The value of equity investment secured by Scottish businesses reached a record £953m in 2022 - up 26% from £754m in 2021.
Based on Beauhurst data, the research from Scottish Enterprise looks at the performance of the Scottish equity investment market and benchmarks this with the rest of the UK.
Scotland's investment market was only surpassed by the ‘Golden Triangle’ of London, the south east and east of England, for both deal numbers and amount raised.
Despite a modest fall in the number of deals completed - 407 in 2022 compared with 424 in 2021 - the value of investment secured was bolstered by a number of large deals valued at more than £50m.
Three in particular contributed to Scotland’s record deal value last year: the £164m into Borderlink, trading as GoFibre, during the first quarter; £50m into Well-Safe Solutions in the second quarter; and £101.3m into TauRx Pharmaceuticals in the fourth quarter.
The sectors accounting for the largest share of deals in 2022 were digital and IT (45%), technology and engineering (38%) and business services (34%).
Spin-outs from Scottish universities continued to attract significant investment, with £235m secured by 58 fledgling companies, making it a record year for spinout value, up 53% on 2021.
Kerry Sharp, director of entrepreneurship and investment at Scottish Enterprise, said: “This latest research shows that Scotland continues to punch above its weight in securing significant investment for its most innovative and ambitious companies.
“Despite these positive headline figures, given the economic headwinds, the risk capital market is facing some challenges.
“We saw investor sentiment impact on market activity in the second half of 2022 and this is likely to continue well into 2023 - many equity investors are focusing on the needs of existing portfolios and they are becoming increasingly selective and are showing signs of changing risk appetites.
“That, coupled with deals taking on average five months longer, is inevitably making it harder for start-ups and early-stage companies to secure the funding that they need.“
This year marks the 20th anniversary of Scottish Enterprise’s co-investment model, which was introduced to act as a catalyst for investment into early-stage high growth potential companies.
Since then, its equity funds have leveraged more than £2bn of private investment into Scottish companies.
“Despite the market pressures, there is still significant capital available to invest in great opportunities and Scottish Enterprise is committed to working with private sector investors to create a pipeline of young innovative early-stage companies creating solutions for the future, jobs, wealth and wellbeing for the people of Scotland,” added Sharp.
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