Sitting in a packed auditorium at Edinburgh’s prestigious New Town Assembly Rooms back in May, The Next Web was among a slew of Scotland’s top tech startups, entrepreneurs, academics, and money-men to see what’s hot and what’s happening in the Scottish tech scene. The occasion? Engage Invest Exploit (EIE), an annual investor event designed to showcase the best companies emerging from Scotland’s universities, incubators and bedrooms.
The main keynote of the day came courtesy of Sir Brian Souter, a name you may not hear all that much outside of Scotland, but you probably have used one of his products before.
Souter is the co-founder of the Stagecoach Group, the international purveyor of transport services, including buses, coaches, trains, trams and even ferries. In the UK alone, Stagecoach Bus employs around 18,000 people across 100 locations, and transports around 2.5 million passengers each and every day. Yes, Souter’s worth a pretty penny, and through Souter Investments, he also puts money back out into the business realm, though with less of a focus on startups.
“Because of the financial crisis, there’s tonnes of really good businesses with strong cash flows that desperately need capital – so the rate of return we get is much better than what we do trying to assess startup investments,” explained Souter.
Souter himself had garnered £25,000 from his entrepreneurial bus-driver father in 1980 to start Stagecoach, and he said this method should still have a role to play today. Though this does ignore the fact that to get money from your family to start a business, well, your family has to have money.
“I think family money is still very important for startups, but what I would say is if your idea is good enough, you will get the money,” he continued. “What we do is, we put a block amount of funds with one of the angel investor groups, and we let them work with them. It is an area that interests us, we do like to see these businesses grow for the long-term future. Souter Investments is an exciting place to be, we run a mixture of investments, diverse from funeral plans to bus companies, to a wide range of technologies.”
This is reflective of the problem faced not only by startups in Scotland, but fledgling companies around the UK, Europe and many pockets across the world. Seed funding can be hard to come by for idea- or prototype-stage companies, and banks are rarely game for playing ball.
Setting the scene
Ignoring the telephone, television, and a myriad of other world-changing innovations to hail from Scotland, when discussing modern-day, consumer-focused tech, flight search engine Skyscanner (the world’s second biggest after Kayak) is one of the few global success stories emanating from Scotland.
Elsewhere, Stirling-based OneDrum was acquired by Yammer back in early 2012, just before Yammer itself was snapped up by Microsoft. And earlier this year, Wolfson Microelectronics, which was founded in Edinburgh in 1984, was acquired by US rival Cirrus Logic. Not a consumer tech company per se, but it’s notable insofar as Wolfson makes audio chips for Samsung Galaxy devices.
Then there’s Rockstar North, formerly DMA Designs, which is now owned by New York-headquartered game developers and publishers Rockstar Games. Rockstar North is the creator behind the ridiculously popular Grand Theft Auto games, while its predecessor DMA was responsible for a little nugget called Lemmings, which you may remember if you played games in the 90s. Oh, Rockstar North is based in Edinburgh, by the way.
Edinburgh University’s School of Informatics is among the biggest computer research conglomerations in Europe, with hundreds of academic staff. In the UK, a Research Assessment Exercise (RAE) is carried out by the higher education funding bodies, designed to guide where research funds are distributed – Edinburgh came out trumps in the last two, in 2001 and 2008.
Skyscanner actively recruits interns and full-time staff from the school, as well as from other technical institutions across Scotland.
Throw into the mix the existing squad of tech startups across the city, from Mallzee and FreeAgent to Money Dashboard and FanDuel, Edinburgh, and Scotland on the whole, has a credible shot at becoming a significant startup hub. And it’s currently at a crossroads where things could flourish or flounder.
CodeBase & co-working
Co-working spaces and incubators are always a sure-fire sign of there being a startup ‘scene’.
Back in 2012, we reported on an impressive new startup hub opening in the Scottish capital called TechCube, which offered office space to fledgling tech startups, and proclaimed to be the first technology incubator in Scotland developed entirely by private capital and the local startup community.
Dr. Jamie Coleman, who is also a member of an angel investment club called Northface Ventures, was responsible for driving the business incubation at TechCube, with a remit of “bringing together the hottest startups and private equity,” he said at the time. But that was then, and this is now. In slightly opaque circumstances, Coleman left TechCube behind and has now spun-out a separate incubator called CodeBase, located a stone’s throw from the world-famous Edinburgh castle.
“CodeBase is one of Europe’s fastest growing tech incubators,” says the About Us page. And while Argyle House may not be the bonniest building in the land from the outside, the 60s-style office block delivers a quarter-of-a-million square feet of space in the heart of the capital – a perfect location to attract startups from Edinburgh, Scotland, and further afield.
