Insight

Investment in Innovation Demonstrates Scotland Is a Beacon of Opportunity in the Fight Against COVID-19

The chief executive of Scottish Institute for Enterprise (SIE) recently said: ‚ 'In Scotland, we have cultivated one of the most dynamic entrepreneurial ecosystems in the world and have succeeded in disrupting industries with outstanding ideas.‚Äù (Source: The Scotsman) This sentiment may have paled earlier this year as industries stalled and businesses faced closure, but it has been re-emboldened in recent weeks as glimpses of routes out of COVID-19 lockdown have turned into real, tangible pathways to recovery, and, in Scotland, innovators and entrepreneurs are being turned to for creative ideas to get things back on track. In this article we look at the innovation landscape in Scotland, tracing its journey from pre lockdown until now, as we look to a post COVID future.

August 13, 2020

Scottish RD&I landscape looked promising pre-lockdown

In the period 2008 to 2018, Scotland’s business expenditure on research and development (BERD) amounted to £9.6 billion (Source: Scottish Government). Nearly 40% of that estimated R&D expenditure occurred between 2016 and 2018, coinciding with the first time Scotland breached £1bn spent on R&D in a single year; the amount has continued to rise, reflecting a collective focus on R&D as an economic driver.

Alongside expenditure on R&D, innovative Scottish tech companies have been attracting significant venture capital (VC) investment in recent years, according to the annual Tech Nation 2020 report: In 2019, £200 million was invested in ‚ ‘digital tech‚Äù in Scotland, equalling the equivalent totals for Northern Ireland and Wales combined. Scotland also ranked fourth highest out of 12 UK regions for investment in emerging technologies – artificial intelligence, robotics, cybersecurity, blockchain, etc – with £93m raised 2015-2019; this is nearly twice the in-flows of Wales and Northern Ireland combined (£36m and £18m, respectively).

The Scottish landscape for RD&I was evolving well (post financial crash) and looked set to continue flourishing into the 2020s.

Lockdown halts progress

However, everything came to a halt in March. In Scotland, firms seeing an increase in their volume of business during Q1 2020 fell to its lowest level since Q1 2009 as a result of lockdown (Source: University of Strathclyde). What was worse, non-essential companies without a digital presence stagnated, waiting to re-open, while ‚ ‘retail multinationals like Amazon sweep up their customers‚Äù (Source: The Scotsman) – companies without the capability, or intent, to invest in digitisation were going to struggle.

Strong support network for Scottish businesses

The nation rallied and support networks emerged to combat the immediate impacts of lockdown. Scottish Government agencies have set up dedicated resource and information centres to help businesses find necessary advice. Some examples include:

Scottish Government: COVID-19 support for businesses

Skills Development Scotland COVID-19 Business Support

Scottish Enterprise COVID-19 Business Continuity Advice

Scottish Government FindBusinessSupport.gov.scot

Voluntary groups have been setup, like Scottish Tech Army, which has mobilised tech talent and aims to provide digital support to groups struggling during lockdown. Over 850 volunteers have helped over 70 organisations, working alongside Civtech and the Scottish Government Digital Directorate to establish ,rapid response units,.

RD&I investment bolsters a positive outlook after lockdown

In addition to the £2.3bn support package made available by the Scottish Government to support Scottish businesses, a comprehensive package of support for innovative early stage businesses whose routes to investment and growth have been impacted by COVID-19 was recently announced by the Economy Secretary. The £38m package, managed by Scottish Enterprise, includes three levels of support to meet the needs of promising businesses at different stages of early growth; this includes a £25m Early Stage Growth Challenge Fund (Applications closed 31^st July).

Government support aside, business accelerator programmes are re-launching, fostering innovative and entrepreneurial young businesses across the nation. Tech Nation has been at the forefront of digital innovation programmes, with its Fintech 3.0, Applied AI 2.0, and the new Net Zero 1.0 programmes opening earlier this summer (Applications closed 20^th July).

Innovative mindset is key to recovery

We have already seen evidence of companies raising large sums of RD&I investment in recent weeks and months: Trustpilot setup an R&D hub in Edinburgh, creating 30 new jobs (£1.8m grant); AI start-up, Aveni, raised £520k via grant funding and an angel investor syndicate of 40 private investors; Cumulus Oncology secured £1.7m from a combination of Scottish Investment Bank and venture capital firms; and many more investments in innovation continue to be made across Scotland, supported by a range of investment sources.

Ensuring industries stabilise and get back to business as usual is, of course, a priority. But innovators and entrepreneurs will help stimulate the rebound, attract venture capital investment, and catalyse growth when business is bleak. As the chief exec of SIE said, we are indeed one of the world’s ‚ ‘most dynamic entrepreneurial ecosystems‚Äù; her statement will, it seems, be tested in the months and years to come.