Key to the success of Edinburgh as a thriving technology hub are its university’s research strengths and a globally renowned enterprise scene
by Mark Ford
Edinburgh Research & Innovation’s Company Formation Team at the University of Edinburgh have achieved a landmark year, with the total number of spin-outs and start-ups reaching 417 in 2015, and 22 in that 12-month period alone raising £237.4 million.
Edinburgh is now emerging as the largest technology hub outside London, with those new businesses formed by the University of Edinburgh estimated to have created almost 3000 jobs, and to be contributing more than £170 million to the global economy.
Key to this burgeoning success is not only the University of Edinburgh’s world-class research but also its renowned enterprise scene, says Grant Wheeler, Head of Company Formation and Incubation team. The thriving start-up community in Scotland’s capital provides access to entrepreneurial, employable, and industry-ready students, and also to a business angel and early-stage finance network.
“There is an element of momentum from earlier successes,” he says. “Clearly success breed success, partly because it results in career entrepreneurs, people who get involved, learn, and are inclined to go and do it again.
“Looking at it from a distance, entrepreneurial failure is not a negative thing; it’s part of the learning experience. They dust themselves off, go and try again. Then again, there are the big employers here who are also recruiting entrepreneurial graduates and postgraduates because they value that mindset.
“So there is an entrepreneurial ecosystem around the university, where we are growing a community of experienced entrepreneurs. However, the impact is beginning to extend beyond that. People in all walks of life are seeing enterprise happen and are thinking that they can do it too. Not just students in the university but everyone. By reading about it in the media, through promoting and encouraging enterprise, we persuade people they can do it – that entrepreneurship is within their grasp.
“Particularly with potentially higher risk ventures, such as those based on technology, confidence is critical. So for young people coming out of university with high-end skills, getting them to believe they can apply those skills and getting them exposed to what’s going on is crucial. Getting them involved in early stage companies, LAUNCH. ed training or our 3 Day Startup challenges work on their mindset as well as on their skills, and makes them believe that things are possible.
“Even professional services, such as those on offer from lawyers to accountants, are evolving, with enterprise becoming a key market for them. At the University of Edinburgh, it’s all about encouraging people at all stages to really believe what they are doing can be commercially exploited.”
Developing and stimulating the entrepreneurial focus around the University of Edinburgh community is only half the story, however, with investment into student start-ups also on the up. This, stresses Wheeler, is driven by the number and quality of innovative ideas arising from the research base, together with the fact that much of Edinburgh’s student and academic enterprise work focuses close to the market.
Underpinning all this is a platform of support from partner programmes such as Scottish Enterprise’s Royal Society Enterprise Fellowships and SMART awards, to the university’s pre and post start-up support service and mentoring. In terms of financial backup, there is also an in-house venture capital fund, the Old College Capital (OCC), which provides growth and development finance for companies associated with the university.
“We are working to build the quality of the propositions and are also trying to stream the best projects through,” says Wheeler. “We are also trying to encourage entrepreneurs themselves to challenge what they’re doing.
“So yes, the quality of projects has improved over the years and if we are starting to get it right then there is a clear knock-on benefit to the city.
“However, we’ve also put a lot of effort into networking with investors, looking at what they’re after, but looking beyond that to bring in management teams to help create companies that will grow more quickly and more successfully.
“There’s no doubt with those kinds of management teams in place, investors are drawn towards that.
“Then there is the fact that Scotland has always had a good population of high net worth business angels who are very well organised here, and there is a strong investment scene, certainly for early stage. The challenge is to introduce growth capital, which is usually sourced from outside Scotland, and Scottish Enterprise has to be commended for its work alongside those investors.”
The university’s successes can not only be measured in the number of spin-outs and start-ups, but also in their stature.
FanDuel, the fantasy sports company founded by University of Edinburgh students in 2009, now employs more than 250 people in Edinburgh and Glasgow, but also has offices in New York, Orlando and Los Angeles.
Last year, FanDuel completed a fifth investment round to bring its capital raised to £252 million, with the company’s valuation breaking the mark to make it the second company from Scotland to join the Unicorn Club (USbased software companies valued at $1 billion-plus).
“There is a very high level of support from the University Principal down, across the institution, and filtering down from some big-hitting academics such as Mark Bradley, Professor of High-Throughput Chemical Biology, and Harald Hass, Professor of Mobile Communications,” says Wheeler. “They are involved in significant new company formation projects, sometimes more than one, alongside running top-level research labs.
“In addition to creating businesses, it is part of the wider student experience, and part of delivering very high quality graduates and post-graduates. The whole experience of enterprise is something seen by employers as important, students see it as part of their career development, and they can have ideas that may not be part of their long-term ambitions but can be experience-building.
“Companies are looking for enterprise skills in their recruits – they really value these skills.
“Edinburgh’s commitment to enterprise and to delivering company formation isn’t just something happening around the edges. It’s fundamental to the culture of the university.”
To find out how you can get involved in start-ups at the University of Edinburgh visit http://www.research-innovation.ed.ac.uk/Entrepreneurs