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6 investors and founders forecast hockey-stick growth for Edinburgh’s startup scene
Scotland is slowly but surely drawing attention in the UK’s startup space. In 2020, Scottish startups collectively raised £345 million, according to Tech Nation, and with nearly 2,500 startups, it has the highest number of budding tech companies outside London. Venture capital fundraises are also consistently on the rise every year.
Scotland’s capital Edinburgh boasts a beautiful, hilly landscape, a robust education system and good access to grant funding, public and private investment. It’s also one of the top financial centers in the U.K., making it a great place to begin a business.
So to find out what the startup scene in Edinburgh looks like, we spoke to six founders, executives and investors. The city’s tech ecosystem appears to have a robust space for machine learning, artificial intelligence, biomedicine, fintech, travel tech, oil, renewables, e-commerce, gaming, health tech, deep tech, space tech and insurtech.
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However, the city’s tech scene is apparently lackluster when it comes to legal tech, blockchain and consumer-facing technology.
Breakout companies that were founded in Edinburgh include Skyscanner and FanDuel. Notable among the current crop are Desana, Continuum Industries, Parsley Box, Current Health, Boundary, Zumo, Appointedd, Criton, Mallzee, TravelNest, TVSquared, Care Sourcer, Stampede, For-Sight, Vistalworks, Reath, InfraCost, Speech Graphics and Cyan Forensics.
The Edinburgh business-angel community appears to be quite strong, but it seems local founders find it difficult to get London-based investors to take an interest. Scottish investors are said to be “pretty conservative and risk-adverse” with some notable exceptions.
We surveyed:
- Wendy Lamin, managing director, Holoxica
- Andrew Noble, partner, Par Equity
- Danae Shell, co-founder and CEO, Valla
- Allan Nelson, co-founder and CEO, For-Sight
- Lysimachos Zografos, founder, Parkure
- Bertie Wilson, co-founder in stealth mode
Wendy Lamin, managing director, Holoxica
Which sectors is your tech ecosystem strong in? What are you most excited by? What does it lack?
It’s strong in space, biomedicine, fintech/insurtech, AI.
What are the tech investors like in Edinburgh? What’s their focus?
The Scottish business-angel community is said to be the largest in Europe. It’s difficult to get London-based investors take an interest in Scotland — investors can tend to look at where companies are based. It is hard for “underrepresented founders” to get investments in Scotland and beyond.
With the shift to remote working, do you think people will stay in Edinburgh or will they move out? Will others move in?
Stay. Not always easy to get people to come and live in Scotland. Edinburgh, there are lots of prejudices, despite it being one of the best cities to live in in the whole of the U.K.
Who are the key startup people in the city (e.g., investors, founders, lawyers, designers)?
Good to see more focus on impact investing. Par Equity is one of Edinburgh’s biggest investors, whereas Archangels is one of the biggest angel investors. Poonam Malik is great for diversity and female entrepreneurs, and she is on the board of Scottish Enterprise, and is a social entrepreneur and investor. Garry Bernstein is also an investor — he leads the Scottish chapter of Tech London Advocates and Global Tech Advocates, and as such is the founder of Tech Scot Advocates.
Where do you think the city’s tech scene will be in five years?
Thriving. The government is doing its best for the tech sector. Education in tech is currently an issue, though. Hope Brexit won’t be too much of an issue.
Andrew Noble, partner, Par Equity
Which sectors is your tech ecosystem strong in? What are you most excited by? What does it lack?
Strong in fintech, health tech, data science, deep tech. Excited by quantum computing, advanced materials, AI in Edinburgh. Weak in blockchain and consumer.
Which are the most interesting startups in Edinburgh?
Current Health, InfraCost, Speech Graphics and Cyan Forensics.
What are the tech investors like in Edinburgh? What’s their focus?
Good at seed stage up to £1 million, okay for pre-series A (£1 million to £3 million) and non-existent for Series A (£3 million-£10 million). Quality of investors is improving. Par Equity is leading the way.
With the shift to remote working, do you think people will stay in Edinburgh, or will they move out? Will others move in?
Experiencing influx of new talent due to COVID-19. Edinburgh is a highly desirable city to live in. Recent new residents include Aaron Ross (Predictable Revenue) and Jules Pursuad (early employee at Airbnb and now VP at Omio).
