Scottish Enterprise generates more than £700m planned innovation activity
Scottish Enterprise’s support is forecast to generate £709.74m of Scottish innovation expenditure. The agency approved £120m in grant funding and equity investment for innovation activities in the 2021-22 financial year, which is now calculated to deliver a further £502m innovation investment from the private sector as well as £86m from public sector partners
A total of 260 projects are being supported, delivering an impressive array of innovations from private firms developing solutions to some of the world’s biggest challenges, to new spin-outs from our world-leading universities, and vital infrastructure in the form of Scotland’s first class innovation centres.
Supported projects included:
- Australian inward investor BigTinCan announced plans to expand its Glasgow software development centre in order to accelerate a series of R&D projects, following confirmation of a funding package from Scottish Enterprise worth £1.4m. BigTinCan specialises in developing software for use by companies’ salesforces, to help improve their customers’ experiences.
- University of Edinburgh life sciences spin-out Kynos Therapeutics announced that it had raised £9m in growth funding, including investment from Scottish Enterprise. The company is developing a treatment to help regulate the immune system and protect patients against tissue damage caused by a mitochondrial enzyme known as KMO.
- Scottish Enterprise announced a grant award of £2.5m to Scotch whisky maker North British Distillery. The funding will allow the company to develop and deliver a modernised distilling process, with the aim of significantly reducing its carbon footprint.
- Scottish Enterprise also continued its funding support as a partner of Scotland’s many innovation centres, including the Fraunhofer Centre for Applied Photonics at Glasgow’s Strathclyde University, the Advanced Forming Research Centre (AFRC) in Renfrew, the Net Zero Technology Centre (NZTC) in Aberdeen, and the CENSIS centre for sensing, imaging and the internet of things (IOT) at the University of Glasgow.
Adrian Gillespie, Chief Executive of Scottish Enterprise, said: “Scottish companies are innovating to create greater opportunities for a more prosperous future, as well as delivering solutions to global challenges in areas like climate change, advanced manufacturing and life sciences. It’s great to see a sustained appetite among our business base to continue investing in innovation despite the current headwinds, while at the same time the private and public sectors continue to invest significantly in our first-class innovation centres. These activities will ensure Scotland remains a leading innovation nation.”
Business Minster Ivan McKee said: “Through our enterprise agencies we are supporting business and industry to adopt the innovative technologies and processes that will help increase their resilience and capacity for growth.
“In Scotland, it is vital that we utilise innovation to grow the economy, create jobs and deliver on our net zero ambitions, to be one of the most innovative small nations in the world.
“This winter, we will publish a new National Innovation Strategy for Scotland, ensuring that our businesses, people and institutions are ready to meet the global economic challenges we face over the next 10 years, and grasp opportunities.”
One mechanism through which Scottish Enterprise helps companies innovate is its SMART:Scotland grant. Research by Scottish Enterprise and Young Company Finance* (YCF) recently revealed the impact of SMART by taking a snapshot of the cohort from 2015/16 and tracking its progress since then, in terms of survival and further investment.
The study revealed that of the 76 SMART recipients that year, 60 companies (80%) are still trading. A total of £156.9m equity investment was raised by the cohort since the time of the grant award, with four companies raising more than £10m each. Innovate UK grants totalling £14.6m have also been awarded to 25 cohort companies since 2015, with five companies raising more than £1m each. They have also seen success at ScottishEDGE, with 11 of the cohort winning a total of £883,000.
Further research by YCF* tracked the impact of Scottish Enterprise’s High Growth Spin-out Programme (HGSP) over the last 10 years. HGSP is another innovation grant mechanism, designed to help universities commercialise research projects with the potential to become companies of scale. A total of 34 companies were created in this time, spinning out from 10 universities. Of these, 29 (88%) are still trading today – a much greater percentage than expected for the high-risk start-ups sector.
Of those still trading, many have benefited from ongoing support from Scottish Enterprise including becoming part of its high growth portfolio of companies, benefitting from a range of wrap-around specialist support in areas such as product development, trading internationally and sustainability.
Since incorporation, 26 of these companies have raised £144m total equity investment, with four raising more than £10m each. Additionally, 19 secured grant funding totalling £28m – including eight grants of more than £1m. The cohort has also seen Converge Challenge success, with eight winners/runners-up from 2011 to 2020.
*(see Notes to Editors for further details of the SE/YCF SMART and HGSP data)
ENDS
Contact Information
Jennifer Stevenson
Notes to editors
Contact information:
Jennifer Stevenson
Scottish Enterprise
0141 468 5779 / 07919 227 836
jennifer.stevenson@scotent.co.uk
Notes to Editors:
About Scottish Enterprise
Scottish Enterprise (SE) is Scotland’s national economic development agency and a non-departmental public body of the Scottish Government. It supports businesses to innovate and scale to transform the Scottish economy by focusing on new market opportunities through targeted investment, innovation and internationalisation. Follow us on Twitter and LinkedIn.
