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Scottish tech sector faces serious threat due to pandemic, start-up leaders warn

Industry leaders are calling for more support from the Scottish Government.

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Start-up leaders are warning that the Scottish tech sector faces a serious threat from the pandemic (Dominic Lipinski/PA)

Start-up leaders are warning that the Scottish tech sector faces a serious threat from the pandemic (Dominic Lipinski/PA)

Start-up leaders are warning that the Scottish tech sector faces a serious threat from the pandemic (Dominic Lipinski/PA)

Start-up leaders are calling for more support for the tech industry as they warn many companies are under “immediate existential threat” due to the coronavirus pandemic.

A survey of more than 100 technology start-up founders and senior executives in Scotland found that more than nine in 10 (95%) said the pandemic had already had a negative impact on their businesses.

More than half (53%) said they were experiencing a significant or severe impact.

Asked what measures they would need to take due to the impact of the virus, 38% said furloughing staff, half (50%) said freezing or scaling back hiring, while one in five (21%) said redundancies.

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 surviveBrian Corcoran, Turing Fest

More than half (52%) of those questioned in the Turing Fest survey said the Scottish Government is currently doing too little to support entrepreneurs.

Alongside the survey results, in an open letter to the Scottish Government, more than 50 Scottish start-up chief executives and founders said that “the current interventions, from both the Scottish and UK governments, will not adequately address the unique needs of high-growth Scottish tech companies”.

In the letter they called on the Scottish Government to “act now to protect Scotland’s entrepreneurial future so we do not lose a generation of high-growth start-ups to Covid-19.”

Brian Corcoran, chief executive of Turing Fest, said: “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.”

In the letter they warn that many of Scotland’s tech companies and the thousands of high value jobs they provide are under immediate existential threat due to the “economic shock” from the pandemic.

Asked what kind of support the tech sector needs, survey respondents called for more direct financial support.

Almost eight in 10 (79%) said they wanted to see the government offer bridge grants to help businesses maintain their operations, 67% called for expanded research and development/innovation grants, and 59% identified employee wage subsidies as a key support mechanism.

Turing Fest said Scotland’s digital economy businesses employ almost 100,000 people and contribute £6.6 billion to the economy.

The survey questioned 106 founders and executives of start-up and scale-up technology businesses based in Scotland, with survey results collected between April 13 and 22 2020.

Chancellor Rishi Sunak last week announced businesses driving innovation and development will be helped through the coronavirus outbreak with a £1.25 billion UK Government support package.

A Scottish Government spokeswoman said: “We recognise the importance of the tech sector to Scotland’s economic growth and future recovery and are engaging with the sector and our enterprise agencies to establish what specific challenges the sector is facing and the actions we may take to assist the sector through the current crisis.

“We are determined to help keep companies in business and have offered a package of support worth £2.3 billion.

“A part of this is £45 million targeting pivotal enterprises.”

PA Media