Officially opened by Scottish First Minister Alex Salmond in March 2014, CodeBase is formed entirely on private equity, and it’s setting out to “build and scale the next great tech companies.”
Just last week, CodeBase’s credentials received a massive boost, when it revealed a partnership with London-based European micro-seed investor and mentoring program Seedcamp, which will lead to a joint event in August geared towards unearthing top startup talent. For the record, the keynote speaker will be Skyscanner co-founder and CEO Gareth Williams.
The so-called Mini Seedcamp, taking place in Edinburgh on August 7 and 8, represents its first foray north of the border, and marks the first shindig in an “ongoing collaboration” to help support and scale startups. The event is taking place during the Edinburgh International Festival and Fringe, and will include a competition that’s open to startups from across Europe.
Up to 15 startups will be selected to participate in the event, which will then vie to procure a place at Seedcamp Week in September, which can then lead to them joining Seedcamp proper. This offers funding, plus a residence at Google Campus in London.
“Edinburgh has a rich history of creativity and fantastic Universities producing great engineering talent,” says Carlos Eduardo Espinal, a Seedcamp partner. “These factors are hugely important when startups are in their early stages, which is why it’s crucial that organisations like Skyscanner are leading the way to encourage others.”
While Seedcamp is looking to spread its wings into new waters, CodeBase is striving to increase Edinburgh’s reputation not only as UK tech hub, but a European one. To help ready the startups, CodeBase is running a one-day Seedcamp preparation workshop on July 7, and will feature pitch-coaching, business model evaluation and fundraising advice from mentors.
“Edinburgh’s startup community is going from strength to strength and the partnership with Seedcamp is evidence of how highly rated our tech scene has become in international circles,” says CodeBase’s Coleman. “We need to help our most promising ventures grow and foster the right type of skills needed to reach the next level and Seedcamp is now an integral piece of the jigsaw that will make this happen.”
Seedcamp tie-ups aside, CodeBase will surely be a compelling proposition for startups of all shapes and sizes. For £200 ($340) a month per person, smaller outfits can have their own desk with 24/7 access, free meeting rooms, super-fast gigabit internet, showers and more. The early-stage companies get 90 days with Coleman mentoring, who helps them to grow and find a product-market fit – if this fails in the designated time-frame, they’re out the door.
Larger companies can gain access to their own custom-built offices, catering for two to 100 people each. Yes, Argyle House is a big building. In terms of the type of companies Coleman is looking for, well, he has a few basic pre-requisites. They generally have to be software-focused, but if there is a hardware element, “it has to have a software core,” says Coleman. This makes them much easier to scale.
Startups in residence
We were given a guided tour of CodeBase, and we got to meet some of the companies already working from the space. While the building was still undergoing some renovation work at the time (damn those drills), it’s easy to see how this could become a hot-spot for startups from across the country.
There are more than 20 companies calling CodeBase home for now, and this doesn’t include the early stage co-working startups that recently incorporated, or a bunch of new tenants that are scheduled to move in within the next few weeks.
Here’s a quick snapshot of the companies currently working out of CodeBase.
Make it Social
Make it Social is a group-booking platform that helps groups of friends organize activities together, and pay individually. Companies can add a ‘Make it Social’ button to their websites to facilitate bookings.
Founded way back in 2007, Kotikan is an app development agency that counts a number of well-known brands among its client-base. This includes global flight search engine and fellow Edinburgh-dweller Skyscanner, which passed the 30-million downloads mark in 2013 across iOS and Android.
Float offers a simple cash-flow management, budgeting and forecasting tool, aimed at SMEs. It integrates with cloud accounting software Xero and fellow Edinburgh-based startup FreeAgent.
Despite rumors to the contrary, TV advertising is still going strong. But if a company can’t figure out which part of its TV ad spend is actually driving sales via your e-commerce website, well, this is where TVSquared wants to help.
TVSquared tells you things like which specific channel is driving most sales and responses, what genres achieve best results, and what the best-performing demographic is. It connects the dots between a company’s e-commerce successes and the driving forces that led to it from the TV realm.
BitWink is an iOS app development company, available for anyone to hire that requires, well, iOS app development.
Cloudsoft’s core raison d’être is to assist businesses seeking to move to the cloud, touting its Cloudsoft Application Management Platform (AMP) as “the only autonomic open source multi-cloud application management solution.”
It’s already working with some big-name companies too, including BetFair and BT.
CogBooks offers an adaptive learning platform that lets companies personalize their web-based learning so that “each individual receives the learning and support they need.” This could apply to universities (for students), employers (for employees), or anybody that offers online learning.
