Scotland's startup problem: why haven't things changed?

Scotland still has a startup problem “But Chris, you’re saying the same things people have been saying for the last 20 years…” I love doing startup events in Scotland because I know I’ll meet engaged, disruptive, incredibly hard-working, and talented builders But almost always, they don’t know what they don’t know about building a tech company. The decisions they make at the outset, especially around funding, can ruin their chance of success. And the way Scotland is structurally set up almost always guarantees they’re pushed down that path. There should be tens to hundreds of startups in Scotland that emerged over the last 10 years, creating hundreds or even thousands of high-paying jobs. But they haven’t We have programmes that fill the top of the funnel, but not enough make it through to scaling So the question is: why haven’t things changed? EIS and SEIS optimise for the wrong things. They’re tax-optimisation vehicles that encourage people to avoid risk in favour of guaranteed returns rather than venture-scale outcomes. The funds using this strategy can show good returns, but they achieve that by owning a lot early and pushing for low exits “Angel syndicates” charge fees, place unqualified people on boards, and invest at low prices for unbelievably large ownership stakes. This makes it impossible for a business to raise an institutional round later. Real investors won’t tell a company this is the reason they can’t invest because fixing the cap table isn’t worth the effort Ambition is coached out of our founders. “You won’t build that here.” “Someone in the US will do that before you.” Our startup community tells founders it’s impossible to big things from Scotland. “Be less ambitious”. I was told this a lot. It’s a self-fulfilling prophecy. Everything else being equal, massive ambition makes everything else easier And there is still a funding gap. Scotland might be one of the easiest places in the world to raise the first £10–50K. There are more grants and public money available here than anywhere I’ve seen. But the next £125–250K might be harder to raise here than anywhere else. This is a big problem that causes startups to stall even if they’re winning There’s also too much advice from people who have never done it. Scotland has a cottage industry of “experts” who claim they can help your startup. Almost none of them have built anything. That’s a big problem. If things haven’t changed in 20 years, who is benefitting from the status quo? How do we help them understand that what they’re doing is shortsighted, that they’re destroying the likelihood of massive successes in Scotland and ultimately holding the entire country back? I’m happy to talk to anyone who needs to hear this message: investors, angels, startup founders just starting out or those struggling along the way And if I can ever help you, please reach out

Scott Lister

Sport Tech Founder, Former Tennis Player & Coach

4d

Would really love a chat Chris. How best to connect? Scott@voso.co

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Anton Puzorjov, PhD

Turning a 180-Years Old Sourdough into Modern Kvass | EIT Food '24 | EF LD18 | NEF 2018 | Saltire Scholar

4d

It was great to finally meeting you in person last night, Chris! After experiencing the local startup ecosystem for the last 13 years, I know exactly what you mean. I probably know 100+ entrepreneurs in person who have experienced this. Assuming EIS and SEIS is just a tool, the possible solution might a new fund with a different set of principles and values that could offer better terms to the founders, returns to the investors, and value and prosperity to the wider Scottish ecosystem.

Matt Thomas

Co-Founder of ThatRound, where startup funding begins

2d

Would love to chat Chris Herd

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Rahul Nathan, PMP

Positive Mindset Drives Life | Fashion Retail Technology Consultant | One size Does Not Fit All | Data Analytics | Data Science Career Mentor & Training

3d

Always focus on doing stuff . Rest will happen . Thats what we are doing at Zimutail and will do the same in UK

Mauro Repacci

Founder & CEO at Boundless Life | Remote Work Advocate | Investor in the Future of Living | YPO Member

4d

Feel like the narrative surrounding the UK has been that it's falling behind in the last few years. Not just in the startup space. It feels like a bit of a fad - I still think the UK will be THE UK for a long, long time

Recognizing the challenges faced by Scottish startups is crucial; fostering an environment that supports sustainable growth and informed decision-making can lead to a thriving tech ecosystem.

Dr Michaela Hruskova

Expert in Entrepreneurial Ecosystems & Community Building | Entrepreneurship Researcher & Educator | Hidden Curriculum Trainer

4d

Thank you for sharing your experience at the meetup last night! There was lots of practical advice around fundraising which expanded on your PDF handout about avoiding messing up your startup at the outset, but actually the one that resonated with me the most was “action produces information”. As a chronic overthinker I should probably frame this and put it on a wall next to my desk!

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