Scotland’s Scale-Up Scene | Season 1 - Episode 2 | Invest2Scale Podcast

Investor Scale Podcast – Episode: Investing in Ambition: How Mercia VC Sees Opportunity in Scotland’s Scale-Up Scene

In this episode of the Investor Scale Podcast, host Ewan Anderson is joined by Alex Gwyther and Dr Natalie Blagburn of Mercia Venture Capital, a leading UK investor backing high-growth companies from seed to Series B. Together, they unpack why Scotland is fast becoming a key region for innovation—and why Mercia is backing Scottish scale-ups across life sciences, software, and FinTech.

Alex and Natalie discuss what makes Scotland’s startup ecosystem so investible—from world-class universities and angel networks to global ambition baked into local founders. They also reflect on what it really takes to attract funding at Series A and B stages, the long-term value of relationship-building with VCs, and the importance of storytelling in investment journeys.

If you’re a founder, investor, or ecosystem supporter, this episode offers practical insights on how to scale with purpose—and why shouting about your success matters just as much as achieving it.

Transcript

Ewan (00:08):

Hi and welcome along to the Investor Scale podcast. Today we are joined by Alex and Natalia from Mercy of Ventures. Welcome along. Nice to see you. Do you want to just tell us a little bit about your role at Mercy Ventures and what Mercy Ventures do?

Alex (00:24):

Yeah, happy to. Thanks for having us. So I'm an investor at Mercier and well Natalia is a portfolio director, so leads on helping a lot of our companies and sitting on boards. And then just very quickly about Mercy. So we invest from seed to series B, writing checks of 1 million to 10 million and we invest across the UK and we invest across a broad range of sectors from health, deep tech, consumer and software.

Ewan (00:52):

You're up from London, from Newcastle. What makes Scotland an investible proposition? Why are you up here today at investor scale?

Alex (01:00):

Sure. So from my perspective, Scotland is a fantastic hub of startups and exciting scale-ups in part because of the expertise in the area. You've got fantastic universities, fantastic groups of groups of business folk that bring with it sort of expertise in life sciences, in software, FinTech, AgTech, g Cleantech, lots of different ranges. I think there's also a cultural element in Scotland which is fantastic of quite collaborative, quite business savvy, and I think that also ties into the ecosystem here in terms of some of the established angel groups. Some of the early funds make it a great place to come and try and find companies that we can support and indeed we have a number of companies based off in Scotland ourselves.

Ewan (01:50):

So does that whole ecosystem make it an attractive proposition? Is that, so I guess there's lots of companies, good companies all over the world, but why is it that ecosystem that almost attracts you to Scotland and says there's real opportunities here?

Natalie (02:04):

Yeah, absolutely. So I look after 10 companies in my portfolio and three of them are in Scotland and two are raising series B. And that's what I'm noticing that this kite actually a lot of companies now in Scotland that are getting to that scale and really pushing ahead, really raising that next round of funding.

Ewan (02:28):

So what do you think that we can do then as an ecosystem? So obviously getting to that next stage, we do a lot, there's a lot of startups in Scotland and they do really well. So what do we do or how can we support those companies to get to that next stage and attract that level of funding?

Natalie (02:43):

It's really interesting to me that I think you already do quite a lot. So I've been invited by Scotch Enterprise to some amazing events, investors, investment events or company meeting investors or company pitching events. And I get even more invitations from Scotland and ecosystem that I do in the region that I'm based in, which is amazing. And what I like is the variety. So here the events are direct connections of investors at the right level to the companies at the right level. You get a lot of information beforehand about who's coming because I think today we are at this conference and there are about 120 attendees and 60% of them are companies. We've seen the list,

(03:34):

We've

(03:35):

Arranged the meetings

(03:37):

With

(03:37):

Companies came to us via LinkedIn or other means to also get in touch with us and I think that's brilliant. Absolutely brilliant,

Ewan (03:46):

Brilliant. And is there other areas around the, obviously you guys are a global company, are there other areas and other regions that are doing a really good job with this?

Alex (03:56):

From my personal experience, as Natalia said, I think Scotland is doing a very good job and we love that there's that kind of particular identity to Scotland, the Scottish companies that shouldn't try and change necessarily. But in terms of other regions that we work in, because we work across the whole of the uk, I've noticed particularly somewhere like Northern Ireland do a fantastic job of again kind of hosting events, shouting about the businesses that are based over there and bringing in investors from across the UK, also from overseas such as the us to come and meet those companies, come and hear the stories because a big part of it as you'll understand is telling that narrative about why that particular company is very exciting, why that founder is super driven and ambitious. And I think personally you should never let go of that ambition and never try and lose that sense of shout about what you're doing and why it's going to be the next big thing.

