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Tech startups defy pandemic with strong growth

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A significant majority of Scotland’s tech startups grew during the pandemic, defying some predictions that many would be forced to cutback or even shut down.

The Scottish Startup Survey 2021, run by the Engage Invest Exploit (EIE) team at the University of Edinburgh’s Bayes Centre, has revealed that 68% per cent of startups said they grew during the pandemic, with only 11% cent saying they contracted. 

Almost three-quarters (72%) said they expect to come out of the pandemic in a stronger position, with only 7% anticipating a decline in business. A fifth (21%) were unsure while 59% said they had to pivot in the wake of the pandemic. 

The findings of a survey by Turing Fest last April in the early weeks of the first lockdown revealed huge concern about the survival prospects of tech firms.

The latest survey by EIE quizzed companies on topics ranging from growth prospects, the investment backdrop, government support, hiring, plans to return to the office, and wellbeing and mental health.

Despite the relative health of startups, most of those surveyed were unhappy at the level of government support.

An EIE21 spokesperson said: “While only a third of startups polled secured investment rounds during 2020, government support was crucial for many, and overall it’s pleasing to see the overall confidence from founders around coming out of the pandemic in a stronger position. 

“What also came through in the survey, was how the vast majority of startups are targeting investors outside Scotland – an area that remains crucial to the success of Scotland’s technology ecosystem.” 

Callum Murray, CEO and founder of Amiqus, an EIE alumnus company that participated in the survey, said: “After taking the decision early on not to furlough any of our team, we were one of the companies in the survey that showed significant growth in the last year.

“We’ll be looking to build on our growth not just in terms of revenue, but in how we can continue to look after our people and contribute to making flexibility and wellbeing at work the norm.”

In terms of the investment backdrop:

  • just over 1 in 3 startups completed an investment round during the pandemic.
  • 26% said they were targeting angel investors, 31% were targeting venture capital firms, and 43% were targeting both. 
  • 92% of respondents were targeting investors outside Scotland.
  • Zoom meeting culture has made investor contact easier according to 57% of startups, with 14% saying Zoom calls have made contact with investors more difficult, with 29% noting no change.

In relation to government support: 

  • 60% of startups said they had received government support over the last fifteen months, with 40% saying they had not accessed government support.
  • When asked, “Is the government doing enough to support startups?”, only 35% said yes, with 65% saying no.

On how the pandemic has impacted hiring plans: 

  • 65% of startups surveyed said they had continued to hire during the pandemic, with 35 per cent saying they had stopped hiring.
  • 38% said the the biggest impact Brexit is having on their business is around hiring and retaining people. 

On returning to the office and remote working: 

  • 63% of startups are planning to return to the office this year
  • 93% of startups polled said they would continue to operate a remote working model.

Wellbeing and mental health:

  • 75% of respondents said the wellbeing and mental health of their team has been one of the biggest challenges thrown up by the pandemic.
  • 63% of startups have put measures in place to deal with the wellbeing, physical and mental health of their teams in the face of the pandemic. 

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