Edinburgh’s impressive technology ecosystem makes this achievement possible. The city’s incubators, accelerators, universities, and partnerships between public and private organisations create an environment in which businesses can start and scale successfully.
New companies are often supported by equity investment from Scottish Enterprise and a number of other Scottish investors. In 2020, Edinburgh-based high-growth technology companies raised £143m in equity investment, down slightly on the £163m in 2019 but a tremendous achievement in the face of the pandemic. Over the last 10 years, high-growth companies in Edinburgh have raised £1.3b with three-quarters of the money going to technology companies.
Accelerators, incubators and universities provide rich environments for entrepreneurs and business leaders to prosper. Since 2011, 190 Edinburgh-based high-growth companies have attended Glasgow-headquartered accelerator Entrepreneurial Spark. Other key accelerators for Edinburgh companies include Entrepreneur Accelerator and Unlocking Ambition.
Though harder to quantify, the role of incubators should not be overlooked. The availability of office space, workshops and access to industry and academic experts provides a crucial leg up for young businesses. This chapter touches on the key components that make Edinburgh technology and high-growth ecosystem so successful.
54k
active companies
621
active high-growth companies
280
active high-growth tech companies
Map of Edinburgh: Key ecosystem features (2021)
Most of the high-growth companies in the City of Edinburgh are clustered around the city centre and the port district of Leith.
Tech investment
In the last 10 years, companies in Edinburgh raised £1.3b in equity investment, with three quarters of this amount raised by companies operating in the tech sector, making evident the importance of tech companies to Edinburgh’s high-growth ecosystem. With a total investment value of £220m, 2019 saw the largest amount raised, while 2020 was the top year for the number of deals at 181.
In January 2016, Skyscanner secured the largest deal of the decade with a £128m equity fundraising round, accounting for 67% of investment that year. The travel website was bought by Chinese travel firm Trip.com, formerly Ctrip, later the same year.
£1,300m
(£1.3b) total equity investment
1,193
total deals
£940m
total tech equity investment
Deal numbers and value of equity investment to Edinburgh-based tech companies (2011–2020)
Tech investors
The largest investor into tech companies headquartered in Edinburgh was by far Scottish Enterprise and its associated funds including the Scottish Co-investment Fund, Scottish Venture Fund and the Early Stage Growth Challenge Fund. Scottish Enterprise is a non-departmental public body of the devolved Scottish Government, aiming to support local economic development.
The angel network Archangels and venture capital firm Par Equity ranked second and third making 68 and 60 equity deals respectively between 2011 and 2020 to support the growth of Edinburgh’s tech ecosystem.
The vast majority of the investors on this ranking are Scotland-based, suggesting the relative strength and self-sustaining nature of the ecosystem in Edinburgh.
Top investors into Edinburgh-based tech companies by number of equity deals (2011–2020)
Spotlight companies
2002
incorporated
73
employees
£2.1m
equity investment raised
Codeplay develops a range of software tools for developers, including providing Artificial Intelligence (AI) based products for projects to build autonomous vehicles. Acknowledging the rapidly growing demands that artificial intelligence imposes on processors, Codeplay allows AI researchers and developers to access the latest processors via well-established open standard interfaces. While the range of products included in its ComputeSuite offering are used by developers in many markets, CodePlay’s ultimate aim is to facilitate the development and deployment of autonomous vehicles.
Leveraging both private investment and grants, Codeplay now employs over 70 people and has grown its headcount by more than 10% in three consecutive years. Its latest batch of investment was provided by the Foresight Williams Technology EIS fund, a collaboration between the Foresight private equity group and Williams Advanced Engineering, the company behind the Williams Formula 1 team. This investment will be used to develop image recognition technology that will allow cars to perceive obstacles, other cars, and pedestrians, in partnership with Renesas, a Japanese semiconductor company. Alongside these international partnerships, Codeplay is heavily involved in the Edinburgh AI scene, hosting the Machine Learning Edinburgh meetup group, and attending a computer science seminar series held at Heriot-Watt University in 2020.
Artifical Intelligence; Software Development
2002
incorporated
32
employees
£38m
equity investment raised
Orbital Marine Power develops and manufactures a floating tidal turbine. Anchored within streams and tidal currents with sufficient speed and power, their innovative floating platform’s underwater rotors converts this energy into electrical energy. The company has developed two turbines, the O2 and the SR2000. Orbital estimates that tidal power could power 80m homes and its deployment would generate investment of over £300b in related services and equipment.Founded in 2002, Orbital received its first Innovate UK grant of £109k four years later. Now, it has secured £17m in total grant funding, and £38m in private investment. Its latest grant, one of the first awarded by the Saltire Tidal Energy Challenge Fund, totalled £3.4m and will be directed towards building the world’s most powerful floating turbine, the next generation of the O2 device. This unprecedented green energy structure will also be built in Scotland, creating new jobs and diversifying the UK’s supply of energy sources.
