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Tech for social good in the UK
In partnership with
Data partner
Contents
Foreword – Rt Hon. Jeremy Wright MP
As Secretary of State at DCMS, I am fortunate to have responsibility for both digital policy and for civil society.
This is no coincidence. There are so many opportunities where these two areas intersect and we must use the power of technology to help us solve the world’s major social issues.
A rising number of organisations are promoting the power of tech for social good, with the sector growing exponentially in recent years.
This report sets out where further opportunities lie and how the UK’s tech companies, alongside digitally-driven civil society organisations, are leading the charge for socially minded technology.
Executive summary
This report is the first of its kind. It aims to explore the tech for social good landscape in order to raise awareness of the types of organisations driving change in the UK, and the challenges for their future growth.
We want you to engage with tech for social good. Champion organisations that you are connected with. Be inspired by the positive changes being brought about by tech game changers.
Tech for social good uses digital technology to tackle some of the world’s toughest challenges. This might include reducing disposable fast fashion by allowing democratic access to upcycling, or efficiently connecting care providers with those seeking care such as families, local authorities and clinics.
We do not aim to capture everything about tech for social good – after all, there are many great reports that have been conducted in this area to date. But this study doubles down on those companies leading the charge, the ones finding a balance between purpose and profit – the sustainable, tech for social good trailblazers.
What we found
1) Tech for social good is emerging – it is not a sector, it is a mobilising framework for articulating the values, behaviours and attitudes that describe a focus on social impact – putting people at the heart of the business. The outcomes of tech for social good are more important than the mechanisms, they include impact on the environment, communities, health, education, mobility and transport. Organisations in this space are establishing a clear sense of identity, and showing supreme growth.
2) There is a great deal of diversity in UK regions and sectors – showing that tech for social good is cutting across all sectors of the UK economy.
3) For tech for social good to continue thriving, companies need smart and patient capital.
However, there are challenges that must be addressed
Diversity and inclusion, particularly gender and ethnicity, must be improved – to ensure that everyone is able to be part of the tech for social good movement
The lack of digital skills will limit growth potential of tech for social good organisations
What this report contributes to the debate
We make positive steps towards clearer definitions and values to embody tech for social good
We shed light on how tech for social good can be mainstream rather than niche, celebrating and recognising tech for good for its all round impact above commercial tech.
In five years, we hope that tech for social good will no longer be discussed. By this time, we trust that social good will underpin the actions of every tech company, rendering the term obsolete.
We take a look at two tranches of changemakers
1) Not-for-profit organisations
The first are firms operating in the tech sector as not-for-profit firms, that are formally registered as either Community Interest Companies (CICs) OR Companies Limited by Guarantee (LBGs).We explore growth, geography and comparison with non-tech not for profits – to identify the patterns that matter for the future of the tech for social good ecosystem.
2) Profit and purpose companies
The second is based on our analysis of for-profit firms across the UK economy. We investigated those firms with a high degree of ‘tech for social good’ density. We call these companies, tech for social good adopters.The firms in this cohort are those with key terms related to consideration of the non-economic impacts of their activity. Take a look at the methodology at the bottom of this page for more information.
Here, we look at employment, diversity, investment, and sectors of these companies, before going on to identify tech for social good firms to watch – those early stage companies showing exceptional promise in healthcare, fintech, edtech, and the sharing economy.
This way, we are able to capture the tech for social good leaders of for-profit, and not-for-profit persuasions. Though as we will evidence, the disjunction between the two is not a simple one, and many organisations are increasingly operating in a hybrid model – appreciating both purpose and profit.
Finally, we explore some of the challenges surfaced through this research – including company formation, skills and investment – and the ways that we all can create a more productive tech for social good ecosystem.
Key statistics on profit and purpose companies
490Tech for social good firms in the UK
45%At seed stage
£1.09bnTotal VC raised
What sectors are these firms based in?
10.3%Edtech
9.2%Fintech
8%Artificial Intelligence
Balancing profit and purpose
£110mRaised by Prodigy Finance – who are revolutionising funding for international students
£2.3bnTotal valuation of tech for social good firms
£732mnTurnover
What are influencers saying about tech for social good?
