Scotland is home to more spinouts than any other region or nation of the UK outside London, but has a large number of innovative firms that have not secured enough capital to grow.
A third (31%) of grant-backed firms in Scotland secured follow-on equity investment, compared with 26% across the UK and Scotland produced 367 spin-outs, according to new research.
However, an “untapped” cohort of 358 firms suggests that there is “significant potential to generate additional growth from existing innovative businesses”.
The report, produced by the Royal Bank of Scotland using data from Beauhurst, identifies a challenge of ensuring that more businesses can access the finance, networks, talent and commercial opportunities needed to grow.
It recommends strengthening access to growth capital, supporting commercialisation pathways and helping innovative firms build the capabilities needed to scale would help more businesses to move beyond the research stage and achieve sustainable growth.
Darren Pirie, head of accelerator and partnerships at Royal Bank of Scotland, said: “Our new report highlights that not only is Scotland’s tradition for invention and innovation alive and well but that our scaling businesses support ecosystem is also very strong.
“Yet we cannot be complacent. We need to have a laser focus on delivering new opportunities and platforms for high growth Scottish businesses, so they can access public funding and attain the exposure necessary to attract the private investment they need to expand and create growth.
Michelle Ferguson, director of CBI Scotland, said: “Scotland has never had a shortage of good ideas, and the numbers here confirm it.
“The harder question is the 358 firms still trading that have not secured follow-on investment, and that is where Scotland’s unrealised growth sits.
“Our members point consistently to two constraints, later stage growth capital and competition for skilled people, and if government, industry and the financial sector move on both we can turn more of Scotland’s inventiveness into jobs and economic opportunity for every part of the country.”
Evelyn McDonald, CEO of Scottish EDGE, said: “Royal Bank of Scotland’s report provides a valuable picture of both the strength of Scotland’s innovation economy and the opportunity that still exists to help more businesses scale.
“The fact that 358 innovative Scottish businesses have been identified as having untapped growth potential should be seen as a real opportunity. We know from our own experience at Scottish EDGE that access to the right funding, networks and support at the right time can make a significant difference to a company’s trajectory.
“Our collective challenge now is to ensure that strong bases of innovation have an equally strong infrastructure for converting innovation into commercial opportunities, clearer pathways to investment, and the support needed to build sustainable, high-growth companies here in Scotland.”
From Innovation to Impact: Translating the UK’s Untapped Innovation Cohort into Regional Growth.
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