Technology has long been a hunting ground for investors with aspirations of backing the next ‘game changing’ idea, concept or invention. With the global thirst for continual development, process efficiencies, speed of communication and less human intervention, it is little surprise that the UK tech sector grew 2.6x faster than the rest of the economy.
Indeed, the UK is already seen as a leader in the FinTech space with companies backed by a supportive regulatory and fiscal framework to encourage greater investment with a focus on education and research. This appears to be bearing fruit with FinTech businesses attracting more investment in the current year than the total invested in the sector for the whole of last year.
High profile funding rounds include the £113m successfully raised by the mobile only challenger bank, Monzo and the £56m invested in the working capital finance provider, Market Invoice.
Some of the most active tech investors in the last 12 months by deal numbers include Mercia Technologies, IP Group, 24Haymarket, LocalGlobe, Passion Capital and Octopus Ventures. Top funders by value of fundraisings include Accel Partners, Balderton Capital, IP Group, Passion Capital and Insight Partners.
As London based Venture Capital and Private Equity firms face increasing levels of competition for investment opportunities with regards to price and speed to invest, there has been an increasing shift to look north to the high quality, young companies emerging from Scotland in the technology sector. For instance, Edinburgh based Mark To Market’s recent £1.75m investment round with participation from 24Haymarket outlines the quality of opportunities emerging from Scotland.
This increase in interest and focus on Scottish opportunities has seen some funds recruit or deploy committed resources and even specific funds devoted to the region.
Edinburgh and Glasgow, in particular, have dominated technology investments in the country with exciting young companies attracting sizable investment in recent years including Care Sourcer, Smarter Grid Solutions, Money Dashboard and LendingCrowd. Notable investments have also included Mercia’s £1.8m investment into student engagement platform, GeckoLabs and Panoramic’s multi-million-pound investment into internet connectivity specialist, Vaioni Group.
We remain very encouraged by the pipeline of high-quality Scottish opportunities in the technology space and anticipate that funding providers will continue to commit additional resources to assess these so as not to miss out on the next Skyscanner and the likes.
By Brian McMurray, Partner, Corporate Finance, Anderson Anderson & Brown LLP
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