Paul Miller, CEO at Bethnal Green Ventures is an eminent advocate for Tech for Good. By now, it has come to mean a multitude of things to different people. Here is what tech for social good means to Andrew at Incuto, Maria at Depop and Alex at Beam.
I believe that ‘profit with purpose’ as I like to call it, allows businesses to build on new challenges. Corporates and small businesses have been successful at creating profit where there is an obvious need, but can they now do this with more impact than just pure cash? I feel that there is a lot of good in business, but it’s not the primary focus, and as maturity grows in business leaders, so does their passion to provide more back to others. With social impact business, you really can have your cake and eat it!
Andrew Rabbitt, CEO, Incuto
Consumers – especially young consumers – are savvy and demand transparency from companies they support. We are living in politically-engaged times. Young people around the world are very comfortable exercising their ability to speak out against perceived injustices, unethical business practices, or policies they believe to be antiquated or uninformed. Tech companies permeate every avenue of our lives, so seeking information about companies who are using their power responsibly and effecting positive change has become a top priority.
Maria Raga, CEO, Depop
Tech alone is never the answer. But tech is a necessary part of solving every big and complex problem. The problem we’re focused on solving at Beam is homelessness. That means building beautiful, functional technology for everyone, including the 320,000 homeless people in the UK – a growing and significant majority of whom have smartphones.
Alex Stephany, Founder & CEO, Beam
What is driving tech for social good forward?
Current solutions to social challenges are not hitting the mark
There are significant challenges in healthcare, education, sustainability and democracy. Investors, governments and civil society are emphasising the need to come up with better solutions, many of which make use of tech, either applied to a new problem, or innovative in their nature. Better solutions are a good thing for humanity, and a huge economic opportunity too.
Digital tech offers scalable solutions to these social challenges
Digital tech allows for radically different approaches to tackle social challenges. They are able to scale their reach faster and with declining costs, enabling more impact than non-tech-enabled solutions.
It isn’t just about purpose, tech for social good often means profit too
We believe there is a growing demand from consumers who are driven by social mission and impact. Customers are hungry for better solutions to things like education and environmental sustainability, and tech for social good adopters can build profitable businesses from the tech products and services they develop to meet this demand.
All change please!
There is a growing demand for investment routes that positively impact society whilst providing market rate returns. Organisations like Bethnal Green Ventures, Big Society Capital, Bridges, Clearly So, Big Issue, Triodos, Acumen, Emerge Education, Sustainable Ventures, Impact Ventures UK, The Conduit, Nesta, Zinc.VC, Impact Hub and Mustard Seed lead the field, but more companies are adopting tech for social good into their products and services, which is a change for the better.
Not-for-profit organisations
Not for profits in the tech sector
464Active tech companies in the not-for-profit space (NFP)
53%Incorporated since 2014
1stThe Community Network, was one of the first tech for social good NFPs, incorporated in 1989.
56%Community interest companies
44%Companies Limited by Guarantee
0.2%Of active tech firms in the UK
The UK is home to 464 active tech companies in the not-for-profit space. Of these organisations, 56% are Community Interest Companies (CICs). The remaining 44% are Companies limited by guarantee (LBG). These organisations comprise 0.2% of active tech firms in the UK.
LBGs are a common means of incorporation for the non-profit sector. Students’ Unions, fundraising charities and housing associations are all generally incorporated using the LBG model.
Growth
Tech for social good NFP organisations are on the rise – the sector is growing exponentially. More tech for social good organisations were incorporated in 2017 than any previous year. 53% of all tech for social good not-for-profit organisations (NFPs) were incorporated since 2014.
- Since 2014, the number of yearly incorporations in the tech for social good space has grown exponentially
- 2017 was the highest year on record – over 70 individual organisations registered with companies house.
- The first record of a tech for social good firm was in 1989 with The Community Network. They provided an extensive telephone network to serve isolated pensioners in partnership with BT.
(Incomplete data means that 2018 incorporations look lower than in reality)
Geography
Tech for social good NFP organisations can be found across the UK. There is good coverage in rural areas, suggesting they are a digital lifeline for many often isolated communities.
