Start me up: Scotland’s growing tech hub

For the past five years FutureX, an Edinburgh-based organisation helping technology start-ups to thrive in Scotland, has been taking a handful of Scottish tech entrepreneurs to Silicon Valley, to encourage them to adopt the valley’s mindset and “think bigger”.

The valley is home to start-ups and global technology companies including Apple, Facebook and Google. Recent estimates show tech employs almost half a million people in the area.

FutureX co-founder Zoi Kantounatou says that taking Scottish tech innovators out there changes their perspective. “For me, the benefit is it’s a different mindset. We take a handful of companies, they get a meeting in a boardroom with an investor, you get to say what your company does and get feedback for your business,” Kantounatou tells Holyrood.

“Sometimes in Scotland we benchmark ourselves against what exists in Scotland. They [entrepreneurs in Silicon Valley] benchmark themselves with the rest of the world. They see themselves from a global perspective. They understand that the more they develop the Silicon Valley, the more they will benefit.

Another reason for the annual trip is so that Scots can hear stories about failure.

“[In the valley] they see failure as learning. Investors trust founders who have failed before. People will ask you what you’ve learned, they won’t ask you why you failed,” Kantounatou says.

“For me, the side that needs more work [in Scotland] is working with entrepreneurs in terms of failure, learning, overcoming. The complaint here is no one wants to talk about the tough times. It’s not I wasn’t good enough, but what I do next is going to be better.”

On this year’s Silicon Valley trip, Kantounatou heard from Scots living in the tech hub who wanted to return home – and were willing to take a pay cut.

“There’s a lot of people who are Scottish and they want to come back, but they don’t know how the scene has changed, how am I going to take this big step and go back? They have families, they’ve been working in the Silicon Valley for an insane amount of money for years and they might be willing to take a pay cut to come back, but they don’t know if there’s opportunity there.”

Her solution: “We need to advertise how great the potential is, that the companies here are growing, making sure people know that and get excited about that and of course, offer them the security of being able to work here.”

Kantounatou says Scotland offers fantastic support to entrepreneurs. That support has translated into rapid growth, with Scottish Enterprise figures detailing a 77 per cent increase in the number of tech start-ups in Scotland, ahead of the UK overall average of 59 per cent and London at 76 per cent.

“Over years we’ve seen the sector grow, a lot of organisations are working together to help the sector grow,” she says.

“We did an event with Scottish Enterprise, with a professor from MIT [Massachusetts Institute of Technology] and he was saying Scotland has an amazing support system, it’s better than we experience, but we need to take advantage and realise how lucky we are.

“It takes an average of five years for a company to operate in Scotland without having a clear business model, because there’s a lot of support and access to things, but how can we translate that to growth?”

Speaking about the impact of Brexit, Kantounatou notes “the uncertainty at the moment does not help” the Scottish tech sector.

“British people forget everyone else has options open to them. People are still moving countries, they just don’t come to the UK anymore… they are moving to Sweden, the Netherlands and Germany,” she says.

“I’m from Greece, and I’ve experienced being here and wondering whether I can stay.”

Scottish Enterprise digital economy team leader David Hartley and entrepreneurial development team leader Ana Gallardo tell Holyrood: “Silicon Valley is not a threat to Scotland’s tech sector but a huge opportunity.”

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“Scotland’s entrepreneurial hub - tech and otherwise - represents a very different reality to Silicon Valley. Scotland embraces a fundamentally different business culture where purpose and social impact are as important as the financial bottom line and where businesses are not celebrated by their valuations but by the inclusive growth they generate to founders, employees, partners, suppliers, customers and the wider communities where they operate.”

Hartley and Gallardo say Scotland is doing “everything it can to attract and retain the critical talent the sector needs”, with initiatives across private and public sectors.

“The most critical factor in attracting and retaining talent is the health and vitality of the industry itself, which reported a strong performance in 2018 and continued optimism for 2019 with 83 per cent of companies expecting to increase sales and 81 per cent looking to increase employee numbers,” they say.

“Underpinning this growth has been a range of initiatives from both the public and private sector that supports a thriving ecosystem, for example, driving digital innovation in the public sector with CivTech, creating a digital skills academy with CodeClan and establishing Turing Fest as a global industry technology event.

“The level of public support in Scotland is also significantly higher than other destinations, making an entrepreneurial career accessible to a more diverse population. And of course, Scotland is a beautiful country with very good quality of life.”