Edinburgh and Glasgow may be the fiercest and friendliest of rivals, but they currently share a leading role in the UK’s technology revolution.
Both are named today in two league tables as among the most innovative and tech-driven cities in the country.
Edinburgh saw 29 equity investment deals last year, with 15 in Glasgow. The cities lead the way as hotspots for investment in thebusiness and professional services sector and the software sector respectively, according to the British Business Bank’s third annual Small Business Equity Tracker.
The UK Tech Innovation Index, published by the Open Data Institute and the Digital Catapult, shows Edinburgh has the most active tech innovation community outside of London, closely followed by Glasgow in fourth.
Of the 36 UK cities included in the Index, the top four are London, Edinburgh, Manchester and Glasgow. Aberdeen features in 20th place, with Dundee 22nd.
The index showed Edinburgh to be second behind London in the Internet of Things, Data Innovation, Artificial Intelligence Innovation, Health Innovation, Creative Innovation and Virtual Reality Innovation.
The two tables will provide further evidence of a growing technology bubble in Scotland, particularly around the capital. Codebase in Edinburgh is regarded as Europe’s biggest tech incubator, while the Strathclyde Technology and Innovation Centre is home to the only Fraunhofer Research Institute in the UK, run by Simon Andrews (pictured above).
David Smith, sector director of digital and engineering at Scottish Enterprise, said: “I’m pleased but not surprised to see both Edinburgh and Glasgow in the top four UK locations for innovative technologies.
“Scotland already has around 150 data innovation and exploitation companies with a combined turnover of £1 billion.
“Substantial new investment is planned, particularly in data and artificial intelligence capabilities, which will accelerate growth in innovative technologies. Scotland is well placed to secure its position as the data innovation capital of Europe within the next few years.”
The latest rankings emerged as equity investment into smaller firms picked up after the number of deals across the UK last year fell by 18% and by 4% in value, according to the British Business Bank research.
This was in line with a wider global slowdown in equity finance following five years of growth.
The latest research from Beauhurst shows record equity investment in UK businesses in the first half of 2017, up by 74.7% on the previous 6 months.
The bank’s tracker outlines emerging clusters of strong deal activity around the country. Technology sectors bucked the market trend as the amount invested rose to £1.7 billion – the highest level on record meaning technology represented almost half (49%) by value of the total equity market.
London continued to experience greater levels of equity investment compared to other UK regions, with £1.9bn in funding in 2016. However, the capital experienced a decrease in its share of UK deals (47%, down from 50% in 2015); a 22% decline in the total number of deals; and a drop in total investment value of 1%.
Elsewhere, trends in equity deals varied geographically, with successful equity clusters in many UK cities, including Bristol, Manchester and Birmingham, and the already-established equity eco-systems of Oxford and Cambridge. These clusters often have a combination of innovative companies, skilled staff and equity investors, creating dynamic hubs of growth and propelling equity investment.
Keith Morgan, CEO at the British Business Bank, said: “This research provides the most accurate and complete view of the state of the SME equity finance market in the UK for growing businesses.
“While the market here followed the global downward trend in equity investment, there are positive signs of innovative growing businesses receiving significant investment in clusters across the UK.”