Who are the key startup people in the city (e.g., investors, founders, lawyers, designers)?
Par Equity (investor), Paul Atkinson, Alistair Forbes, Mark Logan, Lesley Eccles, Chris McCann, CodeBase.
Where do you think the city’s tech scene will be in five years?
One to two new unicorns. Promising number of high-growth tech companies. A much more sophisticated investor scene in the Series A space.
Danae Shell, co-founder and CEO, Valla
Which sectors is your tech ecosystem strong in? What are you most excited by? What does it lack?
Edinburgh is strong in fintech because of our proximity to so many financial services companies and banks. Also, there are some exciting games tech companies because of our history of games companies. We’re pretty weak in law tech, Valla’s area.
Which are the most interesting startups in Edinburgh?
Vistalworks for consumer tech; Sustainably for fintech; Reath for sustainable tech.
What are the tech investors like in Edinburgh? What’s their focus?
As a rule, Scottish investors are pretty conservative and risk-averse. The only real exception is Techstart Ventures, in my experience.
With the shift to remote working, do you think people will stay in Edinburgh, or will they move out? Will others move in?
I think more people will come to Edinburgh from London because the quality of life and cost of living are both so much better here.
Who are the key startup people in the city (e.g., investors, founders, lawyers, designers)?
Calum Forsyth and Mark Hogarth at Techstart Ventures; Janine Matheson at CodeBase; Jackie Waring from the Investing Women angel syndicate; Jim Newbury is a very well-respected developer and coach, and my co-founder Kate Ho is also well known. Also Danny Helson who runs the EIE event with the Bayes Centre.
Where do you think the city’s tech scene will be in five years?
We’ve had a few exits in the past few years (Skyscanner, FreeAgent), which means that talent is spreading out across the ecosystem here and we’re getting some fantastic new startups kicking off. In five years, that first crop should be coming into the Series A stage so we could see a lot of super exciting businesses!
Allan Nelson, co-founder and CEO, For-Sight
Which sectors is your tech ecosystem strong in? What are you most excited by? What does it lack?
Strong in fintech, travel tech, health, oil, renewables, e-commerce, gaming (both video game and gambling tech). Excited by all bar oil (great driver of revenue, but not the future).
Which are the most interesting startups in Edinburgh?
Boundary, Parsley Box, Appointedd, Criton, Mallzee, TravelNest, TVSquared, Care Sourcer, Stampede, For-Sight.
What are the tech investors like in Edinburgh? What’s their focus?
Big fintech scene here. Travel tech is growing too, with Skyscanner’s influence strong.
With the shift to remote working, do you think people will stay in Edinburgh, or will they move out? Will others move in?
Most will stay, as it’s a very attractive city to live and work in. It’s a globally recognized and unique city. Very international flavor as evidenced by the makeup of our team.
Who are the key startup people in the city (e.g., investors, founders, lawyers, designers)?
Ex-Skyscanner people including Gareth Williams, Mark Logan, etc. Ian Ritchie, Alistair Forbes, the FanDuel’s founders and the CodeBase founders.
Where do you think the city’s tech scene will be in five years?
A lot bigger, as tech is a key growth target of the Scottish government and is underpinned/influenced/inspired by Skyscanner and FanDuel.
Lysimachos Zografos, founder, Parkure
Which sectors is your tech ecosystem strong in? What are you most excited by? What does it lack?
Strong in machine learning/AI/digital. Weak in deep tech discovery, especially in biotech/therapeutics. Excited by the rise in adoption of AI in drug discovery — all these ideas that were sci-fi 20 years ago are now adopted in £B deals.
Which are the most interesting startups in Edinburgh?
Pheno Therapeutics.
What are the tech investors like in Edinburgh? What’s their focus?
Conservative angels and a few tech seed VCs.
With the shift to remote working, do you think people will stay in Edinburgh, or will they move out? Will others move in?
Move in.
Who are the key startup people in the city (e.g., investors, founders, lawyers, designers)?
Investors: Archangels, Techstart Ventures and Epidarex.
Where do you think the city’s tech scene will be in five years?
Growing.
Bertie Wilson, co-founder, “Stealth mode”
Which sectors is your tech ecosystem strong in? What are you most excited by? What does it lack?
