TLDR: Scottish startup investment nosedived in 2023 amid global VC decline
Key Points:
- Scottish startup investment almost halved in 2023 compared to previous years
- Venture capital activity declined globally, impacting Scottish startups
In 2023, Scottish startup investment saw a significant decrease following two years of record-breaking funding in the country’s tech sector. According to KPMG’s Venture Pulse Survey, Scottish startups secured £369 million funding across 115 deals, with a total of 45 deals recorded in the last quarter of 2023 amounting to just over £71 million. This decline in investment marked a sharp contrast to the previous two years, where Scottish startups had reached record-breaking levels of funding.
Graeme Williams, head of corporate finance M&A for Scotland at KPMG UK, mentioned that the market has reached a more stable point, with increased caution among investors observed over the last year. Despite the dip in investment, there were still successful funding rounds for Scottish startups, indicating ongoing interest from investors.
Alongside the decline in Scottish startup investment, the wider UK also experienced a sharp decrease in venture capital funding in 2023. London continued to attract the largest share of VC investment, although the overall amount raised by London businesses also decreased significantly compared to previous years.
Looking ahead, businesses seeking funds will need strong business models and management teams to attract VC investment. The focus is shifting towards sustainable growth and financial stability over rapid cash burn and scale, emphasizing a balanced approach in risk management and value creation.
Overall, the dip in Scottish startup investment in 2023 reflects a wider trend of declining venture capital activity globally, with a shift towards more cautious investment strategies and a focus on sustainable growth in the wake of challenging economic conditions.
