Special Report
This report looks at the development of business angel investment in Scotland from 1996-2023. Based on proprietary data provided by Angel Capital Scotland, the work details the evolution of the early-stage risk capital market in Scotland, the role of the public sector in supporting private sector activity and investment, and some of the outputs. In particular it provides, for the first time, sight of the geography of early-stage risk capital in Scotland over a long period of time, and the sectoral focus of investment. The work builds on previous impact reports conducted by the authors for the Archangels investment syndicates in 2015 and 2022. The pioneering Scottish Model of partnership co-investment in Scotland is explained and the impact of the direct and indirect policy support mechanisms are estimated in terms of policy cost per job created.
The Scottish angel market is amongst the most developed and sophisticated in the world. Archangels is the world’s longest continually running syndicate and Angel Capital Scotland (previously LINC Scotland) is the world’s oldest national association for angels. Understanding the development and economic impact of this key component of Scottish innovation is critical to ensuring it continues to thrive. The majority of start up companies fail so investment in this area is very difficult. We find that £1.7bn has gone into this riskiest area of investment, of which just under 25% is public money. A combination of willing private investors and supportive public policies has created a system in Scotland which not only encourages investment here, but generates significant returns to the public as outlined in this report. This is a cause for celebration and recognition of an approach that has worked for over two decades and been copied around the world. It is easy to be critical of policy where it doesn’t work – what we have here is policy that has worked very well and consistently supported entrepreneurship and innovation in Scotland for two decades.
This work is based on an Innovation Fellowship funded by the British Academy, IF2324\240124 held by Professor Niall G MacKenzie.
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Authors
Niall MacKenzie
Professor Niall MacKenzie is the head of the Hunter Centre for Entrepreneurship, Strategy and Innovation at the University of Strathclyde.
Margaret Coughtrie
Dr Coughtrie is an independent researcher and active angel investor.