Support for tech scalers: First Minister's speech at Barclay’s event – 13 July 2022

Thanks to all of you for coming here.

The last time I was at this Barclays Campus was back in October, at its official opening. It was clear then that this campus would play an important part in the regeneration of Tradeston, and that is underlined by tonight’s tech scalers event.

We’re in this campus, not simply because it is a good venue – although it is good - but because Barclays will be the host of the Glasgow tech scaler hub. It’s a further demonstration of how important this campus will be, not just to Glasgow but Scotland as a whole.

It’s also great for me to be here, because some of the most inspiring events I’ve been at - during my years as First Minister - have been gatherings of tech companies and entrepreneurs. They are always filled with energy, ideas and a sense of incredible optimism and opportunity. That’s partly because of the way in which the tech sector, in recent years, seems to have developed a strong sense of community – businesses are constantly sharing and learning from each other’s experiences.

That’s directly relevant to some of what I want to talk about today. I’ll touch on the tech sector and in particular about the establishment of the new tech scalers. But I also want to put that in a slightly wider context – by touching also upon the Scottish Government’s overall approach to the economy, and how we go about that ambition for creating a more entrepreneurial nation. Making sure that commitment to and success in entrepreneurship in future Scotland is very much chiming with that reputation for enterprise, innovation and entrepreneurship that we have down generations past.

In recent months, and I am not assuming any of you have read it from cover to cover, but a few months ago we published the new Scottish Government National Strategy for Economic Transformation, looking at how, particularly as we emerge from the COVID pandemic, we do build a country that is greener, fairer and wealthier for this and generations to come.

To help us achieve those aims we set out very clearly the need to establish a sense of common purpose – common purpose among businesses, trade unions, government and many other partners that need to contribute to building a successful economy.

That sense of common purpose is already very striking in the tech and entrepreneurship sectors.  It’s been of course developed in recent years by the likes of Codebase, FutureX and The Bayes Centre’s EIE Team; as well as by networks such as Start Up Grind, the Female Founders Squad, the Scottish Games Network, and many, many others beside.

And it’s something the Scottish Government wants to encourage across other parts of the economy. For example in recent years we have funded the Scottish Council for the Development of Industry to run productivity clubs to bring companies together to learn from each other about how to operate more effectively, or how to benefit more from new technology.

It’s a simple but really powerful way of tackling one of the biggest issues facing our economy – how do we sustainably increase productivity.

The benefits of that approach – where businesses and business organisations co-operate and collaborate for a common purpose – is already very clear in the tech sector. The efforts you have made in recent years are already making this sector a very significant Scottish success story. Scottish start-ups and scale-ups employ more than 135,000 people – which is more than anywhere in the UK, outside of London and the South East.

Our universities are recognised rightly as world leaders in areas like data analysis and informatics. 

And we have enormous strengths as  a country in really key areas for the future - like AI, robotics and FinTech. 

So we have lots to be proud of, we have lots to be enthusiastic and optimistic about but we also know that the sector can still do much better. To illustrate that with just one example, in recent years Scotland has produced three unicorn companies - companies valued at more than $1bn. Two of those have been tech companies.

That is good and something to be celebrated.

However, during the same time that Scotland has produced three unicorns, Ireland has produced seven. Estonia ten; Israel 16 and Sweden 35.

Obviously the creation of Unicorns isn’t by any stretch of the imagination the only measure for the success of a country’s tech sector – but it’s a strong indicator and one that we should take seriously.

It suggests that we could and should be doing even more to build on the current strengths that the tech sector has. That’s one reason why at the start of the pandemic, we asked Mark Logan to look at our technology ecosystem. Most of you will know Mark, who is speaking later on tonight – he was of course the former Chief Operating Officer of Skyscanner.

And most of you will also know that last week, he was appointed as the Scottish Government’s Chief Entrepreneurship Officer.

I seem to have spent most of my life in the last two or two and a half years dealing with the Chief Medical Officer so it is good as an alternative to be interacting with the Chief Entrepreneurship Officer. I will say more about that a bit later in the speech – but I am delighted to be able to welcome Mark formally to this really important role this evening. I am sure he will make an outstanding success of it.

Mark’s final report was very explicit about the fact that – for all the sector’s successes – we haven’t reached a “tipping point”, as the report described it. We don’t yet have a critical mass of companies who can almost guarantee opportunities for high-quality peer learning, and significant levels of investor interest.

However the report also makes clear that Scotland’s ecosystem, before the pandemic, “was closer to this tipping point than at any time in its modern history.” It highlighted that relatively limited interventions by government, could help us to reach that tipping point. And it set out what those interventions should be, in the three key areas of education, infrastructure and financing.

The Scottish Government has started implementing Mark’s recommendations. For example, we’ve established a new organisation called Scottish Teachers Advancing Computing Science, and are designing a new plan for skills development for computer science teaching.  We hope that steps like this will help to shape and transform how computer science is taught in our schools.

