2020 saw investment activity dip across some sectors – notably hospitality, travel and retail - as uncertainty and continued restrictions took their toll. Unsurprisingly though, the technology sector boomed and there is no sign of the growth easing off.
Tech Nation's annual report notes that UK tech VC investment is third in the world and puts Edinburgh in fifth place with £91 million invested. The 2020 Beauhurst report also confirmed that it was a record year for many tech verticals. Fintech led the way with a huge 221 deals completed during 2020. Exceptional demand for healthcare innovation also led to an increase in healthtech deals and cyber security performance was also strong. Beauhurst also reported that Scotland had record investment activity with Edinburgh being the epicentre of the deal growth in Scotland.
A continuing trend
Moving on to 2021 and the demand for tech investment is only increasing. Beauhurst reported that Q1 of 2021 the tech sector saw more deals close and more money secured than in any other quarter. Within the sector, fintech is enjoying the biggest demand with 36% of all investment during Q1 going into fintechs and there were 82 deals completed in the quarter.
This rising trend in tech investment is reflected in our own deal numbers with nearly 60% of our investments in the last year being in the tech sector. Some of the highlights included:
- Advising Continuum Industries, an Edinburgh-based company providing AI tools for engineering professionals to rapidly design linear infrastructure projects and reduce their costs, on a £1.5 million investment deal
- Advising Cutitronics, a multi-award-winning technology company, in relation to funding of £2 million from existing shareholders
- Advising Incentive Holdings, an Edinburgh-based technology company creating apps for customer acquisition and retention in the media and gambling industry, on a round of equity investment from private investors.
We are also seeing the strong tech sector reflected in lending. For example, transactions for alternative funders and fintech lenders in our Banking & Finance team numbered in excess of 200 deals in the last financial year alone.
The next generation
The strong Scottish tech scene is also seen in the submissions for Scottish EDGE - a funding competition supported by Harper Macleod LLP which is aimed at identifying and supporting Scotland’s innovative, high growth entrepreneurial talent. Nearly a third of all applications in the latest competition round - EDGE17 – were from the technology and engineering sector, indicating that the tech trend is likely to be a prominent feature in future investment opportunities.
There is no doubt that the tech sector has risen to meet the challenges of the pandemic. The innovation and resilience of technology companies in the face of sudden demand for services has cemented the value of technology and digitisation in every aspect of daily life and it is great to see that Scottish companies are at the forefront of this.
Get in touch
If you are a tech business seek investment then please don’t hesitate to contact a member of our team for advice.