- Most cities are home to at least one tech for social good NFP organisation, but there are dense clusters in London, Brighton, Cambridge and Glasgow. The West Country also has a high density stretching from Bristol right through to the Cornish coast.
- Certain rural areas are particularly well served. For instance, the Hebridean coast is home to ten different tech for social good organisations. At least three of these coordinate high speed broadband access for isolated communities.
How does this compare to non-tech not-for-profits?
- The non-profit sector comprises over 22,000 incorporated companies. Unlike tech for social good companies, they can be found across the entire UK, not just in city clusters.
- Large numbers of CICs and LBG companies operate in the healthcare, membership, education, religious, arts and sport spaces. There is no dominating sector or theme across these organisations.
The rate of incorporation amongst tech for social good companies is now higher than the wider non-profit sector. In fact, 17% of all tech for social good organisations founded since 2000, were incorporated in 2017, compared to 10% for all non-profits.
It is important to note that incorporation rates in both tech for social good and the wider non-profit sector remained largely stagnant prior to 2008.
In the wake of public ambivalence of emerging digital innovations and tech giants, governments are committing to growing tech for social good. The UK Cabinet Office launched a £20m GovTech fund in 2018 to support tech for social good. Increasingly, global leaders are turning to tech to solve some of the world’s biggest societal challenges. London Tech Week in June will raise many of the successes as well as the challenges with tech for social good in the UK.
Profit and purpose companies
For-profit firms adopting tech for social good
The ‘tech for social good’ sector was worth £2.3 billion in the UK in 2018, with a turnover of £732 million – larger than the amount generated by the manufacture of consumer electronics in the UK (£634 million).
As was the case with NFPs, the vast majority of tech for social good firms were incorporated since 2008.
Stalling growth
However, the incorporation rate for these firms has dropped significantly since 2015, following a similarly large rise between 2010 and 2012.
Employment
The bulk of employment in for-profit tech for social good companies is in small companies. This is not necessarily a surprising phenomenon, but the dynamics of small firms mean that some companies may require help with sourcing the right talent in resource-poor conditions.
I think that historically there may have been this misconception that in order to do good you have to forego profit but I think in recent years this myth has well and truly been debunked. Rather, the data suggests that founders and startups who are purpose or mission-driven tend to outperform their counterparts, and this makes sense regardless of whether you are trying to recruit talent or acquire new customers. More and more people want to do meaningful work and support businesses that have a net positive effect on society. I personally believe that this trend will continue and gather more steam in the years ahead.
Saf Nazeer, Co-founder and CEO, Helpfulpeeps
I feel that there could be more patient capital available to “tech for good” startups or funds that are focused not just on maximising their financial returns but also factoring in the social impact of their investments. This focus seems to be growing in the US so I am hopeful that the UK will follow suit in the coming years.
Diversity and inclusion
Tech for social good can be a significant enabler of increased diversity and inclusion in tech. When we think about diversity, we refer not only to people characteristics, like gender, age, ethnicity, neuro-diversity and socio economic background, but geography too.
Tech for social good can provide mechanisms for people to access or use technologies in an open, cost efficient, and sustainable way. We are not able to capture all aspects of diversity in this analysis, but we will be expanding our methodology to do so in further editions of this report.
The UK tech sector
When we look at the tech sector as a whole, only 14.5% of tech for social good firms were founded by women. 19% of the digital tech workforce is female, compared to 49% across all UK jobs. This flags a diversity dilemma in tech, reinforcing the current groundswell of industry activity to address inclusion and equality in digital companies. Neither of these statistics is satisfactory – more needs to be done to promote diversity in tech for social good, and tech firms more broadly.
Black, Asian and Minority Ethnic (BAME) workers account for 15% of digital tech workers. This is significantly higher than the 10% across all UK jobs. Ethnic diversity is above UK average, yet gender diversity is significantly lower, but both fall short of being representative of the UK population. This reminds us of the importance of taking a nuanced approach to understanding workforce composition, and the need for action.
Tech Nation is part of the One Tech campaign, supporting underrepresented tech founders in London. One of our main goals is to double the number of female and BAME-led tech start-ups raising investment through our programmes. As part of the campaign, we connect and support London-based under-represented entrepreneurs through mentoring, access to pre-acceleration and investment readiness support and workspace. We navigate founders around the rest of the tech ecosystem.