About Young Company Finance
Young Company Finance (YCF) is a subsidiary of business angel association LINC Scotland, and publishes a monthly review of early stage high growth companies in Scotland, focusing particularly on the issues of how to fund growth.
YCF was founded by Gavin Don in March 1998 and acquired by Jonathan Harris in November 2000. The business was subsequently expanded to encompass special reports on specific market sectors (Life Sciences, Digital Entertainment, and Renewable Energy), a very successful annual conference, and in 2006 a new edition of YCF, a monthly publication tracking young companies in the North of England, subsequently discontinued after four years of publication.
In 2011 Jonathan Harris started Spinouts UK, a new project managed by Young Company Finance which built up a database of spinout and start-up companies from universities across the whole of the UK. In 2018 the Spinouts UK business was acquired by Beauhurst.
YCF was licensed to LINC Scotland in 2010, and acquired by LINC in 2022.
Further details of SMART:Scotland research findings
SMART:Scotland innovation grants provide funding for feasibility studies, and is available only to SMEs based in Scotland that have a commercial endpoint. The maximum grant is £100k, covering 70% of eligible costs for small companies or 60% for medium sized companies, with the remainder to be funded by the company. Studies must last between 6 and 18 months.
In collaboration with Scottish Enterprise, Young Company Finance (YCF) carried out an analysis of how companies progressed after being awarded a SMART grant, in terms of survival and further investment. To keep the numbers manageable it was decided to focus on a single year. 2015/16 was chosen, as companies which were more recently funded have not yet had the time to show how they might develop.
SMART grant awards were made to 76 companies in this period. The following chart shows the breakdown of this cohort by age at the time of the grant award. Almost half the companies (44%) were under two years from incorporation at the time of grant acceptance, implying that the SMART application was a major factor in the company’s start up. The oldest company in the cohort was 34 years old, all others were under 16 years from incorporation.
Companies in the life sciences sector won the largest number of SMART grants, comprising 29% of the cohort. Energy was another sector with a large number of awards (18% of the total), while digital media and enabling technologies had a lower representation (12%).
Of the companies awarded SMART grants in 2015/16, 80% are still trading. There was one IPO, and three companies were acquired in trade sales.
As the SMART programme covers knowledge-based companies at their earliest stages and enables them to test the feasibility of their ideas, it is not surprising that some fail after their projects have been completed. Twelve of the 76 companies (just over 15%) in this cohort failed, which is a reasonable proportion given the high-risk profile of the projects.
A total of £156.9m was raised in equity investment by the 2015/16 SMART cohort since the time of the grant award. Just over a third (37%) of the companies raised no equity after that award, while a small number raised large amounts in aggregate. Four companies raised over £10m.
Out of the 76 companies in the cohort, 25 have been awarded Innovate UK grants since the start of 2015, securing a total of £14.6m in funding. Five of these raised more than £1m each.
Companies from the cohort have also been successful in securing funding and public recognition from ScottishEDGE. Eleven of the cohort have won in different categories and been awarded a total of £883,000. Three of these were also winners of the prestigious Higgs EDGE award, a special category aimed at entrepreneurs who have an engineering, science or technology based business and have a product which is scalable and capable of globalisation.
Further details of HGSP research findings
With data provided by Scottish Enterprise covering funding awards made over the past ten years, YCF has made an analysis of how the spin-out companies arising from the programme have subsequently progressed.
Although HGSP’s funding is largely to the universities which are working on spin-out projects, this analysis is based on actual spin-outs which resulted from this support. The ten-year cohort consists of 34 companies, emerging from awards made to ten of Scotland’s Higher Education Institutes.
The majority of spin-outs supported by the programme are still trading. There has been just one trade sale and four companies are no longer trading. The number of companies in the cohort still actively trading comprises 88% of the total, much greater than might be expected for a set of companies in such a high-risk sector.
Since incorporation, 26 companies out of the 34 in the cohort have raised a total of £144m in equity investment, with four raising over £10m each in aggregate, and additionally 19 of these companies secured grant funding totalling £28m – including eight grants of more £1m.
About a third of the companies in the cohort (23 out of the 29 still trading) have given information about employee numbers on LinkedIn. The breakdown is as follows:
Five or fewer employees: 5 companies
Between 6 and 10 employees: 4 companies
Between 11 and 20 employees: 9 companies
Over 20 employees: 5 companies
There is a strong correlation between employee numbers and investment raised, unsurprising given that one of the main objectives for early-stage technology companies when fundraising is to add staff.
The companies in the HGSP cohort have been conspicuously successful in winning awards in the Converge Challenge, which like HGSP is targeted at companies emerging from universities (eight winners/runners up in the years from 2011 to 2020, with six new spin-outs shortlisted for Converge awards this year). Founders of two of the companies in the have also won RSE Enterprise Fellowships