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The impact of COVID -19 on Scotland's tech industry

27/04/20 14:41

To understand the impact of the COVID-19 outbreak on Scotland's tech industry, we conducted a survey with founders and leaders of Scottish startups. 

106 tech startup founders and leaders responded to the survey, conducted between 12-22 April, 2020. At the time of the survey, 95% of respondents said the pandemic had already had a negative impact on their businesses, with: 

  • 50% freezing or scaling back on hiring
  • 38% furloughing staff
  • 21% considering redundancies

Other key findings from the survey showed that 52% of respondents felt the Scottish Government was doing too little to support tech startups, with a further 17% unclear about the support available to them.

The results and findings from the survey are presented below. 

Respondents by stage of product(s)

Survey charts

Respondents by company size

Survey-company-size

 

Respondents by company revenue in 2019

Survey charts (1)

In the survey, we asked respondents:

Based on what you know today, what measures do you think your business will need to take due to the impact of COVID-19?

COVID-19 Survey - Tech Startups measures

 

How easy has it been for your business to make the transition to remote working?

Transition to remote working

Based on the Government's announcements to date, how do you feel about the Government COVID-19 support offered to tech/startups businesses in Scotland?

COVID-19 Survey - Tech Startups on support offered by the Scottish Government

What kind of government support do you think would most help startups through this time?

COVID-19 Survey - Tech Startups - most helpful support

Which of the COVID-19 support announced by the government, will you make use of?

COVID-19 Survey - Tech Startups - Government Support - made use of

 

Startup founders call for support in open letter to Scottish Government

In an open letter to the Scottish Government, more than 50 Scottish startup CEO's and founders said,

current interventions, from both the Scottish and UK governments, will not adequately address the unique needs of high-growth Scottish tech companies" and called on the Scottish Government to “act now to protect Scotland’s entrepreneurial future so we do not lose a generation of high-growth startups to COVID-19.

In an article published by The Scotsman today, Paul Walton, Co-founder and CTO of Boundary, explained:

...whilst the UK government’s announcements last week were welcome, the rules of the scheme mean many Scottish companies will not be able to get support from it."

Ian Stevenson, Co-founder and CEO of Cyan Forensics added:

The current loan scheme seems to be only open to companies profitable enough to demonstrate repayment – which excludes growing equity-backed startups. The UK Government’s Future Fund is a great step for VC backed companies, but at present, it’s not clear how it can co-exist with the EIS investment that fuels many early-stage companies.”

Scotland’s tech businesses employ almost 100,000 people and contribute £6.6bn to the economy. Scottish startups attracted £200m in venture capital investment in 2019, reflecting a fast-growing and competitive tech sector that stands to become a major part of Scotland’s economic future.

The tech industry is well placed to play a major part in helping Scotland's economy recover quickly after this crisis, but to do so startups will need to survive the immediate challenges.

Tech start-ups can play a key role in rebuilding Scotland’s economy after this pandemic passes, but unless there is immediate intervention from the Scottish Government, many start-ups will not survive and the ecosystem that the Government, and others, have worked so hard to cultivate could be decimated."
- Brian Corcoran, CEO of Turing Fest. 

 

Update: 5 May 2020

The Scottish Government announced a review - led by former Skyscanner Chief Operating Officer Mark Logan - to make recommendations on how Scotland’s thriving tech industry can help with economic recovery.

Scotland’s tech scene is one of the most innovative, high growth sectors we have and it will be critical to our economic recovery. As Scotland seeks to emerge from lockdown and restart our economy when the time is right, we will need that innovation more than ever, and that is why I have invited Mark Logan to lead a review that will recommend how we can harness the enormous potential of this sector."
- Kate Forbes, Cabinet Secretary for Finance, Scottish Government.

Update: 10 July 2020

The Scottish Government have announced a £38m support package to help innovative, early-stage businesses impacted by Covid-19.

More information on the new Early Stage Growth Challenge Fund, including details of the application process can be found on the Scottish Enterprise website.

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