Natalie (04:52):

And let me just add to that. So for me, what makes Scottish companies really stand out is that the board global, so if I give you example, I teach an accelerator in the Netherlands and I'm always surprised how startups in the Netherlands because it's one of many countries in Europe, they're already from their first 10 clients and customers, they think that they're going to be international and not necessarily European. They go far and wide. And I noticed that Scottish companies have a very similar

(05:27):

Mindset.

(05:28):

So the firsthand customers are not necessarily other Scottish companies. They're already set up and thinking about global reach and that's amazing.

Ewan (05:39):

So you touched on this and I'm going slightly off our questions here, but Oh no, don't worry. Don't worry. Ambition was a word that you used it and actually it's really interesting and I think there's a general narrative sometimes that we perhaps, and not that we're not ambitious, but maybe we don't shout enough about how good we are. Do you find that in other areas and do you find that perhaps we could be a wee bit more proactive about how we talk about our companies? Do you think that's something that as a region or as some of the companies you engage with, that's an issue?

Alex (06:11):

So we as a fund, we've tried to position ourselves as champions of ambition in particular the ambition of the founders that we work with because we see our role as being supportive, hopefully providing some advice along the way, but really just trying to elevate what they're trying to achieve. I think speaking candidly, I think the UK as a whole has a bit of a challenge with that compared to some of our cousins across the ponds over in the us they've got a slightly different approach to things and again, I don't think we'll probably ever get to that extent of ambition, but we are working hard to try and collaborate with our founders to help them think about how they can overachieve on their goals and go a little bit further, both in just the business plan but also in the way they interact with the wider market. So it's definitely not just a Scotland thing, I think this across the whole UK we could all do a job and particularly as funders do our job to try and help elevate and support that ambition.

Ewan (07:11):

Do you think that that mindset is, I suppose what I'm trying to say is that we create really solid companies. I think there's an ongoing feeling here that okay, we remember not shooting from the rooftop saying we've got amazing companies, but they're really solid and I think that fail fast mentality is really important, important in starting and scaling businesses, but it also has to come with a bit of solidity. I think being honest, I think the honesty part of it comes through in scotch companies. Would that be right?

Natalie (07:41):

Absolutely, absolutely. But also when I think about ambition and scale-ups, I think about three dimensions. So when companies become bigger, you tend to see their customer base expanding so they have more customers, more revenues, then internally they tend to become bigger themselves. So going from 20 employees to a hundred in a year, that's a lot, right? That's an ambition, right? And the third one is that mindset, like you said mindset, but then how do you teach ambition or how do you showcase ambition? What

(08:16):

Works

(08:17):

And what I know works is having companies, founders, investors that done it before share the stories or literally being in that ecosystem

(08:28):

Close

(08:28):

Together. So even if you look at business incubators or business centers, if you have a place where you have companies that raised series B in the same place, if you have a concentration of founders that are global and exited and you have opportunities to come together, share the stories, whatnot, the good, the bads actually that ripples into the ecosystem. So that's what works. Modeling and examples really work.

Ewan (09:03):

So that is because again, probably come back to this, but so something like investor scale where we're bringing together these sort of opportunities is a really valuable part of the ecosystem again.

Natalie (09:12):

Absolutely. I think the story we heard this morning, we were just chatting, he's stealing all our from

Alex (09:18):

The CEO of modular mod

Natalie (09:21):

Steal.

Alex (09:22):

What were some of the

Natalie (09:22):

Points that he loved? Something like you need to build relationship over two years, you need to plan. We was thinking,

Alex (09:28):

Yes, Dick, we raising when fundraising, Natalia was literally talking about it this morning around how some of the best advice we can sometimes give when a company's going out for fundraising is to treat it as quite a long-term initiative. Like you should be building these connections with potential funders being very structured in the way you do it, almost creating a CRM around it because it's quite often the relationships you've had for years

(09:55):

That you then end up because you want to be working with these funders and these founders from our point of view for years probably five to seven years or more. And so you've got to have that kind of understanding of each other, hopefully a relationship already existing. That's not to say you can't receive funding from someone you've recently met, but I think that the telling the story over time of the growth of the company in depth ambition, that's probably from multiple times speaking to someone checking in as things progress and then when the time is right gets to work together.

Ewan (10:28):

So that was going to be my next question was what do we do and how do these companies go about doing that? So like you say, so longer term vision of that and actually building those relationships. So things like again, investor scale with them perhaps going down to London or Europe or wherever it might be to try and start building those relationships in the knowledge that I'm not walking in here today and walking out with a check, it is a long-term approach. Is that right?

