Sir Michael Moritz, doyen of all things tech and chairman of lofty investment firm Sequoia who backed Skyscanner in 2013, recently blogged about the need for Europe to step up its act and start to produce the kind of technology giants that really only the US has managed to spawn over the last decade or two. Rather than punishing Facebook and Alphabet (Google’s holding company) for clever tax planning across Europe, our leaders should pay closer attention to how these mammoth corporates got to dominate so much in their various markets. Moritz listed the two European exceptions to his rule as Germany’s SAP and the UK’s Arm Holdings.
As Scots, we are always good at finding a Scottish connection to greatness so let’s take note that Cambridge-based smartphone chip maker Arm had a strong Caledonian streak to its founding team - Jamie Urquhart was one of the company’s co-founders and was present when the venture was started up in the back of a pub in the shadow of the city’s majestic university in 1990. Today, this company powers most of the Apple or Samsung phones that dominate our waking hours. Unlike the 1990s, we now have an ecosystem that means our most promising tech founders don’t have to decamp to Oxbridge or London - although Moritz says that the very best European tech founders still head for Silicon Valley - to turn their business dreams into reality. Another more recent Scottish connection backs Moritz up, with the news that a Scottish-born artificial intelligence (AI) expert, John Giannandrea, has been put in charge of search algorithms at Google.
When it comes to a UK context, however, In each of the last four years more Scottish startups have been funded than Cambridge and Oxford combined while we place second only to London on the same yardstick. Last July, FanDuel raised the largest ever UK venture investment deal at just shy of £200 million and only last month Skyscanner reported its latest funding round well north of £100 million. When one or both of these companies come to IPO - in New York by most guesstimates - that’s when Scotland will really feel the boost as hundreds of tech millionaires will be created overnight, many of whom will want to reinvest back into the ecosystem and found startups of their own.
As it happens, Skyscanner co-founders are behind a new social media app that is close to launching from a base in Edinburgh. It’s a further sign of the buzz that keeps building in Scotland’s capital. Last week, London’s Tech City chose e-learning startup Administrate as one of the UK’s highest rated startups. Like Administrate, medical software specialist Craneware continues to be one of our fastest growing tech companies and is expected move up a gear on the hiring front this year. Well respected CEO, Keith Neilson, and team have turned Craneware into one of Scotland’s most successful performers on London’s AIM market. Like FanDuel, its market is almost wholly in North America but it operates a sizeable UK headquarters in Edinburgh. Craneware’s financial software is now used by one in four of hospitals in the US and equates to one of our most impressive tech exports - while the company flies somewhat under the radar in terms of media coverage, they are undoubtedly part of the technology narrative that is building in Scotland.
If there is a fulcrum to all the amazing things that are going on in Scottish tech in the 21st century, it is very probably the University of Edinburgh’s School of Informatics. As institutions go, it too flies under the radar but the numbers speak for themselves: number five worldwide and number one in Europe. included in the same conversations as Stanford and MIT and genuinely world-leading in areas like data science, language technology and machine to machine learning. With the serious talent coming out of the Informatics School, it makes the success of the billion dollar valued tech companies right on its doorstep less surprising. The university’s School of Informatics has big plans to stay on top in the world order by adding scale in terms of both square footage and the breadth of specialisms it will house in the future. Most definitely watch this space.
And a word on FanDuel. Yes, the company has its regulatory challenges in the US at the moment but when you consider the blood and sweat put in by the senior team to get the product off the ground in the first place five years ago and the well documented beaten path around the UK’s venture capital community to support its incredible growth phases, no one should underestimate the mettle of Nigel and Lesley Eccles and co and their in-built ability to fight the good fight and get the right result for the company. They are too important a piece in the jigsaw that is our developing modern economy in Scotland not to wish them all the very best.
Over at Skyscanner, CFO Shane Corstorphine’s move to Miami to run the Americas operation is the strongest sign yet to the size of the travel search site’s ambition in US and South American markets - like most things Skyscanner touches, you’d be surprised if this latest chapter doesn’t turn into gold for the company. A lesser know story about Shane Corstorphine might be the extra-curricular time he has spent with Scotland’s aspiring young startups, a good example being the founding team of shopping app Mallzee. In January, Mallzee CEO and co-founder, Cally Russell, was included in Forbes’ benchmark ’30 under 30’ list of most promising tech founders in Europe under the age of 30; another marker that Scotland is fixing its place on the international tech map.
In his most recent writings, Moritz says the greatest competition in tech over the next 50 years is mostly likely going to come from today’s “garage startups” in China and the US. That makes a lot of sense with or without a tech luminary’s crystal ball but it strikes me that in Scotland we need to take greater notice of markets closer to home. There has been a lot of commentary the last couple of weeks about the opportunity Scotland has when it comes to Europe’s largest market, Germany - both in terms of inward investment and as an export territory.
Commentators in the know say the German people have a great deal of goodwill towards our nation and, more importantly, potentially billions of Euros in private wealth that could be tapped for investment purposes to help fuel Scotland’s corporate growth. The region with the most potential appears to be Bavaria, whose capital happens to be twinned with Edinburgh. Perhaps even greater collaboration within Europe will allow us to compete better against the US and Asia. On that note, I’m off to do a bit of German on my Babbel language app (which is a recent Scottish Equity Partners investment by the way)… tschuss!