This month, the UK’s tech scene reached a significant milestone, cementing its place as a world leader for tech start-ups.
The growth of the tech sector has been incredible to see over the past decade, and it’s been hugely exciting to be involved in it from a talent perspective. Grey Matter’s MD, Rodney Crouch shares his thoughts on why the UK has been so successful when it comes to creating tech unicorns, and why the sector will continue to go from strength to strength.
Earlier this month, it was announced that AI start-up Tractable had secured $60m in funding to become the UK’s 100th company to reach £1bn valuation and achieve unicorn status.
It’s an incredible achievement, and as one of only 3 nations to be able to boast this accolade, it’s a milestone that confirms the UK’s spot as a world leading technology hub.
Over the past decade the number of unicorns based in the UK has increased tenfold. Already in 2021, we’ve seen 13 UK tech companies reach valuations of over $1bn, almost double the number for 2020 (7), and excitingly, there are tens of other tech companies well on the way to reaching this milestone.
The UK now sits third behind only the US and China as the nations with most tech unicorns, and it’s by far the number one European location for fast-growing technology companies.
So, what is it about the UK that makes it a fertile breeding ground for tech companies achieving unicorn status?
In 2020, one tech business was born every 30 minutes; in 2018, it was one every 60 minutes.
That equated to almost 200,000 new start-ups registered last year, and whether they’re a fintech, AI, eCommerce, AdTech or start-up in any other sector, there’s a real appetite for innovation. It’s this innovation which is a magnet for investment.
Add to this the resilience the tech sector has shown over the past 18 months, and the role it’s been playing in the UK’s economic recovery of late, and it’s clear that UK tech companies are an attractive proposition for investors.
Interestingly, undeterred by Brexit or the Covid-19 pandemic, technology companies attracted a record level of investment last year, with investment doubling between October 2020 and March this year.
Indeed, venture capital investment into UK tech companies has increased by 840% over the past decade. Last year, funding reached £11.3bn in 2020, a big jump when compared to £1.2bn invested in UK start-ups in 2010.
Of this investment in 2020, a large portion came from the US as investors began to fall out of love with Silicon Valley and seek to capitalise on the opportunities in the UK. If you look at London in particular, last year over half all funding came from non-European investors, and 36% came from North America.
UK tech talent is of the highest calibre
It’s all well and good to have a great idea, product or solution to problem, but you need to have the talent available to really drive it forward and encourage investment; something the UK has in spades.
A look at Tech Nation’s Tech Nation Report 2021 and you’ll find that a little under 3 million people are employed in the UK’s digital tech economy, an increase of 11% within the last two years. While there might be shortages of talent or skills in some specialist areas, the UK’s tech workforce is typically highly educated, highly skilled and in high demand.
London has traditionally drawn the best talent from all corners of the UK and indeed abroad, but we’re now seeing the strength of other cities when it comes to tech employment.
In fact, across the UK’s biggest cities, around 20% of the workforce is employed within the digital sector and the importance of this employment to the economy cannot be overlooked.
It’s also important not overlook the role that this talent has played, and continues to play, throughout the pandemic.
Naturally, the incredible work of the NHS and other frontline staff have taken the plaudits (and rightly so), but technology has played a significant role in our lives throughout the pandemic.
The UK’s tech talent has been at the heart of this as a driving force within tech companies which enabled many businesses, communities, and families to stay connected throughout. Now, they are playing a key role in the businesses leading the stability and growth of our economic recovery.
The strength of regional tech hubs
The growth of the UK’s regional tech hubs has been a key factor in the UK’s success for a while now, and more and more investment is going into businesses operating outside of the traditional London tech hotspots.
Whilst London plays host to the majority of the UK’s unicorns and prospective unicorns, the likes of Oxford, Bristol, Manchester, Cambridge, and many others, are all recognised as burgeoning regional tech hubs, attracting both significant levels of financial investment and top talent.
London is beginning to lose a bit of its allure as today’s tech and digital workforce seek more cost-effective living, especially as companies navigate their way through working from home and how a future return to the office might look.
As long as you have a great idea and access to top talent, there’s investment to win regardless of where you’re located.
How long before we see another unicorn?
The rate at which the UK’s tech sector is going, we could see another unicorn by the time this content piece goes live!
We saw that globally, VC investment was the highest it had ever been in Q1 2021, and despite the obvious global challenges, there doesn’t appear to be any sign of it slowing down.
There are around 130 companies now regarded as ‘futurecorns’ from different sectors and locations across the UK so it will be exciting to see which one will be announced as the UK’s 101st UK tech unicorn.