At the beginning of 2020, we were expecting this to be another strong year for the Scottish Tech scene, and in particular the Edinburgh ecosystem. Record levels of investment were forecast, and we hoped to see that next generation of young ambitious companies coming through. We're sure the showcase Tech investor event in Scotland, EiE, would have been their best attended in its history, rather than a virtual event as it turned out to be.
However, despite the COVID-19 curveball thrown at the world, there are still exciting developments happening in the sector. On 12 November we learned that Symphonic Software had been sold to Ping Identity, with Par Equity’s stake alone being valued at $31 million. Another great spin-out from Edinburgh’s Napier University, headed up by the legendary Professor Bill Buchanan.
Opportunities in 2020
As in any time of adversity, there will be both drawbacks and opportunities. This is exactly the case for companies operating in the Tech sector this year. Like the rest of the world, Tech companies have realised that remote working is here to stay. Our view is that the vast majority of companies globally will, where they can, facilitate employees working from home either 2 or 3 days a week going forward.
Scotland is desperately short of coding talent, so the realisation that teams of employees could be set up from remote locations will really help Tech companies in Scotland scale. As a result, the Tech to facilitate remote working will therefore continue to grow and develop. While there are amazing stories of COVID-busting sectors (think Zoom, Amazon, Just Eat etc.) and even COVID-busters like Tag Games and My Online Schooling here in Scotland, talk of the global economy not recovering for years to come will undoubtedly impact the Tech sector just as it has every other sector.
Conversations with clients
What have our clients made of all this? Well, we're glad to report that remote working has helped their businesses rather than hindering them across the board. Companies have had to change the way they communicate for the better. When lockdown started, Tech companies were really given their chance to shine. With high expectations and high pressure timescales, it encouraged teams to push their innovative boundaries even further than before, and come together to fight the good fight for the sake of the whole nation. Certain Tech businesses are now the glue holding other businesses together and this will only help with idea generation for future technologies, and encourage young talent to enter the sector.
Where has Tech come a bit unstuck during the year? For us it’s the purported cost and usability of the COVID-19 Track & Trace app in England. A real low-point for the sector that understandably has been the talk of the town. To balance this out, a high point could be the vital role that Tech played in developing multiple vaccines so quickly.
What does 2021 have in store?
Our Corporate Finance Team will be extremely busy with delayed deals being resurrected again. For us as a team, our clients have relied on us in 2020 more than ever before, and we are looking forward to focusing our efforts on continuing to serve Tech focused companies.
Tech company incubators like Codebase in Edinburgh and ONE Codebase in Aberdeen have been organising virtual workshops for their tenants. AAB delivered the first of 3 finance-focused sessions in mid-November. The always challenging ‘Ask Me Anything’ final 15 minutes revealing continued interest in Enterprise Management Incentive (EMI) schemes, so it’s great to hear that Tech founders continue to want to reward loyal staff by giving them skin in the game.
Sadly, without a crystal ball to hand, it’s been difficult to answer questions like ‘when will get back to normal?’ and ‘how quickly will the economy recover?’ But we have been on hand to encourage, support, energise and listen as well as deliver on the technical pieces of work.
With vaccines starting to be administrated to our key workers, there is definitely a feeling of optimism in the air. As economies start to recover, it will be Tech leading the way to stability.
You can find out more about AAB's Tech team, and how they are helping businesses within the sector, here