Tech report

Edinburgh top for innovation outside golden triangle

National Robotarium Edinburgh
The National Robotarium at Heriot-Watt University (pic: Terry Murden)

Edinburgh, Fife and the Lothians have been named the UK’s most innovation-led cluster outside the “Golden Triangle” of London, Oxford and Cambridge.

A report from the British Business Bank found that between 2011 and the second quarter of 2023, there were 475 equity deals worth £710 million involving technology and IP-related businesses in Edinburgh, Fife, Midlothian and West Lothian.

Greater Manchester was second with 342 deals valued at £1.1 billion, closely followed by the Greater Glasgow area with 257 worth £427m. Glasgow ranked second only to Oxford for its share of deals involving academic spinouts.

Nearly half (47%) of equity transactions over the past 12 years have included a spinout from universities in the city and beyond, attracting £214m of investment.

Glasgow was followed by Aberdeen, where 46% of technology and IP-related equity transactions over the same period involved a spinout, placing it third in the UK. Of the 24 spinout equity deals in the city, 21 were from the University of Aberdeen, including three transactions worth more than £10m related to therapeutics company TauRx.

Although Aberdeen is best known for its oil and gas industry, life sciences was the dominant sector accounting for 81% of technology and IP-related spinouts involved in equity deals in the city. The life sciences industry was the largest sub-sector across all four of the nation’s innovation clusters – Edinburgh, Glasgow, Aberdeen, and Dundee – both in terms of deal numbers and investment value.

The Nations and Regions Tracker also found that during 2022 the combined Nations and regions outside of London recorded their first year-on-year decline in the number of equity deals since Beauhurst’s data collection began in 2011 ( down 10%).

Total investment value in these areas also fell (-11%). Scotland saw the steepest decline in the number of deals, falling -22% to 190, but saw a 37% increase in total investment value to £760m.

In Q4 2022, 34% of small businesses in the UK were using some form of external finance – a decline of 7 percentage points from Q4 2021 and 10 percentage points from the same period in 2020. Throughout 2022, 36% of UK smaller businesses sought external financial support, but this recovered to 43% during the first half of 2023.

Susan Nightingale, UK network director for the devolved nations at the British Business Bank, said: “We are seeing promising signs that the use of external finance among smaller businesses is recovering after a decline in 2022.

“Unsurprisingly, our world-class universities continue to play a crucial role in this, supporting emerging innovation-led clusters across the UK.”

The British Business Bank has just launched its £150 million Investment Fund for Scotland aimed at new and growing businesses.

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