Orbital attended the Shell StartUp Engine UK Accelerator programme in 2020, which supports clean energy startups operating outside of established tech hubs.
Clean energy generation
Universities
The University of Edinburgh has spun out 54 companies in sectors including pharmaceuticals, research tools and software, of which 43 remain active. Several of these spinouts have been highly successful at raising equity, such as pharmaceuticals company Resolution Therapeutics, which secured a £27m round in December 2020, just before the end of its third year of trading. Mobile and wireless hardware company pureLiFi has raised £22m since 2011 across six deals, in addition to being the recipient of nine grants worth £2.4m.
4
universities
83
spinouts
68
active spinouts
Edinburgh universities by number of spinouts created
Accelerators
Accelerators are important contributors to local technology ecosystems and are a catalyst for equity investment. This graph demonstrates the strong positive relationship between accelerator attendance and equity raising in Edinburgh. Since the pandemic hit there has been a steep decline in companies attending accelerators as the graph shows. While the overall decline in equity investment is low, it is concerning that there may be a smaller cohort of accelerated Edinburgh-based companies looking to raise equity finance and scale over the next few years.
The Scottish Government recognises the important role that accelerators play in providing founders with the skills and support they need to scale effectively. Scottish Enterprise has launched an accelerator programme called Unlocking Ambition that sees entrepreneurs complete a six-month course and receive a development grant to launch their business. Such programmes are an important part of ensuring the continued growth of Edinburgh’s technology ecosystem.
Accelerator attendance and equity investment received by Edinburgh-based companies (2011–2020)
Incubators
As home to the largest number of high-growth companies outside London, the City of Edinburgh naturally hosts a number of incubators that play an important role in the ecosystem. As described earlier, incubators tend to offer more open-ended support than accelerators with perks including access to co-working spaces and workshops.
A key presence in Edinburgh is CodeBase, founded in 2014 and now with sites in Aberdeen and Stirling. CodeBase offers events and programmes throughout the year in partnership with a range of corporate, academic and local government organisations including Barclays, PwC, Stirling Council, Stripe, Seedrs and the University of Edinburgh. As part of its partnership with Barclays, CodeBase provides mentorship and business support in Barclays Eagle Labs across the UK. Another important facility that plays an incubator-like role is the Edinburgh BioQuarter which is 160-acre site dedicated to life sciences projects. The site is host to around 8,000 clinicians, researchers and students. It is backed by the City of Edinburgh Council, NHS Lothian, Scottish Enterprise and the University of Edinburgh. Other incubators in the Edinburgh ecosystem include The Edinburgh Business School Business Incubator at Heriot-Watt University and the Higgs Centre for Innovation, which is supported by the University of Edinburgh and the Science and Technology Facilities Council (STFC). The Higgs Centre is focused on supporting commercial applications of research in space, astronomy, particle physics and big data analytics.
"Edinburgh has had a growing tech ecosystem for years. But there is ambition for more: there is a pervading sense of maturing, of getting to the next level, that is driving all the constituent parts of the ecosystem: startups and investors, but also institutions old and new are demonstrating that Edinburgh gets tech entrepreneurship, wants more of it, and knows how to accelerate it. Exciting times!"
Steven Drost
CSO, CodeBase
Local government
Local government plays an important role in creating, nurturing and funding high-growth ecosystems. In Edinburgh, the City of Edinburgh Council helps allocate vital resources to the ecosystem.
Invest Edinburgh, the Council’s inward investment arm, highlights investment opportunities for investors outside the region, the country, and even the UK. It has played a role in promoting the 160-acre healthcare and medical research site BioQuarter for investment.
The City of Edinburgh is also one of the six local authority areas that partnered on the Edinburgh and South-East Scotland City Deal. The initiative will see £1.3b of public and private money invested in the region over the period from 2017 to 2032.
Under the stewardship of the City of Edinburgh Council, a number of programmes funded by the deal are helping to support and grow the local ecosystem. These include the Bayes Centre at the University of Edinburgh which acts as a multidisciplinary hub for data science, including commercial applications of data science technologies, as well as the National Robotarium at Heriott-Watt University, which provides facilities to support the creation of a new generation of smart robotics companies.
Other supported organisations include the Edinburgh Futures Institute, which is a multidisciplinary centre for challenge-based data science research, and the Usher Institute (located at Edinburgh BioQuarter) which has a focus on using data to improve health and social care.