In our analysis of diversity of tech boards, we found that 22% of tech directors were women, whilst in gaming, a subset of the tech sector, women accounted for only 13%. Furthermore, when we analysed all 12.5 million UK directorships and companies we found that directors sitting on gender diverse boards make 0.7% higher turnover than those that don’t – the equivalent of £70,000 on average.
This therefore flags potential areas for improvement in tech for social good, and one that will come as a surprise for many. Tech for social good firms need to focus on diversity and inclusion.
In our research looking at career preferences of young people, young women (aged 15-21) were far less inclined to choose a tech career as a future preference, at 30% of young people, compared to 70% young men. Some of these issues stem from the norms that have been established through structures like recruitment processes. To reduce gender bias in your recruitment processes, you can:
- Use gender neutral language to advertise tech vacancies. The use of particular words and phrases will have an impact on whether men or women feel able, or qualified to apply for a job – for example, Gaucher et al.’s analysis shows that company use of language reinforces gender inequality. Companies should therefore use tools to assess and eliminate gender bias, a good first step is to understand what extent the advertisements that are currently being used include gender coding. Matfield’s Gender Decoder for Job Ads (which uses Gaucher et al.’s research) informs the user whether the ad that is pasted into the text box is masculine, or feminine coded.
- Ensure that tech jobs are advertised in places that men and women are equally likely to see. Some publications, have a predominantly male readership and tailor content to appeal to this demographic – therefore vacancies that are exclusively advertised in these publications serve to reinforce a gender bias in potential applicants. Employers should not only look at the content within their job advertisements to eliminate gender bias, but also ensure that the location of their job advertisements are conducive to a gender equal readership.
- Be clear on your company culture, and tell people about it. In most cases, people will have strong preferences for working at a company based on their pre-conceptions of that organisation, informed by what they see of the company in public spheres, like the media, and from friends and family. As such, companies should strive to be open and transparent about issues like pay, culture and equal opportunities.
Geography
Tech for social good firms are skewed towards London and the South East. We saw this to some extent with tech NFPs, but the difference is more pronounced for the profit and purpose-motivated companies.
Incorporation declined during 2008-2016
From 2008 to 2016, there was a spike in the number of tech for social good firm failures. This is somewhat offset by the fact that many firms were born over this period, perhaps suggesting that the increasingly competitive environment contributed to some companies being forced out of the market.
Seeding good
The majority of firms adopting tech for social good are at seed stage (45%). This suggests that the mechanisms suitable for promoting the growth of these firms may be most fruitful at startup or scaleup stage. Take Tech Nation’s Founders Network, for example, founders require the peer-based support that only other founders can provide. This network enables ambitious entrepreneurs to connect, and discuss their challenges, as well as celebrate their successes.
Tech for social good firms seem to share some challenges with the broader tech population, such as talent and investment – but other specific issues exist, which may require a dedicated forum for tech for social good founders to mull over, and find shared solutions together.
Sectors
The majority of tech for social good firms are in Adtech (17.2%) – which can be explained in many cases by an emphasis on tapping into underrepresented, or underutilised markets. This could be argued to have benefits for the consumers reached, making them aware of potentially positive products and services. However, it could also be argued that some companies operating in this sector fit awkwardly into the mould that has been discursively established for tech for social good firms.
Second is Edtech (10.3%), followed by Fintech (9.2%) and AI (8.0%).
Tech for social good firms have raised considerable investment
UK firms raised a total of £1.09bn in venture capital, and were cumulatively valued at £2.3bn in 2018. The total turnover of these firms was £732m – by comparison, this is 0.4% of total tech sector turnover.
An interesting trend is commitment made by tech for social good firms to debt finance, which is high compared to VC capital raised, at £331m. There are probably a few reasons to explain this, companies may chose not to take equity finance (bootstrapping), they may be unaware of VC opportunities, or unable to achieve VC capital (due to structural issues in acknowledging the impact of firms with both profit and purpose).
