September 26th, 2014.
The Post-vote Scottish Start-up Business Scene
“We are only as strong as we are united, as weak as we are divided.”
That was the final tweet posted by best-selling author JK Rowling prior to the result of the Scottish referendum being announced. It was also the sentiment that had financial analysts and investors concerned about the business implications of the Scottish referendum vote.
Because aside from the political ramifications of an independent Scotland, there were concerns over:
• Commercial turbulence whilst Scotland transitioned from the pound sterling to an alternative currency
• The issue of Scotland paying her portion of the UK’s over £1 trillion in debt
• The destabilisation of the Royal Bank of Scotland due to it having locations throughout the UK
• The effect of numerous back-and-forth arguments between Westminster and Holyrood on the operation of Scottish businesses
• Whether Scotland would remain part of the European Union
• And many others
On September 19th 2014, the Scottish public voted “No” to becoming independent of the United Kingdom. And the business community immediately rushed to the stock market only to find a marginal increase of 18 points to 6837. Clearly the markets had braced themselves for the financial consequences of the referendum. Even the Royal Bank of Scotland posted a 2.5% gain despite fears of a loss.
However, despite the relatively muted reaction from the stock market towards the Scottish referendum result, one sector that was demonstrably more outspoken was the Scottish startup scene.
In the quarter following the referendum, the number of business start-ups in Scotland has fallen significantly.
According to the Committee of Scottish Bankers – comprised of Bank of Scotland, TSB Bank and Clydesdale Bank – 3,179 new businesses were recorded during the observed period…a 4.4% drop from the previous quarter.
The largest growth in start-ups came from businesses classified under real estate, renting and other related activities. The next area showing significant start-up activity was in the wholesale and retail trade repairs sectors.
But even though start-up numbers have dropped 4.4% from the previous quarter’s figures, they are 1.1% higher than the same quarter in 2013. This, combined with the recent success of Edinburgh-based cybersecurity firm Payfront in raising over £1.1 million from private investors, provides a glimmer of hope.
Because even though Scotland was split over the issue of being part of the UK, there was demonstrable unity in coming out to vote and seek the best for Scotland. And hopefully this will result in more start-ups being launched in Scotland that will benefit that nation as a whole.