- Scaleup tech investment 2.5x higher than expected based on the relative size of the UK economy in 2018
- UK leads Europe and fourth in the world for scaleup investment after US, China and India
- UK remains hotbed for tech talent – employing 5% of all high-growth tech workers globally – placing the UK ahead of Japan, France and Indonesia
- To date, 35% of Europe and Israel’s tech unicorns ($1bn valued businesses) have been created in the UK
- UK number one in the world for scaleup investment into fintech firms – generating £4.5bn in funding between 2015 and 2018
Tech Nation, the leading scaleup-network for UK entrepreneurs, has today announced the release of its annual Tech Nation Report with data from partners including Companies House, PitchBook, GitHub, the OECD and Streetbees, and in association with the World Economic Forum.
The report provides a comprehensive look into the evolution of the UK’s tech ecosystem, exploring the drivers that underpin and power economic growth within the sector.
For the first time, the report explores the wider international landscape, looking specifically at international and national tech investment, areas of potential growth and related specialisms, talent hubs and more.
Talking about the report, UK Prime Minister, Rt Hon Theresa May MP, commented: ‘‘The UK is a global tech powerhouse. I am immensely proud of our country’s ambitious tech scaleups. These companies are delivering significant economic value to the nation through the investment they raise, the jobs they create and the innovative products and services they deliver’’.
Likewise, Eileen Burbidge, Partner, Passion Capital & Chair of Tech Nation said: “The UK has an incredibly pivotal role in the global tech scene. Nowhere is this more evident than in the Fintech sector where the UK is ranked number one in the world; an enviable position that has been established with decades of hard work, entrepreneurial talent, innovation and supportive policymakers. I’m confident that we have all the ingredients needed for continued success and even greater acceleration of the tech sector here in the UK.”
And Gerard Grech, CEO, Tech Nation added: “The UK continues to exceed all predictions when it comes to tech growth. This report shows how the UK is a critical hub when it comes to global technology developments, with scale-up tech investment being the highest in Europe, and only surpassed by the US, China and India. This is a testament to the innovation, ambition and tenacity of tech entrepreneurs across the UK. These valuable findings will help inform how the UK as a nation can continue to foster competition and collaboration in an increasingly interconnected world.”
“The UK tech sector continues to grow strongly with UK firms attracting the most venture capital funding in Europe and investment in digital scaleups growing by almost two-thirds in a year. We are supporting British innovation so we can drive growth, jobs and higher living standards, including through £2.5 billion for the British Business Bank. This funding will help high-growth firms to access the finance they need to succeed,” pointed out the UK Chancellor of the Exchequer, Rt Hon Philip Hammond MP.
The UK tech sector performed particularly well in investment last year. In 2018, the UK managed to attract 5% of global high-tech scaleup investment, placing it fourth in the world – ahead of Germany, France and Sweden.
Investment for UK high-growth digital tech firms also grew 61% between 2017 and 2018 – driven in large part by ambitious UK tech scaleups (tech scaleups delivered the majority of all tech investments in the UK in 2018 – £5bn of £6.3bn).
The UK’s strongest tech sub-sector, and where it currently ranks as number one in the world, is fintech, with investment in UK high-growth fintech firms achieving £4.5bn between 2015 and 2018.
London continues to remain the UK’s leader in attracting high-growth tech investment, receiving £9bn from 2015 to 2018. Cambridge is second, at £583m, with other UK cities continuing to make considerable ground.
Looking beyond high-growth tech companies, the last 12 years have seen a much greater distribution of investment across the UK.
Notably, the East of England has seen the greatest increase in capital invested across all tech companies, at 206%, followed by the West Midlands (54%) and Yorkshire and the Humber (51%).
On an international scale, UK cities continue to attract investment on the global stage. The table below shows international hubs with shared scale-up investment patterns.
In 2018 the UK continued to remain a hotbed for tech talent, employing 5% of all high-growth tech workers globally. This places the UK ahead of Japan, France and Indonesia (see Figure 3).
In the UK, Insurtech and Fintech were the biggest employers among high-growth digital tech firms in 2018, employing 24% and 18% of the high-growth workforce respectively.
Cyber, AI, and Cleantech all feature in the top ten sectors for employment in high-growth tech firms. Investment data shows that AI, Cyber and Big Data are growing in importance for UK tech scaleups. This means that the UK may be about to see more jobs generated in these sectors.
From December 2018 to February 2019, high growth firms in London grew by over 56%, more than anywhere else in the world.
R&D expenditure in the UK in 2016 represented 1.67% of gross domestic product (GDP).
Businesses and government have put significant financial resources towards the development of a knowledge-based economy. Based on the most recent data from 2016, the UK was ranked 7th globally for R&D expenditure, with spending up £1.4bn to £33.1bn, an increase of 4.3%. This is above the long-term annual average increase of 4.1% since 1990.
UK Secretary of State for Digital, Culture, Media and Sport, Rt Hon Jeremy Wright MP, commented: “This report confirms the UK is one of the world’s leading digital economies, with some of the best minds globally working here and strong investment in the tech sector right across the country. We are working hard to continue this success and remain committed to making Britain the best place to start and grow a digital business.”