When we look at median, rather than absolute funding per tech for social good company, we see that the concentration shifts away from London. Instead, the South West comes out top, followed by Northern Ireland. This may suggest that in London and the South East there are more firms at an earlier stage seeking smaller deals, whilst in Northern Ireland and South West England, the firms seeking investment are at a later stage of evolution, and therefore require larger sums of capital to grow.
Chart topping tech for social good – the ones to watch
So far, the trends in companies adopting tech for social good have been explored. But, which companies are the ones to watch when it comes to performance and sectors?
This section explores high growth, early stage companies that are adopting tech for social good.
We looked at companies in early stages of high growth (1 year, 20% Year on Year growth in turnover- no minimum employee count) rather than the definition from the OECD which is 20% Year on Year growth in either employment or turnover with a minimum employee count of 10.
Ones to watch: Healthcare
1. HealthyHealth – eHealth; Insurtech
2. Signum Health – eHealth; Preventive Care
3. YOURmeds – eHealth
4. CareRadar – eHealth
5. HiveWire – eHealth
Ones to watch: Fintech
1. Slashpay – Fintech
2. Ethical Angel – Fintech
3. Valldata – Fintech
4. B-Social – Fintech
5. UpEffect – Fintech; Alternative finance
Ones to watch: Edtech
1. Surgical Teaching – Edtech; eHealth
2. Study Rocket – Edtech
3. E-Cert Healthcare Training – Edtech; eHealth
4. TechPixies – Edtech
5. Imsomi – Edtech
Ones to watch: Sharing economy
1. Holiday Swap – Sharing economy
2. Kindaba – Sharing economy
3. CareRooms – Sharing economy
4. Folk2Folk – Sharing economy
5. Cycle.land – Sharing economy
Solving tech for social good challenges
Tech for social good incorporations
There was a dip in tech for social good adopter incorporations after 2016. This flags a potentially worrying trend, and necessitates further evidence to understand why this is happening.
Skills
Freeformers is a company aiming to prepare people for the future of work, Gi Fernando, their founder, makes the following assessment of the digital skills landscape:
In terms of digital skills, I think the UK above everyone else is starting to realise that preparing people for a digital future is more than learning to code, it’s about helping people change the way they do things using new tools, then consistently learning and applying to keep adapting. The UK is also starting to realise the value of human skills and attributes that are uniquely premium in a world where automation can commoditise any repetitive task.
We are not there by a long way, and still tend to let the traditional pedagogy of industrial era education misguide us, but we are getting there; preparing people for a digital future rather than teaching digital knowledge.Gi Feranando, Founder, Freeformers
I think there is still a huge black hole when addressing the mass of white collar jobs that are at significant threat, but also present the greatest opportunity for increasing the value of human interaction and new business models; the people in call centres, branches, stores, admin and operations, in factories, are not underprivileged, it’s difficult to ask for charity for them, but if their wage drop below their cost of living, the push down effects on people earning less with be catastrophic. Hence Freeformers.
Skills were flagged as a key tech for social good issue by stakeholders, which is no surprise, given that talent is the top challenge for tech companies across the UK.
Companies should look to diversify their hiring strategies, looking to enhance diversity, and build sustainable and talented workforces for the future.
In their toolkit, Diversity VC present a series of highly practical measures to promote diversity in venture capital firms. But these mechanisms are useful for any company wishing to adopt a more inclusive culture. Take a look at the toolkit here.
Initiatives that encourage young people to develop the skills needed to succeed in tech jobs are key for ensuring continued growth in tech for social good companies. It is the mandate of tech companies to nurture and support the next generation of tech talent, who have a vested interest in living and working sustainably, giving back to their communities, and practicing radical transparency. Young people are comfortable challenging the status quo and will help keep tech companies honest in the future—but they need the practical skills to be able to get in the door and have their voices heard.
Maria Raga, CEO, Depop
Unblocking the pipeline
45% of firms in the cohort were at seed stage. There was considerable drop off in company numbers at venture, growth and established stage. This could suggest a wide range of things, but may be linked to the funding landscape. The need for follow up funding is required for these companies to scale, yet it is often stated that companies with a more purpose-driven mission are less investable.
This may be because investors, and shareholders are more focused on short term financial gains, rather than long term sustainability. Respondents to The Business Case for Purpose from the Harvard Business Review and EY stated that barriers include ‘… short-term shareholder pressure, systems and infrastructure that are not aligned with long-term purpose, and the lack of performance targets and incentives aligned with purpose.’
