The number of new tech companies being set up in Scotland rose by 77 per cent in 2017 according to new analysis by RSM.
In total, there were 440 software development and programming businesses incorporated in Scotland in 2017, a 77 per cent increase on the 249 companies set up in 2016.
UK-wide, there were 10,016 technology businesses incorporated in 2017, with year-on-year rises recorded in every region.
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The figures validate the Chancellor’s recent claim during the Spring Statement speech that a new tech firm is set up in the UK every hour.
Commenting on the figures, Ross Stupart, partner at RSM in Edinburgh said: “These figures show very clearly that despite the fears of a post-referendum slowdown, Scotland’s tech sector is growing at a healthy rate.
“There are a number of reasons for this. Scottish universities are playing a key role in developing and nurturing exceptional talent and we continue to attract the world’s brightest and best. Organisations such as EIE, FutureX Innovation, Start-up dinners, Turing Festival and Entrepreneurial Scotland are also contributing significantly in creating a vibrant and supportive tech eco-system.
“Entrepreneurs are able to gain good access to finance, either through traditional sources of debt at relatively cheap rates, or from venture capitalists, angel networks and private equity funds.
“The UK’s tax regime is also proving to be an incredibly powerful tool in encouraging tech businesses, who take advantage of legitimate tax saving and incentive programmes. These include the Research & Development tax credits, video games tax relief and the Patent Box regime. The Enterprise Investment Scheme also provides valuable tax reliefs to investors which helps earlier stage tech businesses raise funding.
“There is undoubtedly the political will to build momentum and generate further growth as part of the government’s overall industrial strategy. However, there are some clouds on the horizon. While many in the sector will be cheered by the news that EU nationals will continue to be able to come and work in the UK during the transition period, the longer term position is as yet unclear.
“As interest rates starts to rise, we may also see a shift away from venture capital and private equity as investors seek returns from safer investments. For now though, the funding environment is incredibly benign.”
