Scotland saw a sharp rise in startup activity over the first half of this year, recording one of the fastest growth rates across the UK, according to a new report from NatWest.

The bank’s latest New Startup Index, released alongside business data firm Beauhurst, found an almost 18% gain on new firms north of the border so far in 2025, with over 21,500 new businesses launched, putting Scottish startup activity among the top tier of UK regions, and second only to the North East of England, which enjoyed a 19% boost.

In Scotland, hospitality was the most active sector for new companies, with 2,131 venues established, an 18.7% rise, followed by property development and construction which saw 1,316 new startups (23%), and the trades and trade services, with 1,305 new businesses launched (27%).   

NatWest said that the figures highlight Scotland’s growing role in the UK’s business recovery, with startup momentum extending beyond traditional hubs and founders responding to local demand and economic opportunity.

In all, ten regions recorded a rise in startup activity, which NatWest said signalled renewed confidence in the country’s entrepreneurial ecosystem after a 3% drop in new businesses at the tail end of 2024.

Among the other regions bouncing back are the West Midlands with an almost 17% increase, and the North West of England, which saw a 16.5% rise in startups. 

“The first half of 2025 has shown that the UK’s entrepreneurial spirit is not only alive but accelerating,” said James Holian, head of business banking at NatWest.

“What’s particularly encouraging is the surge of innovation coming from regions like Scotland, which has emerged as the second fastest-growing area for startups in the UK. This momentum reflects the depth of talent and ambition among founders up and down the country.”

All together, NatWest found that 426,000 new businesses were registered with Companies House in the first half of 2025, recovering from a dip that saw 378,000 firms launched in H2’24 – the lowest quarterly level since 2021.

Sector-wise, application software remains the UK’s most active startup category, with 34,700 new companies formed – up 0.55% year-on-year – with more firms focusing on breaking into the growing appetite for apps, with the study finding that mobile app developers in particular represent a significant portion of this growth.

Other new companies operating in this sector include those building productivity tools like word processors and spreadsheets, creative software for graphic design and music production, and entertainment software for video games.

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Hospitality ranked second overall, with 26,800 new restaurants, pubs, cafés, and takeaways opening nationwide, reflecting an 8.5% increase from the same period last year. This was closely followed by the national property development and construction sector, which recorded a 7.18% rise in startups from H2 2024, reaching a total of 25,100. 

“It is encouraging to see some recovery from the incorporation volumes seen at the end of 2024,” said Henry Whorwood, managing director at Beauhurst.

“Whilst still down from previous first halves, this recovery is impressive when against a challenging macro background, and policies announced in the Budget that were antagonistic to entrepreneurs.”