Around £705m of venture capital (VC) was invested into Scottish businesses last year - the largest amount on record, according to KPMG’s latest survey.
Despite investor activity dipping in the final quarter of last year, Scotland’s overall performance during 2022 bucked global and UK trends, with investment volumes growing by 12% year-on-year.
By comparison, VC investment in the UK fell by 30% in 2022.
Scotland’s scale-ups attracted £82m of VC investment across 34 deals in the fourth quarter - 15% less than was invested during the same period in 2021
Despite the sluggish finish, 2022’s investment total of £705m surpassed 2021’s total of £626m, which was the previous highest level on record.
Last year's figure is more impressive, given the volume of deals was down by 5% year-on-year.
Stand-out deals during the quarter include Forres-based spaceflight company Orbex securing £40.4m for its Series C funding round, RoslinTech closing an £11m Series A capital raise, and makeup artist Jamie Genevieve raising £5.5m in a Series A round to grow her company VIEVE.
The lion’s share of Scottish deals in the fourth quarter involved businesses in Edinburgh (16), followed by Glasgow (6), while 22 of the quarter’s 34 deals were late-stage VC.
Amy Burnett, KPMG's private enterprise senior manager in Scotland, said: “2022 cemented Scotland’s reputation as a place where exciting young companies are born and where investors are backing promising start-ups.
“While certainly not recession proof, Scotland’s breadth, and depth of scale up sectors did provide some cover during a challenging 2022.
“Globally, investors have increasingly turned away from sectors that rely on consumer spend to drive growth and are instead doubling down on investments in those sectors where technology is addressing big macro trends such as health tech and ESG.
“With an abundance of these businesses being nurtured outside of London, it is good news for Scotland’s deep tech, clean tech, and health tech firms.”
Graeme Williams, M&A director at KPMG UK, added: “As expected, VCs did become increasingly cautious and invested funds into less risky asset classes during the final quarter of the 2022.
“Most investments in Q4 across Scotland were for later stage funding, suggesting that investors backed more established firms to shield from risk.
“We know there is still dry powder out there waiting to be deployed, and while we’re expecting a quiet start to 2023, the Scottish market is likely to see soft growth especially if a recession is shorter than expected.”
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