Alex (10:53):

Yeah, I mean you were making the point that you would hope the founders coming to events like this would be actively, proactively trying to reach out to the likes of us to have conversations even if just short to build that relationship that was what you were trying to

Natalie (11:07):

Say. Yeah, absolutely. Yeah. So I think I wanted to ask people today in the audience how many actually reached out because panel members names and all the investor list was also quite public. It's been there for months. We had some approaches, but not as many as I would've liked

(11:25):

To

(11:25):

Be honest. But I think there's another story here. If you are raising a series B for example, I think that's sort of the big story and the big challenge now it's kind of thinking not who's investing, but who do I want on my cup table?

Ewan (11:43):

Okay,

Natalie (11:44):

Interesting.

Ewan (11:44):

Who

Natalie (11:44):

Is it I want to work with and how do you know if you want to work with us or others if you've never met

Ewan (11:50):

Us before? Is the relationship part of it? Is that what Mercy brings as well is kind of obviously investment money, but you sit on a number of boards here and you're working with a number of companies. Is it that additional, you've got similar sort of aligned values, but also you can bring additional insight in terms of what the wider market might, wider market opportunities, would that be right?

Natalie (12:13):

Yeah, absolutely. One of the main challenges when you start a new series B journey for example, is crafting the narrative. And it's not to say that you are changing your results or what you do, it's a bigger picture because often when you coming to that stage you are already quite successful and you've probably been focused on solving particular problem. It's kind of lifting your head up and it always surprises me how long it takes to then take in what's happening in the market, even though you've been doing this anyways as you go along. But then speaking to as many investors or advisors as possible and certainly always crafting that story to takes longer, longer than you think.

Ewan (13:05):

I like the idea of that almost a CRM worth a full of investors and building those relationships and so on. So what is it or what more opportunities do we need to present as a nation? What do we need to do as an ecosystem to attract investors from down south and from London and from Manchester and so on and so forth. What would help up here, I suppose we've got the good ecosystem, we've got the universities, we've got the accelerators and so on. Is there anything else here that helps us present those companies well? Is it a case of saying we need to be down in London or we need to be in Manchester? Do we need to take some of these companies and be down south?

Alex (13:47):

In my opinion, I think there's a combination of things. I think those sort of roadshows are very useful because it kind of gives you exposure to some of those ecosystems in different regions. But I think events like this are absolutely crucial because you shout about what you're trying to do. I think particularly refreshing to see one focused on scale up, like investor scale is, but then providing the wonderful setting, but also the facilities to be able to arrange these kind of meetings between founders, between investors. Because just having an excuse to have a face-to-face is absolutely brilliant. I think as well in the way that you guys are with this event, initially telling the stories of some of these startups, being able to showcase them is exactly more of what we need. So yeah, I think those roadshows are useful, but I think having them in location is get the investors to come to you guys. Absolutely. We're happy to

Ewan (14:47):

Jump on the train, get the investors to come to us, let's get them up. Absolutely. So just one last question around growth sectors and growth opportunities. You'll get to see real opportunities and new businesses that are flourishing. So what sectors are really interesting for Mercy at the moment?

Alex (15:03):

Sure. So I think we're obviously quite a broad investor, but I think particularly thinking of some of Scotland strengths, we're super excited about some of the innovations coming out from life sciences and biotech. You guys are powerhouse for that with the research with the universities, not least with new advances in computational power and new discoveries, things are becoming really exciting. We've got a few companies up here focused on that. You're also definitely got a great pedigree in FinTech with other software solutions like cyber side of things. Again, we've got a few companies there. And then other parts of I'd say also Cleantech or Climate Tech as well. Those I think for me, those areas are really your heritage. Not to say there aren't other great

Ewan (15:45):

Companies, no, absolutely,

Alex (15:46):

But I think those are absolutely prime and it would be remiss of me not to mention obviously ai.

Ewan (15:53):

Yes, AI

Alex (15:54):

Of course,

Ewan (15:55):

Yes, I forgot about that.

Alex (15:56):

But the importance there is that it'll impact so many different sectors that it should generate innovation in so many different areas, not just your typical, we are an AI company, it'll unlock so many new efficiencies and so many new opportunities. So I think for me, those areas are really interesting.

Ewan (16:14):

Brilliant. Listen, thank you very much for your time today. I really appreciate you taking the time and yeah, I look forward to catching up with you later at the event.

Alex (16:20):

Thanks for having us.

Ewan (16:21):

Excellent.