Official Report 1407KB pdf
The next item of business is a statement by Kate Forbes on the Techscaler programme. The Deputy First Minister will take questions at the end of her statement, so there should be no interventions or interruptions.
14:29
It is with pride, optimism and some frustration that I address the chamber on the progress of Techscaler: pride, because the programme is exceeding expectations; optimism, because its performance is contributing to Scotland’s rise as one of Europe’s fastest-growing entrepreneurial economies; and frustration, because even that undeniable success cannot escape political and, even worse, anonymous sniping.
We should begin with what Techscaler does and why it matters. In 2020, I asked one of Scotland’s most successful modern entrepreneurs, Mark Logan, to review Scotland’s entrepreneurial economy. He concluded that Scotland has no shortage of ideas or ambition, but we lacked the necessary density of experienced talent to turn sparks of inspiration into globally successful companies. As Mr Logan put it, as we are
“short on experience, we must go long on education.”
That is where Techscaler comes in. It is an ambitious idea that is designed to provide the world-class support that is taken for granted in silicon valley, Helsinki and Paris. It operates across 13 co-working spaces and provides structured commercial education from ideation through to scale. That includes free national access to Reforge, which is one of silicon valley’s leading and prestigious providers of scale-up training.
Techscaler pairs new founders with mentors who have been there and done it, and those mentors provide support over months, not just in one-off clinics. It is also about culture and community—creating the events, networks and peer learning that make an entrepreneurial economy thrive.
Nearly three years on from its creation, let us examine Techscaler’s performance. Membership stands at 1,300 start-ups, and the number of applications continues to accelerate. Thirty-five per cent of members are women, which is well above industry averages. It is perhaps no coincidence that a new study from JP Morgan shows that investment in female-led businesses in Scotland has risen by 10.5 per cent in the past year. That compares with a 29 per cent fall in England.
Collectively, Techscaler members have raised £195 million of investment. Sifted, the Financial Times start-up platform, ranks Techscaler as among the best founder communities in Europe. This year, 18 members have won Scottish EDGE awards, and three Techscaler companies—Malted AI, Simple Online Healthcare and Wordsmith AI—are named in Tech Nation’s future fifty programme, which focuses on companies with a $1 billion potential.
Techscaler is far from the totality of our offer. Today, I can announce that, as part of our commitment to Ana Stewart’s “Pathways: A New Approach for Women in Entrepreneurship” report, £1.16 million will be provided to 14 organisations to support new entrepreneurs across Scotland, with a focus on women and underrepresented groups.
None of that is to say that Techscaler is perfect. The contract was awarded, on the basis of cost and quality, to CodeBase, a local ecosystem builder—a start-up itself—that has scaled operations rapidly. The programme is new and ambitious, and it offers a complex mix of services at national scale, so it is only natural that there continues to be scope to refine and optimise. There are challenges to overcome and opportunities that can be realised only if Techscaler is able to adapt and change.
In the post-pandemic economy, the focus on physical co-working has been challenging, as has creating a focal point for the entrepreneurial community in regions where none has previously existed. The start-up world evolves quickly and, since the Logan review, investors are turning towards deeptech. That requires Techscaler to pivot to emerging sectors such as artificial intelligence, medtech and robotics. It requires Techscaler, like any start-up in a fast-moving environment, to improve its leadership, agility and execution. It also requires accountability for results and a positive approach to partnership.
We want Techscaler to be one of the best programmes of its kind anywhere in the world. That is why, earlier this year—long before any of the recent anonymous criticism—I commissioned an early independent review. I will shortly meet CodeBase’s chair, the exceptional Gillian Docherty, who is the chief commercial officer at the University of Strathclyde, to discuss the emerging findings.
However, the unfortunate reality is that we are not here to discuss the rationale for Techscaler or its performance, or to debate how the programme could be optimised. Instead, we are here because some see political capital in a series of unattributed, unsubstantiated claims that have been made in the press. Let us address those claims head on.
Techscaler’s international programme helps start-ups to go global by connecting to investors, entering new markets and enabling founders to benchmark their companies against world-class competitors. Techscaler covers the cost of workspace, economy flights and accommodation. Participants cannot claim for any additional travel or subsistence costs. That part of the programme represents 2 per cent of Techscaler’s spend to date. As we shall see, that is far from excessive by international standards.
