Scottish government to spend £4m on creating five tech hubs

Scottish government has announced a £4m fund to create five technology hubs across the country and plans to establish a formal partnership with the technology industry.

The hubs aim to support 300 startups by 2025, and will be known as “tech scalers”. The plans come after Scottish finance secretary Kate Forbes announced a short-term review of the country’s tech sector in May 2020.

The review, which was led by former Skyscanner chief operating officer (COO) Mark Logan, was published in August 2020. It called for government to build out “a world-class backbone implementation of core capability”.

“Scotland should create a nationwide network of tech scaler centres. We recommend that these are initially created in six cities nationwide, for example: Edinburgh, Glasgow, Aberdeen, Dundee, Stirling and Inverness,” the review said.

The tech scalers will provide “long-term affordable, high-quality incubation space” and education in a range of areas, including Silicon Valley business models, internet-economy working practices, how to manage people and teams and basic operating hygiene.

“Transparent curation policy is in place at entry, and is ongoing throughout the subsequent tenancy, to ensure that the quality of incubated tenant startups remains high (which, for example, directly affects the quality of the market square learning environment for other tenants),” the report said.

“Otherwise, tenancy is offered until the startup becomes a scale-up (100+ staff). This intentionally results in startups of widely varying scales being co-located, which again enriches the learning environment for many of them. Tech scalers could also be the default home for university spin-outs as they graduate from their respective source institutions.”

Finance secretary Kate Forbes said she was pleased to announce the initial investment, which will be key to drive the tech sector forward.

“These hubs will transform the quality and intensity of support available to Scottish startups, delivering world-class education to tech entrepreneurs, helping this vital sector to grow and create jobs,” she said. “They will also offer the chance to network and share ideas, laying the groundwork for Scotland’s digital future.”

The review called on government to re-structure its contract model, with at least a five-year contract window “based on a combination of key build-out milestone, occupancy milestones and performance against an ecosystem-value-based north-star metric with associated target levels”.

It also recommended that government should establish an industry partnership with schools to give computing science pupils summer work experience, and school stage extra-curricular programming clubs, which are supported locally.

The review also said that Scottish scaleups often reach a point where they can’t hire enough people to fulfil leadership requirements to support further expansion.

“They either stop growing or set up offices outside Scotland to attract that talent. Later these offices become the centres for growth of the company. The difficulty in hiring these executives stems largely from the risk to them of relocating their families to join companies in a sparse, pre-tipping point ecosystem,” it said.

“We recognise that the political palatability of the following may be challenging, but we recommend that options are explored in the area of providing to (means-tested) startups a government bond to support the 12-month salary costs and relocation costs of an executive who leaves a Scottish scale-up within the first two years of joining,” it said.