I don’t think there are any sectors that stand out — it’s fairly evenly split. A good strength of the city is the talent that comes from the universities. There are some really good engineers that come from Edinburgh, Heriot Watt and Edinburgh Napier. The main weakness is that the ecosystem doesn’t favor the most ambitious founders. Most investors in the region are angels and aren’t interested in finding outliers that could grow 1000x and are more interested in backing companies that are less risky but might 5x their money. If you want to find investors that will back risky (but very ambitious) plans, it’s easier to find that elsewhere.
Which are the most interesting startups in Edinburgh?
Desana, Continuum Industries, Parsley Box, Current Health, Boundary, Zumo.
What are the tech investors like in Edinburgh? What’s their focus?
I would say it’s getting better, but there are still a lot of issues with the ecosystem. It is being helped in Scotland by the likes of Techstart investing at the earliest stages with high conviction and term sheets that are more similar to London VCs. Outside of this, though, it’s easy for founders to end up with a messy cap table due to the number of angels and lack of VCs looking for VC-type returns — the messiness of these cap tables can then make it hard to raise venture funding down the line. This is fine for a lot of companies that aren’t aiming for a venture-scale return (which admittedly is a lot), but it can hurt those that are.
With the shift to remote working, do you think people will stay in Edinburgh, or will they move out? Will others move in?
I imagine and hope others will move in. It is a great place to live with a very high quality of life, and this should be a natural attraction for people who want a good standard of living but want to remain in a city.
Who are the key startup people in the city (e.g., investors, founders, lawyers, designers)?
SEP (investor), Techstart Ventures (investor), Gareth Williams (founder/investor), MBM Commercial (lawyers), Pentech, Bill Dobbie (investor), Jamie Coleman.
Where do you think the city’s tech scene will be in five years?
Optimistically, I hope that there will be a good number of companies that are at the Series B/Series C stage, which will invite a lot more interest from investors outside of Edinburgh (London, Berlin, Paris, New York, San Francisco, etc.) to start investing more actively in the city at the earliest stages as well as these stages.
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Microsoft’s Project Natick underwater data center experiment confirms viability of seafloor data storage
Microsoft has concluded a years-long experiment involving use of a shipping container-sized underwater data center, placed on the sea floor off the cost of Scotland’s Orkney Islands. The company pulled its “Project Natick” underwater data warehouse up out of the water earlier this year (at the beginning of the summer) and spent the last few months studying the data center, and the air it contained, to determine the model’s viability.
The results not only showed that using these offshore submerged data centers seems to work well in terms of performance, but also revealed that the servers contained within the data center proved to be up to eight times more reliable than their dry-land counterparts. Researchers will be looking into exactly what was responsible for this greater reliability rate in the hopes of also translating those advantages to land-based server farms for increased performance and efficiency across the board.
Other advantages included being able to operate with greater power efficiency, especially in regions where the grid on land is not considered reliable enough for sustained operation. That’s due in part to the decreased need for artificial cooling for the servers located within the data farm because of the conditions at the sea floor. The Orkney Island area is covered by a 100% renewable grid supplied by both wind and solar, and while variances in the availability of both power sources would’ve proven a challenge for the infrastructure power requirements of a traditional, overland data center in the same region, the grid was more than sufficient for the same size operation underwater.
Microsoft’s Natick experiment was meant to show that portable, flexible data center deployments in coastal areas around the world could prove a modular way to scale up data center needs while keeping energy and operation costs low, all while providing smaller data centers closer to where customers need them, instead of routing everything to centralized hubs. So far, the project seems to have done spectacularly well at showing that. Next, the company will look into seeing how it can scale up the size and performance of these data centers by linking more than one together to combine their capabilities.
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Rocket startup Skyrora achieves a successful sub-orbital launch from Scottish island
This past weekend was a busy one for rocket launches, including for new launch companies hoping to join the ranks of SpaceX and Rocket Lab as private, operational space launch providers. Edinburgh-based Skyrora achieved a significant milestone for its program, successfully launching its Skylark Nano rocket from an island off the coast of Scotland on Saturday.
Skyrora has been developing its launch system with a goal of devouring affordable transportation for small payloads. The company has flown its Skylark Nano twice previously, including a first launch back in 2018, but this is the first time it has taken off from Shetland, a Scottish site that is among three proposed commercial spaceports to be located in Scotland.