The programme deliberately does not have a militarised schedule. It is about supporting serious entrepreneurs from Scotland to live and work in the world’s best ecosystems for an extended period. In that regard, Techscaler mirrors international best practice. Germany pays for founders to base themselves in silicon valley with free space and expert support. The Nordics go even further, clubbing together to operate a series of scaled start-up incubators across the US and Asia with subsidised travel and accommodation, allowing founders to focus on growth, not logistics. The Finns go further still, investing in local housing to support founders to live and work in silicon valley for a full three months. That is the level of ambition that we are competing against. The real question is not whether Techscaler goes too far in relation to international exposure for founders and entrepreneurs but whether it is doing enough.
In a few cases, participants have chosen to extend their stay beyond the programme and to be joined by partners, but that was entirely at their own personal expense and no public funds were used for those purposes. My officials have, however, made clear to CodeBase’s leadership that, where public funds are concerned, appearances matter and the highest standards of propriety must be upheld.
Most importantly, the international programme has been a huge success. Multiple export contracts have been secured, six participants secured £5.4 million of investment and several other firms are in dialogue with investors. Showcasing Scottish companies has also put us on the entrepreneurial map. Techscaler has now hosted inward visits from 12 countries, including America, Singapore and China, which are all keen to partner with Techscaler and invest in Scotland.
Since the anonymous criticisms were published, business leaders have expressed their views publicly. Wes Beard of konversable said:
“The fact this has been reported as a ‘free holiday’ is not only factually inaccurate, but an insult to the entrepreneurs”.
Daniel Grant of fern said that he has
“never heard anyone call these trips a holiday.”
Natalie Garry of danceSing said:
“We arrived with no US clients. We now have contracts signed, a clear strategy to scale in the US, and an invaluable network of connections.”
Sandeep Casi, a Tokyo-based partner at Antler, which is a global venture capital fund, said:
“the quality of the Scottish founders that recently travelled to Japan ... is proof that Scotland is set for ... success ... Japan can be a key territory to drive this”.
I could continue with testimonials, but I prefer to conclude positively. Five years ago, this Government set out a vision to establish Scotland as one of Europe’s fastest-growing entrepreneurial economies. That vision is now a reality. The latest analysis shows that Scotland is growing at a rate of 19 per cent, which is well above the UK rate of 12.5 per cent, and almost double the rate of Sweden and the Netherlands. Last year, investment in Scottish companies also grew by 19 per cent, even as global markets stalled. Reports from multiple sources record business start-up rates growing at record levels. As the chief entrepreneur, Ana Stewart, told me last week,
“Scotland is back in the game—a recognised player for the first time in decades.”
In the chamber, members frequently and rightly challenge me to support policies and projects that will drive economic growth. That is what Techscaler is doing, and I would hate to see that progress compromised by these anonymous briefings. I say sincerely to members: help us with your support, your ideas and your challenges, because together we have a genuine opportunity to transform Scotland’s economy and back the initiatives that are delivering results.
The Deputy First Minister will now take questions on the issues raised in her statement. I intend to allow around 20 minutes for questions, after which we will move to the next item of business.
I thank the Deputy First Minister for her statement and for advance sight of it. We asked for the statement not to criticise the ambition of Techscaler, or indeed to criticise CodeBase, which I had the pleasure of visiting with some colleagues earlier this year, but simply to get some clarity concerning information about the use, or potential misuse, of public funds, which had been put in the public domain thanks to the investigative journalism of the Sunday Post. It relates to claims from whistleblowers that overseas trips funded by Techscaler were not properly supported and that those who organised them attended with their partners, effectively treated them as a jolly and were barely seen at meetings or events. Surely, even for this Government, that should be a matter of concern—instead of the Government seeking to castigate journalists and to diminish evidence as “fake news” in Donald Trump style.
Let me ask the Deputy First Minister three questions. At the weekend, the Scottish Government accused me—me—of spreading misinformation, but, when challenged, it could not substantiate that claim. I ask the Deputy First Minister directly: what is the “misinformation” that I am accused of spreading?
Secondly, why was all the negative feedback from participants on those trips redacted from paperwork released to journalists under freedom of information legislation? Why does the Scottish Government not want to give a balanced view on the value of those trips—or was the negative feedback simply too embarrassing?
