According to new research from Scottish Enterprise — which used data supplied by Beauhurst — Scotland achieved its highest amount of equity investment on record in 2022, but deal participation fell, including in the Scots digital and IT sector.

The agency’s research, “Investing in Ambition: Scotland’s Equity Risk Capital Market 2022,” highlights that despite fewer deals, a total of £953 million in investment was put into Scottish firms last year, marking a 26% increase over 2021.

Where did the largest value deals go?
In particular, three Scottish deals with an investment value of over £50m took place in 2022, coming to a total of £315.3m. This is an increase of around £220m from last year.

The deal with the highest investment value — £164m — went into GoFibre, the independent Scottish broadband provider and network builder. This week, GoFibre announced that they’re expanding rural broadband to a further 82,000 premises.

The second-highest value investment of £101.3m went into TauRx Pharmaceuticals, who specialise in neurodegenerative disease treatment, and the third-highest of £50m went into Well-Safe Solutions, the firm who offer decommissioning services for on and offshore wells.

What about actual deal numbers?
According to the research, deal numbers in Scotland were the lowest they’ve been since 2018, with 407 deals taking place in 2022.

So what were the deal numbers in each sector (and keeping in mind that a deal is counted in as many sectors as are relevant for the business — a single company could both be operating in “digital and IT” as well as “business services,” for instance)?

The Scottish digital and IT sector — which is the country’s top performing sector — had a 8% decrease in deal participation, with 189 deals compared to 206 in 2021.

This, however, is in line with deal numbers falling generally in the UK, with most sectors witnessing a drop in deal participation.

Technology and engineering — the country’s second-top performing sector in terms of deals — had 163 deals in 2022, marking an increase of 2% compared to the previous year.

As Scotland’s third-best performing sector, firms in the area of business services had 144 deals in 2022, a fall of 13% when compared to the sector’s 166 deals in 2021.

The hardest hit sector in terms of deals was fintech, which was down 68%. The aerospace and satellite sector also had fewer deals, and was down 50% in 2022.

That said, the oil and gas sector received a 70% boost in deals, with 17 in 2022 over 10 in 2021. Further, the non-renewable energy sector saw a 30% positive change, with 24 deals in 2022 compared to 18 in 2021.

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Where did the deals come from?
Breaking down where the majority of Scottish deals came from in 2022, the government drove the highest number of deals at 119 (a -4% change compared to 2021), totalling a value of £275m (-10%).

In second place are angel networks, who drove 88 deals (+19%) and totalling £122m (+9%).

Third is private equity and venture capital firms, who drove 87 deals (-5%) with an overall value of £428m (+17%).

In light of the research’s findings and the fall in deal numbers, Kerry Sharp, Director of Entrepreneurship and Investment at Scottish Enterprise, said that investors are “focusing on the needs of existing portfolios and they are becoming increasingly selective and are showing signs of changing risk appetites.”

However, despite this, Sharp said that “This latest research shows that Scotland continues to punch above its weight in securing significant investment for its most innovative and ambitious companies.”

To read Scottish Enterprise’s research in full, click here.