Reaching the Canopy: A Mission for Scotland’s Scale-Ups

Invest2Scale’s founding partners explain why Scotland’s scaling companies need more than capital, and why now is the time to build the experience, talent and support around them.

Deep within Australia’s ancient rainforests, young trees can spend years, or even decades, beneath the dense canopy, surviving on the slivers of sunlight that filter through the leaves above. Growth is slow, almost imperceptible. Mortality still occurs, but their strategy is persistence rather than rapid growth.

‍Then a giant falls.

‍Suddenly, sunlight floods the forest floor. Ecologists call the process that follows gap-phase regeneration: canopy openings change the light, temperature and competitive conditions below, creating opportunities for young trees to accelerate their growth.

‍Saplings surge upwards in a race for the canopy before the opening closes once again. But opportunity brings risk. The changing conditions can accelerate growth while also increasing mortality. Competition intensifies and young trees adapted to life in the shade must respond rapidly to a very different environment. Many never make it.

‍For Scotland’s ambitious businesses, the parallels are striking.

‍Over the past decade, considerable attention and resource has gone into creating and nurturing new companies. Scotland now has an increasingly mature pipeline of businesses that have survived those difficult early years, found customers, developed technologies, built teams and demonstrated the potential to become something considerably bigger.

‍But starting a company and scaling one are fundamentally different challenges.

‍And just as in the rainforest, the moment of greatest opportunity can expose whether the foundations are strong enough, the resources sufficient and the surrounding environment capable of supporting what comes next.

‍That challenge brought together Bob Hair of Cazenove Capital, Stuart Hendry of MBM Commercial, Paul Mason of CT Accountants and Ewan Anderson of Eden Scott to establish Invest2Scale.

Initially, the mission appeared relatively straightforward: bring more growth capital to Scotland.

‍Four years on, that ambition remains. But their understanding of what is required to achieve it has become far broader.‍ ‍

Building the ecosystem

‍For Bob Hair, Head of UK Regions at Cazenove Capital, the thinking behind Invest2Scale reaches far beyond individual funding rounds.

‍He points to Boulder, Colorado, and investor and entrepreneur Brad Feld’s influential thinking on entrepreneurial ecosystems: communities built by entrepreneurs for entrepreneurs, supported by investors, universities, government and others, but underpinned by a culture in which people continually pay their experience and connections forward.

‍“That resonated with me because that feels like Scotland,” says Hair.

‍It also informs how he sees Cazenove’s role. Rather than waiting until successful founders have created wealth and then offering to manage it, he believes there is a higher purpose in helping to build the conditions in which those entrepreneurs can succeed in the first place.

‍“If we want to build an economy where we help founders realise their dreams and create wealth, that’s a much higher purpose,” he says.

‍Scotland, he argues, already possesses many of the ingredients. Strong universities, ingenuity, an active angel community and an ecosystem small and connected enough that introductions which might take months elsewhere can often be navigated here.

‍What it has historically struggled to attract in sufficient volume is the growth capital required when ambitious companies move beyond those earliest funding stages.

‍That was one of Invest2Scale’s original motivations: to bring investors to Scotland who might not otherwise encounter its businesses.

‍But the experience of doing so revealed a more complicated challenge.

‍“It’s not just about finding the money,” says Hair. “It’s about being ready to do it.”

‍Capital is only truly useful when the company receiving it has the people, financial structures, governance, commercial strategy and ambition required to deploy it well.

‍That realisation helped drive Invest2Scale’s evolution from a single annual conference to an ongoing programme. Instead of simply creating the introduction between company and investor, the four partners want to make better use of everyone’s valuable time by helping businesses become genuinely ready for that conversation.

‍“If we come at those four corners and actively contribute,” says Hair, “then we will make a difference.” ‍

Experience of where you’re going

‍For Paul Mason, Partner and Head of Corporate Finance at CT Accountants, one of Scotland’s biggest scaling challenges is deceptively simple.

‍Most founders have never done it before.

‍In larger, more mature entrepreneurial ecosystems, founders may be surrounded by executives, investors and advisers who have repeatedly navigated significant funding rounds, international expansion, organisational growth and eventual exit.

‍Scotland has fewer people carrying those particular ‘war wounds’.

‍“Our scale-ups generally have not, in terms of the founder team, lived that before,” Mason says. “They’re doing it for the very first time.”

‍That does not imply a deficit in the founders themselves. It means the odds can be improved by surrounding them with people who recognise the terrain.

‍Mason has advised hundreds of businesses through different stages of growth, success and failure. That breadth of experience allows him to see recurring patterns: decisions made early that later become obstacles, resources deployed in the wrong places, or problems discovered during an exit process which could have been resolved years before.

‍His guiding principle is simple.

‍“Always think about the next stage, and bring in the talent that has experience not of where you are, but where you’re going to.”

‍That expertise does not necessarily need to come from advisers. In many cases, he says, the greatest value may be an introduction to someone else, a founder who has already made the journey, or an objective critical friend prepared to challenge rather than simply applaud.

‍For Mason, the motivation is intensely personal.

‍“I genuinely want to have an impact on companies, on people and on success,” he says. “The economic impact of scale-ups succeeding more quickly, to a greater degree and in more numbers is huge for Scotland.” ‍

From peril to prosperity

‍For Stuart Hendry, Founding Partner of MBM Commercial, the question is partly one of where Scotland chooses to focus its attention.

‍Having spent more than 20 years working alongside entrepreneurial companies, Hendry has watched enormous effort go into encouraging businesses through their earliest stages.

‍His question is what happens afterwards.

