In 2022, Scottish Private Equity companies attracted a record amount of investment (£3.5 billion) even though investment numbers were still slumping elsewhere in the UK.
51 deals were completed in Scotland, up 69% from the previous year. Total investments were also up by £1.5 billion in 2022, making Scotland the only area of the UK to see a rise in both deal value and volume in the same period.
What helped Scotland’s startups and scaleups buck the trend? While consumer-heavy industries suffered as people tightened their purse strings, industries like FinTech and Sustainable/Green-tech continued to grow despite the often hairy financial backdrop. Edinburgh’s FinTech continued to pull in deals, and the move to net zero plus geopolitical instability affecting oil supplies meant Glasgow’s burgeoning green sector could continue to grow.
Demand outstripping available talent
But it’s not all plain sailing – recruiting specialised talent and keeping them remains one of the biggest issues facing scaleups in Edinburgh and Glasgow right now. While Scottish Universities continue to produce new workers with specialist skills into the market and the Scottish Government has announced their ‘innovation roadmap’ to add an extra 20,000 FinTech jobs to the economy, specialist talent is still in short supply.
As the Scottish FinTech market continues to grow, the demand for these specialist skills will continue to outstrip the talent available – particularly locally, with scaleups fighting over the same pool of talent they need to continue growing and secure new investment.
I hate the phrase, ‘the war for talent,’ but when tech founders are talking about fighting for specialist skills, it seems appropriate! So, what can you do to address the talent shortages? Let’s be honest; the country is not going to suddenly train a load more full-stack developers overnight, so for the medium term, you will be operating in conditions where demand will outstrip supply.
What you can do, however, is take steps to ensure you have the best chance possible to be seen as an attractive proposition to potential talent.
In our latest blog, we looked at why Private Equity hasn’t traditionally embraced the move towards flexible working – in spite of it being an industry where it would be a natural fit. Increasing flexibility – and we’re not just talking about working from home, here – not only opens up the possibility of widening your recruitment to other areas of the UK thanks to better remote working practices and governance, it also improves your local talent pool by opening it up to people currently excluded from working. Read the blog to find out more.
Invest in your in-house recruitment
We get it, you have to keep a big eye on costs to secure that next round of investment, and you might not feel spending money building an internal team to make a handful of key hires this year is worth it. But failing to find and keep critical talent can have a real impact on your ability to grow, scale quickly when you need to and even secure investment.
An in-house recruitment team will give you:
Cost Savings: Relying solely on external recruitment agencies can result in higher hiring costs over time.
Improved Quality of Hire and reduced attrition: Having a dedicated in-house recruitment team can ensure that your hiring process is aligned with your company culture and values. This will result in higher-quality hires and better retention rates.
Greater Control: Through your recruitment, it is a disadvantage for companies looking to quickly scale their operations or adapt to changing market conditions. By investing in your in-house recruitment function, you can have greater control over your hiring process, which can help you quickly fill key positions and adapt to market changes.
Long-Term Strategic Planning: An in-house recruitment function can help a company to better plan and forecast its hiring needs for the future. Without this function, the company may struggle to identify and fill key positions in a timely manner, which can negatively impact the company’s growth and success. Moreover, potential investors look for barriers to growth, and if your recruitment plans don’t match up to your ambitions – prepare for questions!
So while things are looking positive for 2023 in the Scottish Scaleup sector, don’t forget about addressing the biggest possible barrier to growth – talent.
If you’d like to know more about how we help private equity-backed scaleups, startups and carve-outs set up agile and innovative in-house recruitment teams while delivering first-class talent acquisition across critical candidate-short areas, contact us today.