Launched initially out of Dundee back in 2011, Outplay Entertainment is a venture-backed game development company with a mission to “deliver fun, free and innovative games across a wide range of social and mobile platforms”. These games are distributed across iOS, Android and Facebook, and claim millions of users each day. Check out Monster Legacy for iOS as one example of Outplay’s handiwork.
Confbuzz is all about making events more useful, as it specializes in pulling together information from complex data, using machine-learning to eke out useful connections between delegates which can then be displayed on interactive maps. Event organisers pay for a Confbuzz event license, while delegates can use it for free.
EoSurgical is striving to improve the quality of surgery through delivering accessible surgical training tools. Its technology simulates real-life procedures, and includes the likes of eoSim, which helps surgeons learn, develop and master laparoscopic skills. It works with smartphones and tablets.
Administrate’s software is designed to help training companies and departments manage their business. The online system covers three main areas and products: Making training-administration easier, helping companies set up and deliver e-learning initiatives, while also assisting them in keeping their website up-to-date. This includes accepting online bookings.
GetSquare is an e-commerce and digital marketing agency that helps companies manage and set up their online stores. It’s already working with a range of clients from across Scotland and further afield.
Make Works’ mission is to make it easier for creatives to produce their works entirely from local materials. It’s helping open up access to Scottish suppliers, trades and manufacturing, serving as a platform to connect individuals and companies.
MiiCard (see previous coverage) is an online identity verification platform. It lets you sign up to online services and verify your identity without sending in forms or scanning documents. A single, trusted identity with all your personal data in one place. It offers a business, enterprise, and individual-focused service.
Neo designs and builds mobile and Web products, and creates “corporation innovation programs”. As an example, it helped reboot Friendster, after the once-all-conquering social network had fallen from grace. The mandate? “To reposition the company and launch a social gaming site that focuses on ‘entertainment and fun’.”
Peekabu’s engine enables your mobile phone to recognize buildings and products, or lets your laptop transform drawings into passwords.
The recognition engine constitutes a custom-built API that that works on Windows, Mac, Android and iOS, as well as HTML5 in browsers.
Reloaded Games is an online platform that powers free-to-play massively multiplayer online games (MMOG), including War Rock, Global MU Online, Sword of the World, and Knight Online. It claims 8.5 million players in 10 countries.
Founded in 2006, RightScale’s software suite includes cloud management and cloud analytics, supporting “infrastructure-as-a-service resource pools,” and enables self-service access to cloud services across a whole organization. It already has some big-name clients under its belt, including Electronic Arts (EA).
ShareIn is a tech-focused, equity-based crowdfunding platform. The online portal strives to connect individual investors with companies seeking equity funding. This is in contrast to the likes of Kickstarter, which doesn’t offer equity for backers.
With Stipso, clients (e.g. marketers) can create interactive infographics which also ask questions. It’s like a visual content marketing tool with living infographics that taps data from online surveys. For example, a website visitor may see a pop-up on a gaming site asking ‘What is your favorite RPG this week, X, Y or Z’, and then see the results of their input (and everyone else that contributed) in an accompanying infographic.
Founded in 2012 after it was spun out of Edinburgh’s Napier University, Symphonic is essentially a trust and governance framework that provides authentication of requests for data access within and between organisations. Its software facilitates collaboration in terms of circumventing security and governance problems. The purpose? To prevent unauthorized access while providing an “auditable trail of information access.”
Launched in 2012, Relaymed is a healthcare software startup constituting a cloud-based service that automatically captures point-of-care test data and allows medical professionals to assign it to electronic health records (EHR) as structured data.
Consisting of a team of maths, statistics, computer science and artificial intelligence (AI) specialists, Winterwell delivers “practical solutions to tough problems” via a range of services. This includes things like deciphering data your company may possess but you don’t quite know fully how to exploit.
ZoneFox specializes in helping companies protect their assets, including data and IP, by examining relevant data, providing alerts, and user activity monitoring. For example, ZoneFox flags and investigates employee activity that may breach a company’s data access or manipulation policies.
Kickstarting a tech ecosystem
CodeBase’s chief focus lies in “attracting international tech-savvy investment in order to pave the way for global expansion.” It ultimately wants to increase angel and venture capital investment for up-and-coming companies, serving as a go-to for investors such as DFJ Esprit, Oxford Capital, Scottish Equity Partners, and Seedcamp, while helping startups become “investor-ready”.
While co-working spaces and incubators are only part of the puzzle, the fact that Edinburgh now has two sizable spaces for startups – CodeBase and TechCube – is a good sign for fledgling tech entrepreneurs and developers. And with Seedcamp on-board as a partner, this should go someway towards elevating CodeBase’s reputation across the startup realm.