For centuries unicorns have exerted a strong fascination for people who attribute magical powers to the mythical beast but today the most avid ‘unicorn’ hunters are shrewd technology investors who have the digital powerhouse of Edinburgh firmly in their sights.
‘Unicorns’ are start-ups that have achieved a valuation of $1 billion or more and according to technology advisers GP Bullhound, of the 13 companies in Europe that achieved unicorn status last year, Edinburgh based travel search engine Skyscanner and online fantasy sports company FanDuel were the only two to have emerged from Scotland.
Both companies have their Scottish operations in Quartermile, a city center development that has a Silicon Valley vibe and an international workforce that includes computing and engineering graduates from the city’s three world-class universities.
Skyscanner and FanDuel are both private equity backed businesses with ambitious growth plans. They are among the best-known of Edinburgh’s hi-tech companies but they are by no means isolated examples of entrepreneurial success as Scotland’s capital is a major hi-tech start-up hub.
However, their unicorn status has elevated them on the world stage, despite the fact that as Skyscanner Chief Executive Gareth Williams says, becoming a unicorn is not an end in itself.
The unicorn is the animal emblem for Scotland and has been a Scottish heraldic symbol since the 12th century. The success of today’s Scottish ‘unicorns’ is emblematic of a new age of digital enlightenment for Edinburgh in particular.
The city was at the heart of the 18th century Scottish Enlightenment which was characterized by a flowering of creativity across many disciplines including philosophy, the arts and science, led by some of the world’s greatest thinkers including Adam Smith, the ‘father of capitalism’ and philosopher David Hume.
The intellectual might of the city’s universities today is globally recognized. The QS World University Rankings, which compares 800 institutions on academic and employer reputation and other key factors has ranked The University of Edinburgh third in the UK after Cambridge and Oxford in 2014.
The University of Edinburgh’s School of Informatics is particularly highly-regarded for research and commercialization – in the decade to 2010 it created 244 spinouts, more than its closest UK rival, Cambridge University. Edinburgh Research and Innovation (ERI) data show that investment in university-founded companies hit a record $363 million in the past year.
Skyscanner’s Williams says: “Our growth can in part be attributed to the world-class computer science department at The University of Edinburgh which produces really excellent graduates.” Skyscanner employs more than 700 people worldwide, including 50 nationalities across nine global offices, including offices in both Edinburgh and Glasgow.
There has been an explosion of hi-tech and digital activity in Edinburgh – and locating in the city is an increasingly attractive proposition for US companies
The information and communications technology (ICT) and digital technology sectors deliver an estimated $4.6 billion to the Scottish economy and employ 17,000 professionals based in Edinburgh.
Edinburgh’s emergence as a hi-tech hub has been supported by rising numbers of academic spinouts as well as start-ups emerging from Codebase, the UK’s largest technology incubator and one of the fastest-growing in Europe. It houses 60 companies who benefit from strategic financial advice and support as well as affordable high quality business accommodation.
Williams says: “Edinburgh’s story over the past 10 years has been an explosion of software and internet companies from more than 80 startups in the Codebase incubator to $1 billion companies like Skyscanner and FanDuel. It’s incredibly valuable to have because technologists can learn from each other. People who work in the sector in Edinburgh have a choice of companies to work for which adds to the city’s attractiveness as there is a very mobile global technology workforce.”
In the early days of Skyscanner Williams was based in London and was nervous about moving to Edinburgh. “Within three months I really appreciated the benefi ts such as easy access to mountains and beaches as well as all the attractions you seek in a city. I am very happy to raise my family here as well as grow my business.” Skyscanner is a global player with more than 40 million unique monthly visitors to its website, more than 35 million app downloads and services available in over 30 languages, generating revenues of $143 million last year.
Williams says: “Locating in Edinburgh also provides an opportunity for US companies to understand European markets. It is a very credible base from which to establish a European presence.”
Numerous US corporations have already established bases in Edinburgh including Amazon, which set up its first development center outside North America in the city, as well as Microsoft, Oracle and Dell. US financial companies include State Street which is part of a thriving Scottish finance sector spanning banking, insurance and asset management, underpinned by a strong network of professional services firms.
Nigel Eccles, co-founder and CEO of FanDuel, the largest daily online fantasy sports company, recently raised $275 million in funding and is now valued at a reported $1.3 billion.
FanDuel has successfully tapped into a growing passion for fantasy sports, with 41 million fantasy sports players in the United States alone.
It is big business, with big wins on games spanning NFL, NBA as well as college football and basketball – its entire customer base (to date) and more than half its employees are in the United States. FanDuel has 386 employees – 241 in the US and 145 in Edinburgh – mainly in product engineering. Regular direct US flights from Edinburgh, Scotland’s largest airport, help FanDuel operate as a transatlantic business.
Eccles says: “When we moved our headquarters to New York we wanted to keep the engineering team in one location and felt we could build a better engineering base in Scotland. We’ve got a phenomenal team across Edinburgh and the United States. Our mindset is to hire the best people: the difference between the best person and the average person is 10 times. We look to hire the best and there is so much high quality engineering talent emerging from some of the best computing science universities in the world in Scotland.”
The tech sector also spans established successful businesses such as Craneware, a medical billing and revenue software solutions business whose products are used by one in four US hospitals. Craneware has 200 employees worldwide, of whom around 100 are based in Edinburgh.
Craneware Chief Executive Keith Neilson says: “Vibrant companies are continuing to set up and grow in Edinburgh and there are good potential inward investment opportunities. It’s a great place to live and work and to start up companies.”
Neilson says Edinburgh has an economical cost base with commercial rents on a par with US cities outside of cities such as New York and good transport links. “We have 16,000 square feet with a rooftop garden with amazing views over Edinburgh. There are eight flights a day to the US, between Edinburgh and Glasgow airports. I can leave Edinburgh at 9am and be in Manhattan for lunch.”
For further information contact Investor Support at The City of Edinburgh Council. investinedinburgh.com