Thirdly, the Deputy First Minister said that, collectively, members of Techscaler had raised £195 million—which is a very healthy total. Can she tell us how much of that total comes from exclusively private sources as opposed to Government-backed funds such as those from the Scottish National Investment Bank, Scottish Enterprise or Par Equity?
First, I thank the member for leading his question by saying that he is not here to criticise Techscaler or CodeBase. That is so important: the more cross-party support there can be for initiatives that are delivering results, the better. I am very grateful to him for outlining that point.
Let me confront the points that the member made. First, on misinformation, I quoted to him in the statement the direct rebuttals—which were made on the record—from businesses and founders who had been involved with the schemes, all of whom strongly rejected any suggestion that the trips were jollies or holidays. In fact, the one person who had gone on the record and was quoted in the newspaper headlines promptly went on to say that he totally rejected the characterisation of Techscaler that had been made—and he said that in his own words. That is quite conclusive regarding the challenge that those trips were somehow holidays. I prefer to listen to people who are happy to speak in their own name.
Secondly, let us talk about the redactions. The point is that Techscaler is taking feedback, and rightly so. It is in its third year of operation, and I would expect it to take on board feedback, which is vital. It allows us to take on board areas for improvement as well as to recognise those areas that have been a success. The redactions were made on the basis of two reasons. First, some elements were commercially sensitive, and I think that nobody disagrees with that. Secondly, the information was provided on the express basis of anonymity. If the same people who are so keen on reducing or removing that anonymity cannot even get anybody to go on the record in the press without their names being removed, that says it all.
The final point is about the split of the £195 million. I am more than happy to come back to the member to split that down. I have previously given comments in the chamber on the breakdown, but I would rather give that to him in writing.
I thank the Deputy First Minister for advance sight of her statement. I agree that Techscaler is proving to be a significant driver of Scotland’s tech ecosystem, and we hope that the concerns that have been raised will be considered by the DFM’s early independent review, so that Techscaler can maximise its positive impact on Scottish businesses.
Techscaler was central to Mark Logan’s recommendations, but so, too, was the skills pipeline. Indeed, he was right to say that we need to “go long on education”. However, in that area, progress has been more limited. Inspiring young people into technology careers, including in AI and robotics, is crucial to addressing skills gaps, yet, last year, computing science teacher numbers were at an all-time low, with computing science deserts across Scotland. Will the Deputy First Minister outline a comprehensive plan to ensure that young people can access technical skills in schools nationwide? How many additional computing science teachers will be deployed as a result?
I thank Pam Duncan-Glancy for her question, too. I enormously value the cross-party support that has always existed for the implementation of the Scottish technology ecosystem review—STER—which is Mark Logan’s review, and I am grateful to hear that confirmed again.
On the centrality of education, Pam Duncan-Glancy is absolutely right to say that a number of education programmes are offered through Techscaler, tailored to different stages of the founder journey. I mentioned membership of Reforge, which is a premium education programme that is globally respected. The fact that our scale-ups have access to that is probably underappreciated in Scotland. We also have other programmes, including Techscaler discovery, which is a free online programme to support individuals at the earliest stages of their journey, and there is a catalyst accelerator, which is a 10-week hybrid programme. In many cases, those programmes are delivered by experienced founders and industry experts.
On embedding this in our schools, I was delighted to confirm last year that, for the first time ever, we now have entrepreneurial education provided through the whole school experience, from primary 1 to secondary 6, because of the way in which we have provided funding to key organisations. It means that young people, at different stages of their school experience, have access to entrepreneurial learning. The Gen+ programme was one such programme that benefited, and there are others, as well.
The challenge to recruit computing science teachers continues. I know that the Cabinet Secretary for Education and Skills is very much committed to that, and it is an area of collaboration across Government.
I welcome the Deputy First Minister’s statement. It is truly heartening to see Scotland doing so well in such a globally competitive sphere, and I congratulate all concerned. Given the scale of success and return relative to a modest Scottish Government investment, which represents but a fragment of the Scottish budget, does she agree that, over and above the £1.16 million investment that was announced today, a significant increase in the resources allocated to the Techscaler programme in the next budget is necessary to take it to the next level, with all the private investment that that will attract and the employment and economic growth that will undoubtedly follow?
