Notes: Based on the age distribution of companies, Travel to Work Areas were segmented into four groups. TTWAs were assigned a label based on the extent to which the proportion of companies in a given age band was greater than the UK average. Balanced clusters exhibit a flat distribution of companies across all age bands.
The number of digital tech companies born in the UK has boomed, with a staggering 78% increase between 2009- 2010. A high growth rate was sustained, averaging over 20% from 2010 to 2015, until 2015–2016 when the business birth rate fell by 17%.
More than a third (35%) of UK clusters are balanced ecosystems, meaning they have an even distribution of businesses of different ages. Over a quarter (26%) are scaleup dominant, with a higher proportion of companies aged 5–9 years. A quarter (26%) are mature, suggesting a higher than average proportion of companies aged 10–18 years and 19 or over. While just 12% are start-up dominant, meaning they have a higher proportion of companies aged four or under.
This gives us a more nuanced view of the dynamics in these local economies and helps us answer an important question: What support mechanisms do ecosystems need to flourish?
As an ambitious and early stage SME, that is tackling a globally defined problem, collaboration is key for us. We look for the support of government and health departments, as well as industry giants to find ways that we can innovate, and grow together.”
The mix of companies at different ages in clusters across the UK indicates the health of the ecosystem. Balanced clusters, showing a diverse range of growth stages might be better placed to see more sustainable broad-based growth.
Understanding the age and development of tech companies in clusters that are not balanced could inform decisions on appropriate support mechanisms to local ecosystems. Mature tech companies, for example, seldom require venture capital investment. On the other hand, clusters with a critical mass of startup and scaleup companies certainly need this financial infrastructure to facilitate their rapid growth.
A high proportion of clusters with a balance of company growth stages suggests a healthy UK ecosystem.