At DIGIT’s sixth annual Expo, a discussion on the challenges and opportunities facing Scotland’s growing tech ecosystem took center stage. Despite a thriving startup environment, Scotland’s tech sector faces a significant hurdle: scaling up. While many startups in the country manage to get off the ground, the leap from startup to scale-up remains a complex journey.
Scotland’s Startup Success, But Scale-Up Struggles
Scotland has witnessed a surge in startup activity, with over 40,000 new businesses launched last year alone. Yet, the path to growth beyond the initial startup phase remains a struggle. The survival rate of new businesses stands at 43.7% within their first five years, a clear indication of the difficulties startups face as they attempt to grow.
At the heart of this issue is the limited market size of Scotland. Although its close-knit, supportive ecosystem works well in the early stages, it becomes a constraint when it’s time to scale.
The Scottish Ecosystem: A Double-Edged Sword
While the concentrated nature of Scotland’s market can foster rapid relationship-building and local connections, this same environment can be limiting when startups try to expand beyond their immediate reach.
Greg Aitken, CFO of Quorum Cyber, described the local tech ecosystem as a bubble, which has both positive and negative impacts. “There’s lots of good stuff happening in our ecosystem,” Aitken said, referring to the abundant talent and resources within Scotland. However, the smaller market can restrict access to larger investments and opportunities.
In the panel discussion, Colin Hewit, CEO of Float, emphasized the importance of breaking out of Scotland’s insular tech scene. “You’re in a bubble, and I’m telling you to get out of that bubble,” he said, highlighting the value of expanding networks and accessing larger investment hubs like London.
Global Mindset for Scaling Up
While Scotland’s strong ecosystem nurtures early-stage startups, scaling businesses need to look beyond local borders for growth. Panelists suggested that adopting a global mindset is critical for tech companies hoping to make the leap.
Leah Hutcheon, CEO of Appointedd, emphasized that her company was “born global,” and this global approach was essential in helping it scale. Similarly, Rachel Jones, founder of SnapDragon, stressed the importance of seeking international expertise and funding. By expanding her search for technical talent and investment beyond the UK, Jones successfully grew SnapDragon into a global entity.
This international perspective is essential, especially for tech companies, which can offer services online to a global audience.
Capital and Talent: A Balancing Act
As the conversation shifted towards the key elements of successful scaling, capital and talent were identified as the two major pillars. Scotland is known for its strong talent pool, particularly due to its world-class universities.
Aitken noted that Quorum Cyber’s success—growing from £3 million to over £30 million—was built on access to this talent pool. He pointed out that Quorum’s graduate schemes, aimed at bringing young talent into the fold, played a crucial role in their growth.
However, access to capital remains a challenge. Investors often focus on larger markets, such as London, making it harder for Scottish businesses to secure funding locally.
Cultural and Mindset Challenges
One of the key themes of the panel was mindset. The panelists agreed that a shift in attitude is necessary to propel Scotland’s tech sector to the next level.
Leah Hutcheon highlighted how the local culture sometimes undermines ambition, citing negativity in the press and the lack of emphasis on entrepreneurship in Scotland’s education system. “No one talks about being an entrepreneur in school here,” Hutcheon said. She argued for enterprise to be embedded in the curriculum, enabling future generations to view entrepreneurship as a viable career path.
Moreover, the international mindset prevalent in markets like the US can create a more dynamic approach to scaling, where the focus is on ambition and limitless possibilities.
Mentorship and Networking: Key to Success
Another hurdle to scaling in Scotland is the lack of mentorship available for businesses looking to expand. Aitken stressed the importance of mentorship and shared how having experienced mentors helped his business navigate growth.
Hutcheon echoed this sentiment, noting that asking for help and seeking out mentors was essential for scaling. She encouraged other entrepreneurs to “ask questions, ask for help, and just get stuff done.”
Moving Forward: Advice for Aspiring Scale-Ups
The panelists shared valuable insights for those seeking to scale their businesses:
- Build momentum: Quickly assemble the right team and make fast decisions.
- Break out of your bubble: Look beyond Scotland’s borders for funding, opportunities, and mentorship.
- Embrace international talent: Don’t be intimidated by international recruitment challenges.
- Cultivate a positive mindset: Foster a culture of ambition, learning, and resilience.
Despite the challenges, panelists expressed optimism about Scotland’s ability to scale its tech sector. A combination of talent, education, and global connections could be the key to transforming Scotland into a thriving hub for tech unicorns.
