh’s population? Will there be a net influx or outflow of residents?
It is likely that Edinburgh will attract more individuals relocating from London, driven by the superior quality of life and lower cost of living offered by the city.

Who are the influential figures shaping Edinburgh’s startup ecosystem – including investors, founders, legal professionals, and designers?
Key individuals include Calum Forsyth and Mark Hogarth of Techstart Ventures. Janine Matheson at CodeBase provides valuable support. Jackie Waring, representing the Investing Women angel syndicate, is a significant contributor. Jim Newbury is a highly regarded developer and mentor. Kate Ho, my co-founder, is also widely recognized. Danny Helson, who manages the EIE event in collaboration with the Bayes Centre, is another important figure.

Looking ahead, what is your vision for Edinburgh’s tech scene over the next five years?
Recent successful exits, such as Skyscanner and FreeAgent, have facilitated the dispersal of talent throughout the local ecosystem. This has spurred the emergence of a new generation of innovative startups. Within five years, these companies are expected to reach the Series A funding stage, potentially leading to a surge of highly promising ventures!

Allan Nelson, Co-founder and CEO of For-Sight

In what industries does Edinburgh’s technology sector demonstrate particular strength? What areas generate the most enthusiasm, and where are the gaps?
The ecosystem excels in areas such as financial technology, travel technology, healthcare, energy – encompassing both oil and renewable sources – e-commerce, and gaming, including both video games and gambling technology.

While all sectors are promising, enthusiasm is particularly high for everything except the oil industry, which, despite being a significant revenue source, is not considered a long-term growth area.

Notable Edinburgh Startups

Could you highlight some of the most compelling startups currently operating in Edinburgh?
Several companies stand out, including Boundary, Parsley Box, Appointedd, Criton, Mallzee, TravelNest, TVSquared, Care Sourcer, Stampede, and For-Sight.

Investment Landscape in Edinburgh

What characterizes the technology investment community in Edinburgh, and what are their primary areas of interest?
Edinburgh boasts a substantial fintech presence. Furthermore, the travel technology sector is experiencing growth, largely due to the considerable influence of Skyscanner.

Remote Work and Population Shifts

Considering the increasing prevalence of remote work, what impact do you foresee on Edinburgh’s population? Will residents remain, or will there be an outflow? Conversely, will the city attract new residents?
It is anticipated that the majority of individuals will choose to remain in Edinburgh, given its highly desirable quality of life and work environment.

The city is globally recognized for its unique character and possesses a distinctly international atmosphere, as reflected in the diversity of our team.

Key Individuals Shaping the Startup Scene

Who are the pivotal figures driving the startup ecosystem in Edinburgh – encompassing investors, founders, legal professionals, and designers?
Notable individuals include former Skyscanner employees such as Gareth Williams and Mark Logan. Also significant are Ian Ritchie, Alistair Forbes, the founders of FanDuel, and the individuals behind CodeBase.

Future Outlook for Edinburgh’s Tech Scene

What is your vision for the evolution of Edinburgh’s technology sector over the next five years?
Significant expansion is expected, as technology is a key priority for economic growth within the Scottish government.

This growth is further supported and inspired by the successes of prominent companies like Skyscanner and FanDuel.

Lysimachos Zografos, Founder of Parkure

What are the prominent sectors within Edinburgh’s technology landscape? What developments generate the most enthusiasm, and where are the gaps?
The ecosystem demonstrates considerable strength in machine learning, artificial intelligence, and digital technologies. However, a relative weakness exists in the early-stage identification of deep tech opportunities, particularly within the biotechnology and therapeutics fields. The increasing integration of AI into drug discovery is particularly exciting, with concepts once considered futuristic now attracting substantial investment – in the billions of pounds.

Could you highlight some of the most compelling startups currently operating in Edinburgh?
Pheno Therapeutics stands out as a particularly interesting venture.

How would you characterize the technology investors in Edinburgh? What are their primary areas of interest?
Investment in the city is largely driven by cautious angel investors and a limited number of technology-focused seed venture capital firms.

Considering the increasing prevalence of remote work, what impact do you foresee on Edinburgh’s population? Will residents remain, or will there be an outflow? Conversely, will the city attract new inhabitants?
An influx of new residents is anticipated.

Who are the influential individuals shaping Edinburgh’s startup community – encompassing investors, founders, legal professionals, and designers?
Key investors include Archangels, Techstart Ventures, and Epidarex.

Looking ahead, what is your vision for the evolution of Edinburgh’s tech scene over the next five years?
Continued expansion and growth are expected.

Bertie Wilson, a Co-Founder Operating Discreetly

Could you identify the strongest areas within Edinburgh’s technology landscape? What developments generate the most enthusiasm, and where are the notable gaps?
The city doesn’t exhibit a pronounced dominance in any single sector; strengths are distributed relatively uniformly. A significant asset is the consistent influx of skilled professionals graduating from local universities. Edinburgh, Heriot-Watt, and Edinburgh Napier consistently produce highly capable engineers. However, a primary challenge lies in the ecosystem’s tendency to prioritize less ambitious ventures.

The majority of regional investors are angel investors who generally seek lower-risk opportunities with potential for a 5x return, rather than actively pursuing outliers capable of achieving 1000x growth. Securing investment for highly ambitious, albeit riskier, projects is often more feasible in other locations.

Notable Edinburgh Startups

Which Edinburgh-based startups are currently generating the most interest?
Several companies are particularly noteworthy: Desana, Continuum Industries, Parsley Box, Current Health, Boundary, and Zumo.

Investment Landscape in Edinburgh

How would you characterize the tech investors operating in Edinburgh, and what are their primary investment priorities?
The situation is improving, but systemic issues within the ecosystem persist. Organizations like Techstart are positively influencing the landscape in Scotland by providing early-stage funding with strong conviction and offering terms comparable to those found with London-based venture capital firms.

However, outside of these instances, founders frequently encounter complex capitalization tables due to the prevalence of angel investors and a relative scarcity of venture capitalists seeking venture-scale returns. This complexity can subsequently impede future venture funding efforts. This arrangement suits many companies not targeting venture-scale growth, but it can be detrimental to those that are.

Remote Work and Edinburgh’s Future

Considering the increasing prevalence of remote work, what impact do you foresee on Edinburgh’s population? Will residents remain, or will there be an exodus? Conversely, will the city attract new inhabitants?
I anticipate, and indeed hope, that Edinburgh will experience an influx of new residents. The city offers an exceptionally high quality of life, making it a natural draw for individuals seeking a desirable standard of living within an urban environment.

Key Individuals in Edinburgh’s Startup Community

Who are the pivotal figures driving Edinburgh’s startup scene – encompassing investors, founders, legal professionals, and designers?
Key players include SEP (investor), Techstart Ventures (investor), Gareth Williams (founder/investor), MBM Commercial (lawyers), Pentech, Bill Dobbie (investor), and Jamie Coleman.

Edinburgh’s Tech Scene: A Five-Year Outlook

What is your vision for Edinburgh’s tech scene in the next five years?
I am optimistic that a substantial number of companies will reach the Series B/Series C funding stages. This progression should attract increased interest from investors based in other major hubs – London, Berlin, Paris, New York, and San Francisco – prompting them to engage more actively in Edinburgh’s early-stage investment opportunities, as well as later-stage rounds.