‍“What is the point putting all this effort into all these companies raising a million pounds, and then they’re not actually going on to scale?”

‍He is not arguing against startup support. New businesses and new ideas must continually enter the ecosystem. But measuring success at the point a company gets out of the ground risks missing where much of the eventual economic value is created.

‍“If we only put our focus into starting and helping those seeds grow to that level, why are we not putting as much effort, and more effort, into those saplings that have the potential to grow into really big trees? Let’s direct more light to those companies.”

‍Hendry sees the consequences when that next stage does not go to plan. Increasingly, he finds himself referring companies facing serious difficulties to restructuring and insolvency specialists.

‍“That’s what breaks my heart,” he says.

‍That is not where Hendry believes the value created by Scotland’s entrepreneurial ecosystem should ultimately accrue. He wants to see more of it translated instead into stronger businesses, growing revenues, better jobs and wealth for the entrepreneurs who have spent years building them.

‍He also sees plenty of evidence of what the other side of that equation can look like.

‍Only this week, one client arrived with multiple competing term sheets from investors to consider.

‍“That’s a nice thing for me to be able to do,” he says. Too often, a company may have one offer and little room to negotiate. A choice of investors fundamentally changes the dynamic.

‍For Hendry, those contrasting conversations capture both the urgency and the opportunity facing Scotland’s scaling businesses: some are struggling to secure the capital required to keep growing; others have built such a compelling opportunity that investors are competing for them.

‍The ambition is to see many more of the latter.

‍Hendry does not define success only in terms of technology companies or billion-dollar valuations. He points to businesses in traditional industries turning over tens of millions of pounds, often led by founders who do not even consider themselves entrepreneurs, including companies that are among the largest employers in their towns.

‍That, for Hendry, is economic impact in its most tangible form.

‍More Scottish companies moving from £5 million to £10 million turnover, from £20 million to £50 million and from £50 million towards £100 million would have a profound cumulative effect on employment, wealth and the wider economy.

‍“I just want to see more companies get through the canopy.” ‍

A rising tide

‍Ewan Anderson, Marketing Director at Eden Scott, describes the ambition another way.

‍“For me, this has always been about a rising tide raising all boats.”

For Anderson, the value of successful scale-ups extends well beyond the individual companies themselves. Stronger businesses create jobs, retain talent, generate experience and contribute to a healthier ecosystem around them.

‍“As a collective, how can we support that?” he asks.

‍Successful scale-ups create experienced executives. They attract specialist talent. They create wealth which can be reinvested. People who have travelled one scaling journey can take their experience into another business, join boards, become investors or help the next generation avoid mistakes they themselves had to learn the hard way.

‍That is how an ecosystem begins to compound its own experience.

‍Anderson believes Scotland may now be reaching that stage naturally.

‍“I think now the opportunity is to scale,” he says. “We’ve got a really solid foundation of startups, and a solid foundation of an ecosystem that can help all these startups to create good companies.”

‍That maturity changes what founders need.

‍Invest2Scale was initially conceived largely around access to investment, but conversations with businesses revealed that finance was only one part of the challenge.

‍“It’s more than money,” Anderson says. “It’s actually about the talent. It’s about the opportunity to globalise and get out there into new markets.”

‍It is also about bringing accumulated experience back into companies at the right moment. The founder capable of taking an idea through its earliest years may need an experienced CEO, CFO or CMO alongside them for the next stage. People who have already scaled companies elsewhere can become part of Scotland’s infrastructure for doing it again.

‍That thinking also sits behind the change in Invest2Scale’s format.

‍“My fear has always been that you start hosting an event for event’s sake,” Anderson says. “It was getting back to the nub of what we were trying to do, which was to give the knowledge, skills and insight that people needed to grow their business.”

‍The August gathering will therefore become the starting point rather than the whole programme, followed by focused masterclasses that allow founders to learn from specialists, from people who have done it before and, crucially, from each other.

The opening in the canopy

‍The timing matters.

‍Technology, global markets and capital are shifting at exceptional speed. Artificial intelligence alone is changing both the economics of creating companies and the competitive landscape facing established ones.

‍Hendry describes the current period as comparable to the dotcom era “on steroids”: simultaneously fascinating, frightening and full of possibility. He is seeing SaaS valuations fall sharply in some transactions while, elsewhere, strong businesses have investors jostling to be first in line.

Opportunity is not being distributed evenly.

Nor does being based in Scotland lower the competitive bar.

Hendry recalls US venture investors visiting Scotland and being surprised by the quality of the companies and technologies they encountered. But their feedback to some founders was equally direct: if they wanted US capital, they had to compete with the founders those investors could meet on their own doorstep.

The technology could be world class. The proposition for capital had to be too.

For Invest2Scale’s founders, that is where Scotland’s opportunity and its challenge increasingly meet.

The gap in the canopy may be opening, but its existence guarantees nothing.

A business has to recognise the opportunity. It needs capital capable of supporting the journey, but also leadership, talent, governance, financial discipline and the confidence to enter markets far larger than its own.

And founders must make those decisions at speed while often travelling that road for the first time.

The mission that began with bringing more growth capital to Scotland has therefore become something broader: building companies capable of attracting it, deploying it and turning that capital into sustainable growth.

The hope is that the programme itself becomes part of the compounding effect Anderson describes: founders sharing experience with founders, expertise being paid forward, stronger companies creating stronger talent pools and successful businesses increasing Scotland’s ability to produce the next generation.

Or, returning to Hair’s vision, something bigger than four professional services firms running an events programme.

“We’re founders of what we want to be a movement,” he says, “not sponsors of a conference.”