Scotland's tech sector in 2024: Industry leaders outline their hopes and challenges

“What the results of this report show are that the region is clearly a hotbed for the industry, is open to investment and poised for significant growth in the coming years.”

Scotland has become a more attractive place to start a technology business in the past five years while the vast majority of tech leaders believe the sector will “grow rapidly” over the coming five years, new research has revealed.

Out of 72 technology chiefs quizzed for the study, 79 per cent agreed that the sector looks set for growth during the next five years, with 76 per cent stating that Scotland had become “more attractive” to launch a tech firm in the past five years. The UKTN report, which was sponsored by professional services giant KPMG, canvassed key players in the tech industry north of the Border to generate an inside view of the sector and showcase the experiences of those running tech companies and support organisations. However, almost a third of respondents said they have personally experienced challenges securing funding for their business.

Despite that, some 86 per cent of those quizzed said they would encourage other similar firms to launch in Scotland and 80 per cent stressed they had received advantages to setting up and running their firms in the region, such as access to support networks and academic talent.

The tech industry is growing at one and a half times the overall economy.

The study also showcased that there are 8,680 Scottish registered tech businesses, with tech start-ups enjoying a collective value of £16.6 billion. Recently, it was revealed that 2023 saw start-ups in the tech industry share £343 million in venture capital investment.

The report ranked fintech - financial technology - as a strength for Scotland followed closely by health technology, with climate tech and deep tech cited as emerging specialisms. Respondents feel that attracting further global tech businesses to Scotland could encourage more strategic partnerships across the sector and foster innovation, while encouraging growing businesses to stay put.

However, tech leaders also highlighted the ability to secure funding as the main challenge in the sector closely followed by hiring the right kind of staff. Almost a third said they have personally experienced challenges securing funding for their business ventures. “More support for entrepreneurs” was cited as the most popular factor that could drive tech growth, with many respondents raising concerns about a mismatch between the skills required in the tech sector and the educational curriculum in schools and colleges, calling for initiatives to reform educational curriculums to meet skills gaps.

Amy Burnett, emerging giants lead, Scotland, KPMG UK, said: “It is great to read such positive noise from business leaders when it comes to the tech industry in Scotland. What the results of this report show are that the region is clearly a hotbed for the industry, is open to investment and poised for significant growth in the coming years.

Amy Burnett of KPMG: 'What the results of this report show are that the region is clearly a hotbed for the industry, is open to investment and poised for significant growth in the coming years.'

“The tech industry is growing at one and a half times the overall economy; it now includes close to 15,000 firms and 400,000 employees. Covering all areas from net zero to clean tech, the scale is wide, the scope epic and the possibilities endless. The tech ecosystem has flourished in recent years, and as a result Scotland is really putting itself on the global map. So much so that it is now a vital contributor to the health and wellbeing of our economy.”

Out of the 72 survey respondents, more than half (56 per cent) worked in or near Edinburgh, 25 per cent worked in or near Glasgow and the rest were split across Aberdeen, Dundee, Dumfries, Inverness and Stirling. The majority of respondents (58 per cent) were tech company founders or owners, and respondents otherwise represented business support organisations, service providers, investors, tech event organisers and academics.

Chris van der Kuyl, the Dundee-based entrepreneur and gaming mogul, said: “My involvement in the technology sector in Scotland dates back over 30 years. In that time we have transformed from a country who exported some of the best global talent to the tech hotspots of the world to a hotspot where the best in new technology driven businesses come to start, grow and thrive. From Skyscanner to FanDuel and from Minecraft to GTA, some of the 21st century’s best known technology brands have emerged and grown to global prominence with Scottish talent and know-how.

“The common denominator is, and always has been, a thriving higher education sector and just as the University of Edinburgh celebrates over 60 years at the forefront of AI research we are poised perfectly to embrace the next technological revolution.”

Writing in the report’s foreword, he added: “The investment and support ecosystem has grown in scale and sophistication to support the burgeoning sector. We have one of the most sophisticated angel investment networks in the world.”

Oscar Hornstein of UKTN said: “Despite the nation’s history of excellence in science and technology, it has yet to establish the kind of reputation as a tech hub already seen in places like London. The pieces, however, are all there for Scottish tech to go from strength to strength, with world-class research and educational institutions nurturing new generations of talent and growing support from local government and industry bodies like Fintech Scotland.

“There are, of course, challenges that have held Scotland back. Access to the kind of funding – in particular at later growth stages – that might be more readily available south of the Border, limited facilities to meet the demands of the country’s ambitious entrepreneurs and a lack of a global reputation that can draw talent and investors from around the world are all barriers to Scotland achieving the international tech hub status it is capable of.”

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