Skylark Nano is a development spacecraft that Skyrora created while it works on its Skylark-L and Skyrora XL orbital commercial launch vehicles. Nano doesn’t reach space — it flies to a height of around 6KM (roughly 20,000 feet) but it does help the company demonstrate its propulsion technologies, and also gather crucial information that helps it in developing its Skylark L suborbital commercial launch craft, as well as Skyrora XL, which will aim to serve customers with orbital payload needs.
Skylark L is currently in development, and Skyrora recently achieved a successful full static test fire of that rocket. The goal is to begin launching commercially from a U.K.-based spaceport as early as 2022.
Skyrora’s approach is also unique because it employs both additive manufacturing (3D printing) in construction of its vehicles and uses a kerosene fuel developed from discarded plastic waste that the company claims produces fewer emissions than traditional rocket fuel.
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Rocket startup Skyrora shifts production to hand sanitizer and face masks for coronavirus response
One of the newer companies attempting to join the rarified group of private space launch startups actually flying payloads to orbit has redirected its entire UK-based manufacturing capacity towards COVID-19 response. Skyrora, which is based in Edinburgh, Scotland, is answering the call of the UK government and the NHS to manufacturers to do what they can to provide much-needed healthcare equipment for frontline responders amid the coronavirus crisis.
Skyrorary says that the entirety of its UK operations, including all human resources and its working capital are now dedicated to COVID-19 response. The startup, which was founded in 2017, had been working towards test flights of its first spacecraft, making progress including an early successful engine test using its experimental, more eco-friendly rocket fuel that was completed in February.
For now, though, Skyrora will be focusing full on building hand sanitizer, its first effort to support the COVID-19 response. The company has already produce their initial batch using WHO guidelines and requirements, and now aims to scale up its production efforts to the point where it can manufacture the sanitizer at a rate of over 10,000 250 ml bottles per week.
There’s actually a pretty close link between rocketry and hand sanitizer: Ethanol, the form of alcohol that provides the fundamental disinfecting ingredient for hand sanitizer, has been used in early rocket fuel. Skyrora’s ‘Ecosene’ fuel is a type of kerosene, however, which is a much more common modern aviation and rocket fuel.
In addition to sanitizer, Skyrora is now in talks with the Scottish Government to see where 3D-printed protective face masks might have a beneficial impact on ensuring health worker safety. It’s testing initial prototypes now, and will look to mass produce the protective equipment after those tests verify its output.
Plenty of companies are pitching in where they can, including by shifting their production lines and manufacturing capacity towards areas of greatest need. It’s definitely an ‘all-hands-on-deck’ moment, but there’s definitely a question of what happens to businesses that shift their focus this dramatically once the emergency passes, especially for young startups in emerging industries.
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Nissan’s zero-emission ice cream van uses old EV batteries to keep things cool
File ice cream vans under “things I never thought posed a significant risk to the environment but might actually.” Nissan has developed a new concept vehicle that addresses the problem of all the emissions generated by conventional ice cream vans, and older models in particular, which pump out a lot of greenhouse gases while idling in order to just make sure the ice cream on board stays iced.
For the project, Nissan’s working with ice cream company Mackie’s of Scotland, a purveyor of fine frozen treats that has already taken steps to reduce its footprint using dairy from its own, family-run farm that’s powered by energy from renewable sources, including wind and solar. From the sustainably-made product, to the new zero-emission delivery van conceived and built by Nissan, the companies are calling the approach a “sky to scoop” way to reduce their carbon footprint.
To start, Nissan took their e-NV200 light-duty commercial van, which itself is fully electric and provides up to 124 miles of range on a charge. For this ice cream concept, the van was modified with Nissan’s new “Energy Roam,” a lithium-ion power pack that uses battery cells recovered from older Nissan EVs built from 2010 on. These repurposed power packs can each store about 0.7kWh with output of 1kW, and two are used on board to run a built-in soft-serve machine, fridges and freezers. The power packs can be recharged either from a 230v main power outlet (this is designed for U.K. use), or from solar tiles installed on the van’s roof, which can fill up the batteries in two to four hours on their own.
Besides its all-electric power sources, the Nissan concept van includes a number of revisions of the traditional model of mobile ice cream selling, including situating the vendor outside the van with a hatch that opens to expose the ice cream dispensing goodness. It’s also equipped with contactless payment support so you can just pay with Apple Pay or Google Pay on the go, and through an integration with What3Words, the van broadcasts its location via Twitter instead of with a jaunty jingle.