Kenneth Gibson will appreciate that, in my engagement with the Cabinet Secretary for Finance and Local Government, I will be making a strong case for investment in programmes such as Techscaler, because the more prosperous our economy is, the more revenues are raised and reinvested in our public services. I come back to the point that, where there is a project, policy or initiative that works, we should back it.
Can I just say how much I deplore the language that the Deputy First Minister has used this afternoon in the chamber while discussing whistleblowers? It goes to the heart of how the Scottish National Party Government works, because it loves to silence dissident voices.
Let us be frank about what has happened. The Government claims that the redactions in the Techscaler feedback obtained by FOI were for commercial sensitivity, but I think that that is an exaggeration. Investigative journalism at the Sunday Post revealed that the redacted information was actually negative feedback. The Government does not want to hear negative feedback. It would appear that the Government does not believe in the value of whistleblowing. Will the Deputy First Minister consider her attitude towards those who fear speaking out but wish to do so on the basis of anonymity, so that what they have to say can be heard in a country that increasingly lives in fear of how the SNP Government operates?
I base everything that I say on fact, and Daniel Grant was the only individual named in the Sunday Post article. He has since taken to LinkedIn to say that he has “never heard” anyone call those trips holidays; yet, in this chamber, I have already heard the Opposition refer to them as that. I would rather take Daniel Grant’s word than Stephen Kerr’s.
Yesterday, I had the great pleasure of attending the opening of the new energy transition skills hub in my constituency. It is a collaboration between North East Scotland College, ETZ Ltd and Shell that will power an evolving energy workforce and that will, I am confident, play its part in producing some of our future Techscaler talent.
I very much welcome the cabinet secretary’s update on the Techscaler international programme, which helps start-ups to go global and to access new markets overseas. What action is the Scottish Government taking to incentivise our ambitious founders and scale-ups to remain right here, in Scotland?,
I am pleased to hear that Techscaler is having an impact in the north-east, because the whole premise of the programme was to ensure that the initiative was not concentrated only in Glasgow and Edinburgh and would also be able to support entrepreneurs right across Scotland. That is what makes it such a critically important programme.
The question of how we retain scaled firms is, in some ways, a nice problem to have, because it is symptomatic of the growing pains of a thriving but still emerging entrepreneurial economy. All scale-ups need access to three things: the talent, the capital and the infrastructure that is relevant to their businesses. That is what we are trying to deliver.
The Sunday Post asked CodeBase what kind of selection process was carried out. The response was:
“Ultimately, the value they”
—that is, the contributing individuals—
“derive from these programmes depends on their own commitment and approach.”
Techscalers have a crucial part to play in the tech ecosystem and are worthy of public money to support that, so will the Scottish Government’s scrutiny and accountability reflect that individual commitment and approach?
Techscaler is in only its third year. As I said, it is improving year-on-year, and the feedback processes allow it to keep improving.
One important area is the balance between application processes and selection, which means tailoring programmes to those who would benefit most. As members know from some of the testimonials, the fact that some companies have gone out and got international contracts that they would not otherwise have had is indicative of their commitment to pursuing those opportunities. The member is absolutely right to highlight that.
Investing in Scotland’s talent also means mentoring, training and creating partnerships that will help our entrepreneurs to innovate and build. Can the Deputy First Minister say any more about the advice and support that Techscaler provides to founders and entrepreneurs?
The whole remit of Techscaler is to build relationships. Rather than having an education programme in which people just turn up for a one-off clinic, hear some great advice and then leave, Techscaler tries to embed a bit more flexibility, offering networks and a mentoring programme alongside world-class educational facilities.
I note the support in the Techscaler scheme for international flights and for what the Deputy First Minister calls “deep tech”, such as AI, which can have high energy needs. How is the Scottish Government ensuring that the programme supports its stated ambition to transition to net zero? What is the carbon cost of all the money that has been spent on Techscaler? What will it cost the public purse to sequester the emitted carbon later?
I really like the way that the member has framed that question because she is absolutely right that a lot of those companies are involved in support for the transition and for the innovation that is required to meet our climate change goals.
