The UK has digital suburbs, not just cities
Explore the concentration of digital tech across the UK. The darker the colour in a cluster, the higher the digital density.
Digital tech density in Travel to Work Areas across the UK in 2017
Source: Tech Nation, 2018; ONS, Business Structure Database, 2017
Note: Digital density measures digital tech specialisation in clusters compared to density in the UK. A figure above 1 indicates relative specialisation, and below 1 indicates relative lack of specialisation in digital tech.
The digital tech industry is powering the growth of local economies across the UK. However, it is not the sole preserve of larger metropolitan cities. Areas such as Guildford, Aldershot, Slough and Heathrow have significantly higher digital tech density and the highest levels of employment and tech turnover, suggesting that the UK has emerging digital suburbs. This finding challenges the conventional view that UK tech activity is based in large cities.
Jobs figures may differ from those presented in the 2017 Tech Nation Report because we are using current 2011 Travel to Work Area geographies, last year we used 2001 TTWAs. Read more about how we are measuring jobs.
The map shows that digital tech concentration varies across the country.
London illustrates this fact, with a location quotient of 0.92, digital density which is below the national average. Its digital tech turnover is highest of any cluster in the UK, but compared to the absolute size of the London economy, digital tech does not dominate.
The locations of larger tech companies may explain some of these findings. Vodafone and Micro Focus have their UK headquarters in Newbury, for instance, resulting in a digital tech density that is around 15 times higher than the UK average.
Reading’s results are around seven times higher than the average because it is home to large tech companies including Microsoft, Oracle, Cisco Systems, Huawei and Symantec. The high turnover of these companies impacts the local economies of clusters in which they are located.
Find the dominant digital tech company age band in your cluster. Toggle through growth stages by clicking on the labels.
Growth stage distribution of companies in clusters across the UK
Source: Tech Nation, 2018; ONS, Business Structure Database, 2000 – 2016
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?
Co-founder, Vida
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.
In startup ecosystems, early stage programmes could help bring founders and CEOs face to face with one another, and with industry experts.Connect with Tech Nation’s Founders’ Network to find out more and watch out for Rising Stars, Northern Stars rolled out the nation.
Support for scaleup ecosystems, meanwhile, looks different. Upscale is Tech Nation’s six-month programme for fast growing, mid stage tech companies. It provides world-class advice from scale coaches, entrepreneurs and operators who have built and sold businesses to help accelerate their growth.
Finally, balanced and mature ecosystems might benefit from support such as Future Fifty, our programme for late stage companies at Series B+ or revenues of £5m per year. With a year-on-year growth rate of 30% over the past two years, these high growth digital tech companies are supported via a curated set of private partners, networking opportunities and direct links to the UK Government.
High growth digital tech firms are renowned for new global products, accelerated innovation, job creation, and rocketing turnover.
When referring to high growth firms, we use a broad definition. Companies must be in the digital tech sector, or sectors with a high concentration of tech, and they must adhere to one of the following conditions: 1) Completed an MBO, 2) Graduated from an accelerator, 3) Hit the OECD scaleup criteria, and 4) secured equity investment.
High growth digital tech firms in the UK
Source: Beauhurst, 2018
