There were 122 foreign direct investment deals done over the course of last year, up from 119 in 2015.The EY Scotland Attractiveness Survey showed Scotland was the second most popular part of the UK to invest in behind London.
This fifth year in a row that the country has been in that position.
However, Scotland won a smaller share of overseas investment in 2016 than previously, with 10.7% of deals coming north of the border compared with 11.2% in 2015.
Foreign Direct Investment (FDI) in Scotland grew by 2.5% in 2016 - lower than the 7% increase recorded across the UK for that year and significantly down from 2015 when investment in Scotland grew by 51%.
Mark Harvey, EY's senior partner in Scotland, said a "halo effect" from events such as the Commonwealth Games and the Ryder Cup may have resulted in "abnormally high" levels of investment in 2015.
"We enjoy resources few nations can match, including one of the most highly-educated work-forces in Europe, a long-standing reputation for innovation and an internationally-regarded brand.
"Today's attractiveness survey indicates these assets continue to be recognised on the world stage, with a substantial number of projects from the US, France and Germany.
"In fact, more than one in 50 of the investment projects across the whole of Europe are located in Scotland."
Scotland’s perceived attractiveness for foreign investors remains at a reassuring level: 7% of companies who are yet to invest in the UK ranked Scotland as the most attractive region; a particularly encouraging sign. This is of significant note given that the ‘halo effect’, created by the landmark events in 2014, appears to be ebbing, with Scotland’s attractiveness slipping back to 4% from 6%. There are also important opportunities open for exploitation. Scotland could focus on developing stronger relationships among the newer and emerging origin sources of FDI. Although China and India rank among the UK’s top five original sources, they did not appear in Scotland’s top 10. Scotland also trails behind other UK regions in terms of where Headquarters are established. Manufacturing in the UK performed well, predominantly driven by the North of England and the Midlands. The picture for this sector in Scotland, however, has not been as strong. There has been a decline in machinery and equipment projects, creating fewer jobs per project in comparison to England’s Northern Powerhouse. Collectively, the regions have performed extremely well and are largely responsible for the UK’s 20% growth in FDI projects with almost 90% of the UK’s growth coming from outside London and the South East. Leading the pack is Scotland with the greatest number of projects outside London. The UK’s agenda to devolve power has resonated positively with investors who are helping to rebalance economic activity across the country. However, awareness of UK devolution appears to be limited, and knowledge of regional changes could bring further benefits. Growth in regional economies and the latest FDI figures should not be taken for granted. Now is not the time for Scotland to rest on its laurels. Regional performance is also increasing across European countries, posing greater competition for Scotland and the UK. Continued improvements to infrastructure and skills development will be necessary in order for Scotland to attract more inward investment in the future.
Each of the 10 leading sectors for FDI in 2015 across Scotland either generated the same number of projects or recorded an increase over their 2014 performance. The sole exception was of machinery and equipment, which decreased. The most significant sector generating investment into Scotland in 2015 was software, whose projects rose by 170%. However, eclipsing this in terms of the rate of increase was business services, which recorded a six-fold increase in project numbers, and utility supply, which recorded a five-fold increase. On the downside, machinery and equipment projects declined by 60%. In addition, while oil & gas was still in the top 10 sectors generating investment projects in Scotland in 2014, the 2015 GIM figures show that the malaise in the industry meant that only one project was recorded in Scotland from the oil and gas sector during the year. When the overall increase in FDI employment recorded across Scotland is broken down by sector, those sectors showing the largest actual growth in employment were business services (a 16-fold increase in FDI jobs), software (up by 92%), food (an 18-fold rise) and scientific research (up fourfold). These five sectors accounted for employment growth of 2,482 out of the total of 5,385 jobs created through FDI into Scotland during the year.
Largest projects in Scotland in 2015 in terms of job creation Source: EY’s Global Investment Monitor 2016 Company name City Origin country Jobs Project type Activity JP Morgan Glasgow City USA 500 Expansion Sales & Marketing Webhelp Groupe Argyll and Bute France 400 New Contact Centre Lockheed Martin UK Glasgow City USA 327 New Research & Development Webhelp East Ayrshire France 300 Expansion Contact Centre Marine Harvest Fife Norway 260 Expansion Manufacturing Jabil Circuit Inc West Lothian USA 212 Expansion Sales & Marketing Concentrix Renfrewshire USA 200 Expansion Sales & Marketing ThyssenKrupp AG South Lanarkshire Germany 200 Expansion Manufacturing HGS Europe Scottish Borders India 200 Expansion Contact Centre CGI France Edinburgh City Canada 200 Expansion Shared Services Centre
Here are the top 11 most active angel groups investing in Scottish startups
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Angel Academe
Typically invests between 拢100k and 拢1.5m. Companies should have at least one woman on the founding team. 聽The average stake taken by investors is 17.0% at a 拢2.38m pre-money valuation.
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Apollo Informal Investment
Typically invests between 拢20k and 拢150k. Based in Edinburgh, the group is sector-agnostic and invests in companies with a maximum valuation of 拢500k.
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Archangels
The preferred level of investment is 拢250-500k but can cover a range from 拢50k to 拢2m. Based in Edinburgh, Archangels is also a partner of the Scottish Co-Investment Fund.
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EOS Technology Investment Syndicate
Typically invests between 拢20k and 拢500k. Invests exclusively in companies that are either EIS- or SEIS-qualifying, with a special focus on sectors such as software, oil and gas, renewables, bio-medical, and marine
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Equity Gap
Typically invests between 拢20k and 拢500k. The average stake taken by investors in deals is 21.9% at a 拢1.46m pre-money valuation.
ESM Investments
Typically invests between 拢200k and 拢500k. The fund was founded in 2011 and is made up of current and former technology executives and founders.
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Gabriel Investment Syndicate
Support includes a minimum of 拢20k from Gabriel, plus matching funding from Scottish Enterprise.
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Investing Women
Their usual range of investment is between 拢50K and 拢250K of seed capital in early stage ventures that are based in Scotland. They also look at considerably larger investments collaborating with other angel groups.
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Kelvin Capital
Kelvin Capital was founded in 2009 and has since raised a total of over 拢13.5million into 16 portfolio companies.
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London & Scottish Investment Partners
Typically invests between 拢300k and 拢500k. The network is a Scottish-based angel group supported by investors from London and Scotland. It's members are part of LINC, the Scottish Angel Network.
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