She may have heard me say in my statement that the spend on the international element of the programme is only 2 per cent of the overall spend. Given that the amount of capital raised is about £195 million, if even some of that is reinvested in helping us innovate to get to net zero, I think that that is money well spent.
Just 8 per cent of firms have full access to the necessary skills to effectively use AI tools and tech. That is according to Hays, the specialist recruitment agency. However, in the past 20 years, we have lost almost 30 per cent of our computing science teachers. How will Techscaler succeed if we do not have the necessary skilled workers to work in the sector?
That question is worthy of a much longer answer than I am about to give, but Techscaler is one part of the answer. Techscaler equips, enables and supports founders. A point that is frequently put to me is that building up a density of companies and entrepreneurs who are all doing this activity makes it a lot easier to attract the skills to Scotland in the first place.
Techscaler has a great focus on the educational element, but the challenge to the answer that I am giving is that it is self-selecting. In other words, those who are already interested in developing a business or whatever, particularly with a focus on AI, will probably self-select to become part of the Techscaler programme. The question that Willie Rennie asks is about the wider cohort of people who do not feel that they have AI skills.
Richard Lochhead has just launched the AI Scotland programme, which is specifically designed to embed AI much more widely in the public and private sectors, and a big part of that involves equipping people with the skills to make them confident in applying or working with AI.
Thanks to the work of the Scottish Government, Techscaler successfully raised more than £100 million of capital investment last year, from both public and private sources, and it is supporting businesses across medical technology, artificial intelligence and space. Can the Deputy First Minister say any more about the importance of collaboration with the private sector and of developing confidence in and attracting investment into Scotland’s early talent?
Collaboration is critically important here. The success of Techscaler members in securing £195 million of investment is a powerful reflection of the confidence that investors have in Scotland, and credit goes to the exceptional founders, whose innovation is driving Scotland’s growth. However, that progress is rooted in collaboration. A prime example is Techscaler’s partnership with Scottish EDGE, which runs Scotland’s leading business funding competition. Through the Techscaler-sponsored young EDGE award, Techscaler provides funding to innovative founders who are under 30, alongside access to its education and mentorship programmes. This year, 18 Techscaler members won Scottish EDGE awards. From my perspective, it is brilliant to see the ecosystem working together, and long may that continue.
Does the Deputy First Minister share my view that, in order to succeed, projects such as Techscaler must enjoy public confidence and the support of members of this Parliament? Although the Deputy First Minister says that Government-funded overseas trips should not be run to a “militarised schedule”, this is one business leader’s account of the trip:
“They went out drinking all night and even when stuff was organised for the next day, not by Techscaler but by other organisations, they didn’t turn up because they were sleeping it off. Some of them did it every day.”
The FOI response was heavily redacted, and apparently other criticisms of the programme were redacted as well. Will the Deputy First Minister join me in encouraging a re-release of the FOI response with only commercially sensitive information redacted?
If a survey is responded to on the basis of anonymity and confidentiality, I think that it is pretty challenging to then breach that confidentiality, not least as people on the Conservative benches have been encouraging me to respect the anonymity of whistleblowers.
Recent figures confirm that Scotland is by far the fastest-growing start-up economy in the UK and is fast becoming Europe’s leading start-up nation. That success comes despite a challenging fiscal environment in which Labour’s tax on jobs is harming growth and Brexit is limiting access to talent across the country. Can the Deputy First Minister say any more about Scottish Government’s policy choices and how we can build on that momentum?
The member is right to talk about some of the global headwinds and the challenges that we are encountering right now, which give us all the more reason to support and back the initiatives that are having an impact. The outlook for Techscaler, even after three years, demonstrates that the strategy is working. Every major indicator—start-up rates, investment of risk capital, the size of later-stage investment deals, and external investment—is growing rapidly, often bucking UK-wide and global trends. In other words, it is working. I sincerely hope that members across the chamber can find it within themselves to back something that works.
That concludes the ministerial statement.
On a point of order, Presiding Officer. Since I mentioned whistleblowing in the chamber, I should be transparent by making it clear that my entry in the register of members’ interests states that I am a director of WhistleblowersUK, a not-for-profit organisation that was set up to advocate for a more positive environment for whistleblowers and whistleblowing.
Thank you, Mr Kerr. That is not a point of order, but your comments are on the record.
There will be a brief pause before we move to the next item of business.
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