We also established the tech ecosystem fund, which provides support for organisations that help entrepreneurs connect with their peers, and with potential investors. Back in April, I spoke at an innovation showcase in the City of London that the fund had supported, and it was already very clear how helpful the event was, in helping to make connections between Scottish start-ups and potential investors. 

And today, we can confirm a further step in implementing one of the review’s most important recommendations - the establishment of a nationwide network of tech scalers.

We invited tenders last year to establish the tech scalers. The bidding process generated a lot of interest, which is really encouraging, and has already led to new collaborations between Scottish and international organisations. I want to take the opportunity tonight to thank everyone who was involved in any of the four bids we received – the work that was done, and the willingness to get involved in the project, was hugely appreciated.

I can confirm today, however, that the contract has been awarded to Codebase, which I am delighted to announce, congratulations.

They currently run a very successful tech incubator in Edinburgh. Under the contract, they will establish seven tech scalers in Aberdeen, Dumfries, Dundee, Edinburgh, Glasgow, Inverness and Stirling.

These hubs will be delivered in partnership with universities, local authorities and businesses.

For example – as I mentioned earlier - the Glasgow hub will be based here in this new Barclays campus. I want to thank Barclays for that, there is no doubt the spaces and accommodation right here really do make it a perfect venue. 

However as demand for space grows at this campus, new sites can be opened at Glasgow and Strathclyde universities. There are similar arrangements – and so a similar level of flexibility -  in place too for the six other hubs.

The scalers will supply the infrastructure that new companies need – not simply in terms of premises, but in terms of support and education as well. They represent an investment, not just in facilities, but crucially an investment in people – because people after all are the single most important factor in the success of any company. 

For example the scalers will offer five separate courses for companies at different stages of development – from new start-ups onwards. The course for advanced companies will include free access to a programme called Reforge, which is Silicon Valley’s most prestigious education programme for tech start-ups. It’s a good example of how the tech scalers won’t simply encourage peer learning within Scotland – they will also look much further afield.  

Codebase have also promised to develop a national calendar of events for the tech community. And companies led by women and minorities – who are currently significantly under-represented among tech start-ups - will be prioritised for entry to the incubators. Those companies will also be given extra support which recognises the greater challenges they currently face in raising investment, and developing peer networks. 

So the tech scalers will be one way -  Ana Stewart’s review on Women in Enterprise is another - in which we try to harness the entrepreneurial potential of all of Scotland’s population, which is really, really important.

What all of this really means is that tech start-ups – right across Scotland - will have access to world-class education and mentoring, and opportunities for peer learning and networking.

For new companies at all stages of their development, Scotland, as a result of what we are talking about here tonight, will provide one of the most supportive environments in Europe.

In fact, I believe that all of this will make Scotland one of the best places anywhere to start up a tech company. These scalers will help to shape the future not just of the tech sector but of Scotland’s economy overall. It is actually quite difficult I think to overstate the importance and the significance of what we are announcing and celebrating here this evening.

The final point I want to make about these tech scalers is that - as well as being hugely important in themselves, underlining the point I have just made, they are also an important part of the wider vision for entrepreneurship which is set out in the National Strategy for Economic Transformation. The strategy makes it clear that we need to promote and celebrate entrepreneurial activity – not just in this sector, but in every sector of the economy.

We want to build on the vision Mark’s review set out for the tech sector, and apply some of those principles very firmly to the wider economy.  We envisage, for example, that the focus of the tech scaler programme will shift over time so that it becomes a broader programme for start-ups in any sector that are looking to scale up.

That is important, because we know that encouraging small and scaling firms can have a really significant impact on overall economic prosperity. At the moment, across the UK, small and scaling firms constitute 1% of small and medium sized businesses – but they are responsible for a third of the economic value created by those business. That shows the impact that can and is being had.

And of course these companies are a really important source of innovation – something that is vital if we are to raise prosperity, while also addressing the climate crisis and all of the other challenges that we face as a country, indeed as the world faces.

And so when you consider some of the goals the national strategy sets out – not simply around productivity and innovation, but also around promoting wellbeing – we know we cannot achieve those goals, unless we create an environment which enables and encourages more entrepreneurs. Supporting entrepreneurship is one of in my view the most important interventions any government can make in the economy.

That’s why the new role Mark is taking up – as Chief Entrepreneurship Officer – is such a vitally important one.

And I want to be clear to you this evening that the Scottish Government is determined to do everything we can to create a more entrepreneurial nation. Indeed, it’s why we are investing in these tech scalers at a time when we face a tough public spending environment, because we know that by providing the right environment for business, government action can help to support a much stronger and more sustainable economy.

This is a shared endeavour – government, the private, public and third sectors working together. 

Every single one of you in this room are already part of that shared endeavour – and I know that you will continue to be in the period ahead, so I am really grateful to you all for that.

So please – continue to do everything you can – not just to build up your own companies, but to support and develop businesses more generally.

I am really optimistic that this initiative is going to put Scotland on the map and fuel our economic success and prosperity in the future.

So thank you very much for being here and good luck in everything you do.