Bonus for ice cream sellers: Nissan notes that van owners could collect and store power using the on-board batteries and sell it back to the grid even when it’s not ideal weather for selling cold confections — though it’s definitely still a concept, so this is all theoretical.
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WTF is Baillie Gifford?
The SoftBank Vision Fund has been screaming from the venture headlines the last few months, driven by eye-popping rounds (and valuations!) into some of the most notable startups around the world. Yet, SoftBank isn’t the only player rapidly buying up the cap tables of top startups. Indeed, another firm, more than a century old, has been fighting for that late-stage equity crown.
… Who the what?
When our fintech contributor Gregg Schoenberg interviewed Charles Plowden, the firm’s joint senior partner, about the firm’s prodigious investing, we realized that we have never gone in-depth on one of the most influential investors in Silicon Valley. So here goes.
Baillie Gifford is a 110-year-old asset management firm based out of Edinburgh, Scotland, and has long had a penchant for pre-IPO tech companies. The firm was an early investor into some of the world’s most valuable private and public tech companies, boasting a roster of portfolio companies that includes unicorns from nearly all generations in modern tech, including everything from Amazon, Google and Salesforce to Tesla, Airbnb, Spotify, newly public Lyft, Palantir and even SpaceX.
Baillie Gifford’s reach stretches way beyond the 280/101 corridor. The firm has an extensive history of investing across geographies, with one of its first and most successful investments coming from an early entry into Chinese e-commerce titan Alibaba. More recently, Baillie Gifford even held a stake in recently IPO’d Chinese electric autonomous vehicle manufacturer NIO, and one the firm’s largest current holdings is South African internet conglomerate Naspers — which itself is an active investor and developer of emerging market tech infrastructure.
The firm’s low profile belies its aggressive capital deployment strategy. According to data from PitchBook, Baillie Gifford was involved in roughly 20 deals in 2018 and was involved as a lead or participant in transactions worth over $21 billion in aggregate total deal size — beating out behemoth Tiger Global, which tallied roughly $13.25 billion on the same metric.
The firm has about $2 billion focused on private companies, so while it is aggressive in getting into later-stage rounds, it is not nearly operating at the scale of say the Vision Fund or Tiger Global. While the asset manager primarily focuses on public-equity investing, the firm has participated in investment rounds as early as Series A, according to PitchBook and Crunchbase data.
Overall, the firm manages $221 billion in assets under management as of January 2019.
As one of the earliest asset managers to invest in pre-IPO tech companies, Baillie Gifford has sourced investments through its longstanding reputation as an investor. The firm first began really diving into private tech investing in the wake of the dot-com bubble. The firm doubled down on the tech sector at a time when few others were investing and sifted through the blood bath to find cheap entryways into companies that are now amongst the world’s largest.
Today, however, the landscape is undoubtedly much different. Tech companies now make up four of the top five largest companies in the world by market cap, and seven out of the top 10. Now, everyone wants a piece of the pie and there seem to be more checks being thrown at founders than most can even fit in their wallets.
With more capital at their fingertips than ever before, founders are opting to keep their startups private for longer in order to avoid the stress of having to deal with short-term public market investors who are more often than not looking for the first opportunity to cash out. So why, amongst so much choice, do companies continue to partner with Baillie Gifford?
Plowden has some insights on that front in our interview, but the summary is that Baillie Gifford just sees itself as a partner. Unlike its peers and most investment managers, Baillie Gifford has no outside shareholder owners to report to. As a partnership, wholly owned and run by just 44 partners, the firm doesn’t face the organizational constraints that beset most firms that manage billions and billions in assets.
The result? In short, Baillie Gifford has quietly been making a killing, and probably drinking some good Scotch along the way, as well.
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Demonsaw Uses “Social Cryptography” To Share Files And Data Anonymously
While Demonsaw sounds like it would be an amazing metal band, it’s actually a sharing system built by a senior programmer at Rockstar Games. The creator, Eijah, was part of the core team for Grand Theft Auto V and Max Payne 3 and is also a dedicated privacy activist. Demonsaw is his solution to the age-old problem of sharing information anonymously.
“Privacy is very important to me. Read More
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