Number of deals is up but venture capital funding in Scotland falls
Bulk of Q2 backing goes to tech and healthcare, says KPMG survey
Ken Symon
KPMG's head of deal advisory in Scotland James Kergon
More than £23.8 million of venture capital (VC) was invested into Scottish start-ups in the second quarter of 2019, with the bulk of funds spent on technology and healthcare businesses.
The research for KPMG's Venture Pulse survey shows that deal volume is up while funding value is down with investors becoming increasingly risk averse as political and economic uncertainty continues to grow.
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The latest data, compiled by venture capital data company Pitchbook, shows investment has dropped by more than £16.8 million compared to Q1 2019, but the number of business attracting funding has risen from 14 to 16.
The majority of start-ups benefiting this quarter from venture capital were in the tech or pharmaceutical sectors, with nine businesses receiving more than £16 million in funding.
These included Aberdeen-based EnteroBiotix , which attracted more than £2.4 million in seed funding to help it develop pioneering new medicinal products to restore health and prevent bacterial infections.
The bulk of VC investment this quarter focused on Edinburgh, with eight businesses attracting support. Elsewhere, funding was provided to five companies in Glasgow, two in Aberdeen and one in Dundee.
UK-wide, VC investment was also down with 279 deals, valued at £2 billion, completed during Q2, compared to 324 in Q1, valued at £2.4 billion.
James Kergon, head of deal advisory at KPMG in Scotland, said: "While it's reassuring to see such a wide range of Scottish businesses attracting VC investment from around the world, the dip in funding levels is slightly concerning.
"Whether they're early-stage start-ups, or long-established businesses, every one of the 16 companies is doing something innovative and, in some cases, truly pioneering.
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"The future success of the Scottish economy relies on a diverse ecosystem led by entrepreneurial companies at the forefront of technology and product development.
"However, there is hope on the horizon. While investment is down, it's clear to see that, despite deepening economic uncertainty, venture capitalists remain attracted to Scotland's tech savvy, globally-focused start-up community."
Scottish Enterprise