Scotland is the UK’s third most active region for equity investment, with a record number of deals closed last year, according to Scottish Enterprise.
A report released by the economic development body identifies 446 stock deals in Scotland in 2020, up from 428 in 2019.
The study places Scotland third behind London with 2,986 transactions and the south-east of England second with 725.
It was the fourth year in a row that Scotland attracted more than £ 400million in equity investments, although the total amount invested fell from £ 485million in 2019 to £ 430million.
The digital and IT sector accounted for 30% of transactions, followed by business services (21%) and technology and engineering (19%).
The remaining transactions were spread across multiple sectors, with life sciences and food and beverage well represented.
Jan Robertson, Acting Director of Growth Investments at Scottish Enterprise, said: “The Scottish equity investment market has held up well over the past year, demonstrating the strength of the Scottish entrepreneurial ecosystem and the quality of the investment opportunities. . “
Early in the market trades below £ 500,000 saw a slight increase year over year, in terms of both number and amount invested. In comparison, these numbers have fallen by 12% and 14% respectively across the UK.
Scottish Enterprise said this could be attributed in part to the 90 investments made through the Early Stage Growth Challenge Fund, which is managed by the Scottish Investment Bank to support emerging businesses through the pandemic.
The country has also benefited from the activities of its business angel networks and its track record in attracting corporate investment and venture capital.
However, in another indicator of the performance of the early stage investment market, Scotland and the rest of the UK have seen a decrease in the number of companies getting equity investments for the first time.
In the UK, 29% of all deals closed in 2020 were first-time equity investments, up from 33% in 2019. In Scotland, it fell from 29% in 2019 to 24% in 2020.
Robertson added: ‘Early Scottish companies will play an important role in the country’s recovery from Covid-19.
“Many of them operate in sectors with significant economic opportunities such as low carbon, digital and health and care, and their development must be carefully nurtured.
“Through continued co-investment with private sector investors and by providing access to expert advice, we will help start-ups obtain the patient capital and expertise necessary to fuel their growth.”
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