Pathways to funding in Scotland are open but preparation key

That was the message from the first panel session at Insider’s Scotland growth event breakfast, where funders and advisers described a market that remains active, but increasingly selective.

Iain Burnside, CEO of DSL Finance, said the overall picture for SME finance remained relatively strong, pointing to data showing most businesses are still securing funding.

He said: “Four out of five SMEs actually got the finance that they were looking for, or a portion of it in the last year, and four out of five of them got the terms they wanted.”

But while capital is available, speakers made clear that accessing it is becoming more difficult.

Margaret Morton, chief executive of Angel Capital Scotland, said the environment remained challenging, particularly for businesses that lacked a clear proposition or failed to stand out.

She said: “It continues to be a challenging funding environment,” adding that those securing backing typically had something “unique” and “globally impactful” about their business models.

Victoria McLaren, investment manager at Maven Capital Partners said 2025 had been a tougher year for equity finance, shaped by interest rates, geopolitical disruption and slower exits.

She said: “There have been less deals done and I think there’s been a concentration of capital as well in some of the larger deals rather than earlier-stage, smaller deals.”

However, she said the outlook for 2026 was improving as funds had closed funding rounds and capital is still available to be invested through schemes like the Investment Fund for Scotland, so capital was ready to be deployed”

She said: “If companies are lean, capital efficient and have a credible team, then there’s definitely funding out there.”

Alan Hamilton, corporate finance partner at Johnston Carmichael, said the experience of raising capital now varies sharply depending on the stage of the business.

He said: “The businesses we’ve seen which often find fundraising more challenging are those at the very early stage. That’s still inherently difficult.”

Norrie Cook, Head of Fund Scotland at The FSE Group, said the issue was not a shortage of capital, but a lack of awareness among founders about what is available.

He said: “The capital there? Yes. One of the biggest challenges is making that awareness in the market of what’s available for the businesses.”

Norrie pointed to a major shift in the funding landscape, with more capital now coming from alternative lenders and a growing number of funders operating in the market.

However, he said business owners often do not have the time or knowledge to navigate the options.

A central theme across the panel was the gap between what funders expect and how prepared many businesses are when they approach the market.

Alan Hamilton said founders often underestimate the level of preparation required before raising capital.

Businesses need to clearly articulate their proposition, understand their funding requirements and prepare for detailed scrutiny.

He said: “It’s everything from the quality of your pitch decks, financial forecasts with assumptions that are clearly explainable to planning ahead for the likely diligence an investor will likely undertake.”

Victoria Mclaren said timing was also a key issue, with many founders starting the process too late.

She said: “It can be quite a time-consuming process… founders often underestimate how long that diligence process and the transaction can actually take.”

She added that equity raises can take six to nine months from start to finish, but companies that are prepared can move through the process much faster.

Norrie said businesses should view funding as part of a wider growth journey rather than a one-off event.

He said: “Use your growth plan. The funding is only part of it. The growth plan helps you to get there.”

Margaret Morton said founders also needed to better understand how different types of investors operate, particularly in the angel market.

She said: “Not all angel groups are the same,” adding that businesses should research sector focus, stage and investment criteria, and understand that “headline valuation is only part of the term sheet”.

Victoria said investors are ultimately looking for evidence of traction, not just ambition.”

“She said: “Businesses are ready for growth capital when the product’s there, the market is there, the growth plan is there, but they need the capital to go and execute on that plan.”

Iain Burnside highlighted the role of debt as an alternative to equity, particularly for businesses looking to retain control.

He said debt allows founders to avoid dilution and offers more predictable costs, adding: “The business actually knows how much they’re paying.”

He acknowledged that diligence requirements are increasing, but said debt can still be a more straightforward route for some growth businesses.

The importance of financial discipline also came through strongly.

Iain Burnside said cashflow forecasting was “very important” in demonstrating affordability, while Hamilton said it provides the clearest picture of how a business operates and grows.

Norrie added that strong plans alone are not enough without the team to deliver them.

He said: “The leadership team deliver the story. Cashflow tells us if they can deliver.”

The message from the panel was Scotland does not lack capital, but it does face a challenge in connecting that capital with the right businesses.

For founders, the priority is preparation, positioning and targeting and for the wider ecosystem, the task is improving awareness and access.

Early-stage firms face the toughest fight for capital

Panel says younger businesses are finding it hardest to secure backing as investors focus on quality, traction and lower-risk opportunities

The biggest pressure point in Scotland’s funding market is at the earliest stage.

While panellists agreed there is still capital in the system, several said younger businesses are finding it harder to raise money than more established firms.

Alan Hamilton of Johnston Carmichael said firms with traction, a strong team and a proven proposition were still attracting support, but the earliest-stage businesses remained the most challenged.

He said: “Those at the very early stage in their journey with limited track record often find fundraising inherently difficult.”

Victoria Mclaren of Maven Capital Partners said data shows that 2025 saw fewer equity deals overall, with more capital concentrated into larger transactions.

The 2026 outlook is positive and there is plenty of funding available for smaller and earlier-stage raises for quality companies.

That has left smaller and earlier-stage raises under greater pressure.

Margaret Morton of Angel Capital Scotland also said quality remained a decisive factor, with investors still backing businesses that were distinctive, globally relevant and supported by strong management teams.

Norrie Cook of said Scotland’s market was still relatively well served, but that seed investment had become “more difficult” and “more tricky”, making it even more important for founders to know their market, prepare properly and seek support early.

Top five: What funders said growth businesses need

1. Know your market Funders want evidence that the business is solving a real problem customers will pay to fix.
2. Show traction Revenue growth, pilots, commercial agreements and customer wins all matter.
3. Build a credible plan Growth forecasts need to be ambitious but grounded in reality.
4. Get the numbers right Cashflow forecasts, sensitivities and assumptions are central to any raise.
5. Target the right backers Not all lenders, angels or investors are looking for the same type of business.