Thus, patient capital for tech for social good adopters is needed. Big Society Capital and Bethnal Green Ventures are excellent examples of investors leading the field in their support for social enterprises and tech for social good.
Bethnal Green Ventures’ principles are outlined here, they offer a useful guide for investors considering the opportunity of tech for social good.
Methodology
We used firm-level data from Companies House, Beauhurst and company websites to identify companies operating across the economy that are engaging in activity with an objective of delivering public and social impact. For more information see Beauhurst’s website here.
To do this, we took the descriptions and mission statements that companies provide through their websites, and those featured on Beauhurst to conduct Natural Language Processing which allowed us to determine the self-reported adoption of practices related to the provision of public and social good.
For our analysis of not-for-profit tech companies, we used Companies House data. We used the definition of digital tech employed in the Tech Nation Report 2018, which can be found here. We did not capture charities through this part of our analysis, rather we focused on those organisations that are not-for-profit tech firms. Furthermore, the report does not include charities or companies that do not use tech for social good.
The information and data used in this document is sourced from Companies House using their API and other bulk order products.
A word from our partners
Berenberg
Collaboration and empowerment are fundamental to the success of social business models. They help us to create diversity of thought and to improve our knowledge of how ESG factors (Environmental, Social and Governance) can influence corporate behaviour. We are delighted to be working with like-minded partners to support the growth of this movement.
In the investment management industry, our research into public markets demonstrates the inherent value of companies with sustainable business models. We are conscious, however, that the success of these companies stems from the innovators and the private companies who take huge risks at the outset.
We understand life as a private company. We have been led by personally liable partners for 429 years. We are constantly evolving and see first-hand how quickly client interests can change. Our involvement in the “tech for social good” sector will allow us to better help our clients support and invest in sustainable businesses.
The relationship between technology and social good is of increasing value to society. Berenberg’s affiliation with Impact Ventures UK and the Arts Impact Fund gives us insight into the opportunities and challenges in the sector. We have supported the Tech4Good award at the Investor Allstars and the Northern Tech Awards, which recognises and rewards inspiring and purposeful entrepreneurs across the UK. Many of them have undertaken extraordinary journeys to get to where they are today.
Tech Nation’s analysis is a useful step towards understanding the “tech for social good” landscape across the UK. Alongside BT, we are hopeful that it will bring greater visibility and awareness of how businesses are using technology to have positive social impact. Our wish for this report is that it may act as a catalyst for further engagement and ultimately investment. We look forward to continuing our support of this sector.
Richard Brass, Head of Wealth and Asset Management UK at Berenberg
BT
The findings in this report are great news for everyone involved in the ‘Tech for Good’ space in the UK. It’s brilliant to see it is now firmly established across different tech sectors, and in all parts of the UK start-ups and businesses are increasing in number.
We are all living in a new world that is being shaped and created by the rapid acceleration of technology and at BT, we are keen to find and support disruptive new technologies that improve people’s everyday lives.
BT is at the heart of bringing this to life. With 5G, fibre to the premises and hybrid technologies like the Internet of Things, we can offer a more reliable and constant network connection. Our networks have the power to enhance the lives of everyone, and it important to make sure no one is left behind from the benefits of connectivity, or by the pace of change.
That’s why we need a culture in the UK that celebrates and supports ‘Tech for Good’ entrepreneurs and business, those who are at the forefront of making sure the most vulnerable people in society can benefit. By using their ingenuity and flexibility they bring ideas to life that can maximise the combined opportunities of connectivity and technology.
And that’s why we have been a proud advocate and supporter of the ‘Tech for Good’ sector in the UK for many years. From partnering with ‘The Community Network’ in 1989, establishing the Tech4Good Awards with AbilityNet in 2011, and through to our Infinity Labs programme, we are proud to have played our part in supporting many start-ups and businesses on their journey to
success.
We also know that collaboration is important, and it’s great to have worked with Tech Nation and Berenberg on this report, and we will continue to support and collaborate across the sector to help more people than ever before benefit from ‘Tech for Good’.