Scotland’s technology companies were responsible for £6.3 million ($8.5m) of the total £8.4 million ($11.3m) in funding raised in the first three months of 2018, according to the new Venture Pulse Report from KPMG.

This was despite a slowdown in the first quarter of 2018, following a record-breaking year in 2017, in which £3 billion ($4bn) of venture capital was invested in UK companies.

KPMG notes standout deals in Scotland, including £2 million raised by dementia app creator MindMate and peer-to-peer investment company LendingCrowd, which raised £3 million.

The news follows a recent EY report which highlighted record levels of direct foreign investment in Scotland over the last three years, with the digital sector achieving a 56% increase in investment.

Sam Subesinghe, Head of Management Consulting, KPMG, ScotlandSam Subesinghe, head of management consulting at KPMG in Scotland, told DIGIT:

“VC investment in Scotland slowed in the first quarter as investors focused on smaller numbers of later stage deals. Brexit is cited as the main reason for this, but while overall investment has dropped, the tech sector continues to grow.

“Scotland’s tech scene attracts investors as it is well-established and goes hand-in-hand with a strong financial services sector. Additionally, the country’s university infrastructure means there is a strong supply of highly-skilled graduates emerging. Coupled with a favourable exchange rate, investment in the tech industry will continue to play an important role in the UK’s growth strategy.”

The UK as a whole remains the fourth most promising global market for innovation, disruption and technology breakthroughs, with the US, China and India leading the pack.

KPMG’s Global Technology Innovation Report report also notes the record level of VC investment of $4 billion in the UK’s tech sector in 2017. This is double the 2016 total and was more than the combined investment seen in Germany, France, Spain and Ireland.

Tudor Aw, Head of Technology for KPMG in the UK, said:

“The U.K. tech sector continues to go from strength to strength, with robust performance by mature tech companies and spectacular investment by VCs in emerging U.K. tech firms.

“There can be no room for complacency however, and in that context, it is heartening to see the government continue to state its view that the tech sector is at the heart of its industrial strategy. This will be vital to ensuring the United Kingdom stays at the forefront of emerging technologies and remains attractive to tech investments.”