Scotland has built a valuable pipeline of deep tech businesses and directs an unusually high share of venture capital into the sector, but researchers warn that too few companies are progressing into scaleups.

Scotland must rethink how it funds, develops and supports deep tech companies if it is to convert its scientific strengths into lasting economic value, according to a new report.

The Scottish Deep Tech Report 2026 found that Scotland’s venture-backed deep tech startups are now worth a combined $7.9 billion, with investment in the sector growing 7.8-fold over the past decade.

Deep tech attracted $323 million in venture capital during 2025, representing the sector’s third-highest annual funding total. Between 2020 and 2025, around six in every ten venture capital dollars invested in Scotland went to deep tech companies, compared with a European average of 32%.

However, researchers at the University of Glasgow’s Adam Smith Business School said Scotland is still struggling to translate its research, technical expertise and early-stage pipeline into companies capable of reaching significant scale.

The country’s deep tech funnel includes more than 200 startups and breakout companies but only five scaleups. Around 75% of startups have raised less than $15m, while stakeholders said businesses often plateau at between 20 and 30 employees before stalling or being acquired, typically by overseas buyers.

The report counts Scottish-founded AI drug-discovery company Exscientia as the ecosystem’s sole unicorn outcome, although the business became a wholly owned subsidiary of US-based Recursion following the companies’ combination in November 2024.

University spinouts remain central to Scotland’s deep tech ecosystem. More than 80 spinouts account for 43% of its venture-backed deep tech startups and contribute 56% of the sector’s overall value.

Biotechnology, pharmaceuticals and AI are among Scotland’s leading deep tech sectors. AI startups have raised $216m since 2020 and accounted for 21% of deep tech venture investment in 2025.

Scotland also has established strengths in photonics, quantum technologies and semiconductors, which the report traces partly to the technical workforce and engineering capabilities developed during the Silicon Glen era.

Researchers identified five main areas where change is required to help more of these companies grow.

1 – Develop Deep Tech Leaders Built for Scale

The report said Scotland needs structured programmes designed to form and develop leadership teams capable of scaling deep tech businesses.

Although the country has considerable scientific and engineering talent, stakeholders identified a shortage of commercial and operational leaders with the skills required to support companies as they grow.

Researchers noted that the founders best placed to develop breakthrough technologies are not always the people best placed to scale the businesses built around them.

They called for sector-specific commercial talent pipelines, structured team formation programmes and postgraduate and executive education focused on the scaleup phase.

These programmes should support both founders and the operational and commercial leaders deep tech companies need as they move beyond their early stages.

2 – Build Literacy Across the Full Value Chain

Skills investment should extend beyond the founders and innovators developing new technologies, according to the report.

Deep tech companies also rely on investors, procurement officers, supply-chain partners and regulators being able to understand and engage with technically complex businesses.

Researchers called for greater commercial and technical literacy across the full value chain so that the wider ecosystem is better equipped to support deep tech companies as they scale.

This reflects the report’s wider finding that Scotland’s challenges do not stem from a shortage of scientific expertise alone, but from gaps across the institutions and organisations that companies depend on.

3 – Fix Access to Infrastructure

Scotland already has significant deep tech facilities and infrastructure, but the report found that these assets are not always operating in ways that meet company needs.

Researchers said facilities are underused not because companies cannot find them, but because their pricing, design and governance models can make them difficult to access.

This is particularly important for businesses attempting to move from prototypes towards manufacturing and production.

The report argued that increasing investment in infrastructure will not be sufficient on its own. The operating models behind existing facilities must also change so that growing deep tech companies can make practical use of them.

4 – Make Scotland a First Customer

Researchers also called for Scotland’s public sector procurement power to be used more deliberately to support domestic deep tech companies.

The report said clearer first-customer pathways could help anchor Scottish innovations at home before companies follow investment and commercial opportunities elsewhere.

This would mean public bodies playing a more active role in creating initial routes to market for technologies developed within Scotland.

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The recommendation comes amid wider concerns that companies often need to look outside Scotland for the growth-stage capital, commercial expertise and opportunities required to continue expanding.

5 – Develop a Scottish Model

Finally, the report argued that Scotland needs its own understanding of how deep tech innovation operates within the country.

Researchers called for sustained social science research into the institutions, financing structures, organisational models and governance arrangements shaping the sector.

This would allow future interventions to be designed around Scottish conditions rather than importing approaches developed in other ecosystems that may not apply locally.

Several initiatives are already attempting to strengthen different parts of the sector, including the Critical Technologies Supercluster, the Deep Tech Supercluster programme, Techscaler, the National Robotarium and the Scottish National Investment Bank.

The University of Glasgow has also established a Deep Tech Innovation Centre within the Adam Smith Business School to research the operational and strategic challenges facing the sector and develop education programmes for future deep tech leaders.

Dr Gemma Milne, Lecturer in Innovation and Technology Management, said: “Scotland already has world-class deep tech expertise and infrastructure. What it needs is a development model built for its own context: one that draws on lessons from elsewhere without importing them wholesale, takes Scotland seriously as a deep tech leader in its own right, and is as imaginative about the institutions that steward deep tech as about the science they support.

“Done well, the benefits land both at home and worldwide.”