After leaving the European Union, the UK government is keen to highlight the growth in investment in the general ‘tech’ industry around the country rather than just in London.
The UK saw £29.4bn venture capital this year, up 2.3x from last year’s £11.5bn. Almost £9bn of this went into startups and scaleups outside London and the South East and the regions are home to nine of the 29 unicorns formed this year. The combined value of UK tech companies founded since 2000 is now £540bn, after the biggest year-on-year increase since 2013/14.
Th UK government was at pains to point out that the £29.4bn raised was double the figure raised in Germany (£14.7billion) and almost three times that raised by companies in France (£9.7 billion). UK tech investment accounted for a third of the total £89.5 billion that flowed into the European tech ecosystem this year says the analysis for the UK’s Digital Economy Council by Dealroom and the job search engine Adzuna.
Nine out of the 29 unicorns created this year are outside of London including Interactive Investor in Glasgow, Vertical Aerospace in Bristol and Touchlight Genetics in Hampton. Of all the unicorns created in the UK, 35% are outside of London and 35% of futurecorns are also based outside of the capital, suggesting that the growth in tech in the regions will continue strongly in the next five years.
“There is no longer any debate over whether you can build a multi-billion dollar tech business in the UK. The investments made over the past few years into startups and scaleups across the country are producing outstanding results and I look forward to seeing how ecosystems like Bristol’s grow and thrive over many years to come,” said Nigel Toon, Co-Founder and CEO at double-unicorn chip designer Graphcore, based in Bristol.
The UK’s total unicorn figure to 115 meaning a quarter of the UK’s total unicorns were created in 2021 alone. The UK has more unicorns than France (31) and Germany (56) combined. The investments were mainly focussed on fintech and health startups.
Cambridge is the leading regional tech city in the UK thanks to its combination of high levels of VC funding, venture capital rounds, advertised tech salaries, number of unicorns (tech companies worth more than $1bn) and ‘futurecorns’.
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Manchester was only narrowly beaten by Cambridge to the number two position. The number of tech jobs in Manchester increased by 164.6% in 2021 and the highest advertised average salaries outside London were in Edinburgh at £58,405.
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The study looked at the top ten cities outside London for tch.
UK venture capital firms have also had a record year and raised £7 billion from London firms including Index Ventures, Balderton Capital, 83North and Eight Road Ventures.
The majority of the money coming into UK tech is from the US, with 37 percent of all funding coming from the States, up from 31.5 percent last year, with the majority of it going into fintech and health tech companies. Over 28 percent of UK venture funding came from domestic capital.
More US venture funds launch offices in the UK, including Bessemer Venture Partners, General Catalyst, Lightspeed Venture Partners and Sequoia Capital.
The UK government also point to the London Stock Exchange hosting more than twice as many transactions as the next most active European market, with a combined £49.0bn raised through IPOs and Follow-On Issuance. The 37 tech and consumer internet companies that have listed this year achieved a combined market cap of £31bn. The London Stock Exchange has also supported 30 founder-led companies to list this year.
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“With such a record tech investment year, it’s becoming increasingly evident that the UK is very good at rearing and cultivating startups and scale-ups into successful global companies right across the UK, unlike its continental European neighbours, where it tends to be more in capital cities,” said Gerard Grech, founding Chief Executive, Tech Nation. “A true network of digital excellence is emerging right across the country through entrepreneurship, driving new job and wealth creation. Tech Nation is committed to identifying and fueling the growth of these high-potential businesses through its programs and initiatives, removing geographic and financial barriers as quickly as possible.”
“The UK startup and scale-up sector is very attractive right now and investors don’t want to miss out on this opportunity. We are living in a ‘founders’ market’ and investors want to be there at the very beginning. We have seen top series A and B VCs moving into seed during 2021. What’s notable compared to other countries in Europe is that talented founders are starting companies right across the UK. Given that difficulty hiring is one of the main headaches for growing tech startups, this geographic spread should translate into another structural advantage for UK tech,” said Luisa Alemany, Associate professor of management practice in strategy and entrepreneurship at London Business School’s Institute of Entrepreneurship and Private Capital.
The increased levels of money going into UK tech also mean companies are in need of trained technical and business staff. There has been a 50 percent rise in overall UK tech job vacancies advertised this year compared to 2020’s figures, with advertised tech vacancies hitting 160,887 in November. Currently, tech vacancies make up 12 percent of all available jobs in the UK, with just over 50 percent of these jobs available outside of London and the South East.
UK tech jobs
Software developers are still the most in-demand tech job across the UK. These positions make up 9% of all tech jobs with prospective developers being offered an average salary of £64,318, a 12% increase on 2020’s figures. Specialist staff such as java developers and IT systems architects continue to be able to command high salaries with the average advertised wage for these roles being £80,076 and £93,004 respectively. 21.6% of all job ads in the IT sector are advertised as remote roles. This is also contributing to the spread of the UK tech ecosystem beyond London as businesses can hire across the country and find the staff that they need, regardless of location.
“It’s taken 20 years for UK tech to get to the starting line and things start to get interesting in the next 20 years,” said Saul Klein, partner and co-founder at LocalGlobe. “We have all the ingredients to become the leading tech ecosystem in the world, with record levels of R&D, financing and established tech hubs across the country from New Palo Alto in Kings Cross, to Cambridge, Edinburgh and Manchester. But the key differentiator for investors in future will be a willingness to take an ethical approach to building businesses. We can be world-class in this and over the long term this will set our companies apart from those built in the US and China.”
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