Data released today indicates that equity investment from the Scottish tech sector is helping to boost small firms across the country.

Scotland’s tech sector growth accounted for 44% of equity investment in Scotland’s small businesses last year, according to the data, with £124 million invested in smaller tech companies.

Analysis from the British Business Bank Small Business Equity Tracker found that small Scottish firms saw a major boost in equity deals in 2020, increasing to £284m.

The sector saw a growth in the number of deals of 16% in 2020 – exceeding the 12% increase seen across the rest of the UK.

This is despite data released by Hitachi Capital Business Finance in February suggesting that SME’s in Scotland were much less positive about business growth than the rest of the UK.

Hitachi’s report claimed that small Scottish firms were around half as confident about growth as areas such as London.

Commenting on the data, Mark Sterritt, UK Network Director – Devolved Nations at the British Business Bank, said: “Last year saw a record number of small businesses receiving equity investment in Scotland, placing the country ahead of other parts of the UK with the exception of London. Our analysis suggests this has continued on into 2021, as the Scottish economy recovers, and investor confidence returns.

“It is particularly encouraging to see the tech and life sciences sectors feature so prominently as destinations for investment. Scotland has a flourishing tech ecosystem and a vibrant life sciences sector, with a broad range of exciting and ambitious companies emerging across the country, with products and services that have global potential.”

Life sciences companies were an important contributor to the latest figures, receiving £44.6 million in equity investment and Scotland received 31% of the UK’s deals in this sector in 2020.

Sterritt continued: “The British Business Bank is aiming to support companies in both sectors, and beyond, with a range of initiatives. Among them, Future Fund: Breakthrough, a new £375 million UK-wide programme, is due to launch this summer, which will help address the later stage equity finance gap faced by innovative UK deep tech and R&D-intensive companies.”

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Scotland’s share of small business equity investment deals has more than doubled over the last five years, from 5% in 2016 to 12% of the UK total. Activity has been boosted by a variety of exciting new companies emerging and support from the Scottish Government, with two-fifths (42%) of announced equity deals during 2020 involving a government fund.

The bank said that last year’s strong momentum has continued into the first quarter of this year, with the total equity investment value in small UK firms reaching £4.5 billion. Scotland accounted for £90.9 million of this figure.