Accelerating innovation through collaboration and the Fintech Pledge
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As London Tech Week begins, we’ve worked with Dealroom to bring new figures on tech investment that illustrate how the UK is faring in the wider European tech ecosystem.
View the full London Tech Week UK Tech Report slide deck here
Some of the UK’s unicorns (private companies valued at $1bn) include Darktrace, Deliveroo, Farfetch, Funding Circle, Improbable and TransferWise, all of which have taken part in Tech Nation growth programmes such as Upscale and Future Fifty. The total value of the UK’s 13 unicorns is estimated at $23bn, out of a combined value for all 34 European companies of $62bn. The UK’s current unicorns are now worth more than the $17bn value of France and Germany’s unicorns combined.
Will Shu, Founder, Deliveroo says:
“Deliveroo is proud to be a British company, exporting our technology around the world. In just five years we have created work for riders and growth for restaurants in markets across the globe while delivering millions of meals to our customers. None of this would be possible without the creativity and talent of the team in London, an incredible city and the place we call home”
Aside from London, the UK counts three additional cities with at least one unicorn – Manchester, Oxford, Cambridge – and Abingdon, a town in Oxfordshire. The UK has now produced 25 $1bn+ exits since 2010, which is as many as Israel, Sweden and Germany combined. Over a third of the European companies formed since 1990, that have gone on to be billion pound businesses, are from the UK. In the last few years, several of these companies have come to the stock market, including Zoopla, Blue Prism, Just Eat and Purplebricks.
Samir Desai, co-founder and CEO at Funding Circle, said: “We are seeing the rise of disruptive technology companies right across the country due to the remarkable talent and creativity here. These companies can be pioneers on a global stage, providing jobs and careers for future generations.”
The UK is where Europe comes for startup funding, with seven of Europe’s top 10 venture capital investors based here. The UK provided 22% of all venture capital invested in Europe in 2017. Only the US is a bigger investor in Europe, providing 26% of funds, and the UK remains significantly ahead of Asia, which provides 13% of the VC funds invested in Europe. Within Europe, UK investors are those which are most actively investing outside their own country. In most European countries (including France, Germany, Sweden, Netherlands, Spain) about 20 to 25% of foreign investment comes from UK-based investors. During 2017, there were 229 non-domestic funding rounds led by UK-based investors. In contrast, German investors made 140 investments in companies outside their own country, while France had 86 non-domestic funding rounds during 2017.
Wendy Tan White, Board Trustee Alan Turing Institute, Board Member Tech Nation, said: “As an entrepreneur and an investor I see that momentum in the UK technology sector is building relentlessly, helped by a world-class research and academic environment. Ambitious entrepreneurs no longer have to leave this island and head to the US to build the company of their dreams. Our commitment to science, research and deep tech is already starting to pay off but the big benefits are still to come, as we develop global authority in the fields of artificial intelligence and deep tech.”
Dealroom.co analysis shows there are 51 potential unicorns, currently based in the UK, illustrating the growing momentum of the UK ecosystem. These are companies that are currently valued at between $250m to $1bn and are emerging from a wide spread of sectors including fintech, healthtech, AI, e-commerce and proptech. These potential future unicorns are typically growing fast and have a combined value of $18bn.
Eileen Burbidge, Partner at Passion Capital, HM Treasury Special Envoy for Fintech and Chair of Tech Nation, said: “The UK is a great place for a tech investor to be right now and I see founders with huge ambition and appetite to build global companies every day. In fintech particularly we are already a global leader and I am excited to see what further great things come out of the intersection of the UK’s financial services expertise and its deep tech knowledge.”
The Government is backing public and private initiatives worth up to £14bn which are designed to support research in academia, startups and growing businesses. Money committed to unlock investment in technology and innovation includes more than £6 billion for UK Research and Innovation which brings together the seven Research Councils, Innovate UK and a new organisation, Research England. BGF, which was established by five high street banks in consultation with Government, has funds of £2.5bn to invest in growing businesses and has now invested in 225 companies, including many early-stage tech companies.
Stephen Welton, chief executive of BGF, said: “The shortage of growth capital provision on any meaningful scale was the catalyst for the creation of BGF in 2011. Since then, we have been able to support hundreds of brilliant UK businesses to grow, including in the technology and innovation sector and we have also helped to change the culture around investing, with many more institutions and the Government now recognising the advantages of a patient, long-term approach to helping UK SMEs to scale up.”
The Digital Economy Council and Digital Economy Advisory Group brings government and the tech community together to implement the Department for Digital, Culture, Media and Sport’s UK Digital Strategy.
Saul Klein, Partner at LocalGlobe, said: “The UK’s long history of producing successful £1bn+ businesses shows that we have the talent and the attitude to build bigger and better technology companies. Some of the most exciting developments of the next decade are taking place at startups and universities across the UK, supported by a world-class ecosystem of experienced entrepreneurs who have already built successful businesses and are now investing in the next generation of startups.”
The Tech Nation report 2018 calculates that a new digital tech startup is created in the UK every 50 minutes. We also found that in total 2.1 million people are now employed in the digital tech economy – this includes both people working in the digital tech industries and people carrying out digital tech jobs in non-digital industries. The average salary for a job that requires digital tech skills is £42,578 which is significantly higher than those which do not (£32,477). Three of the top ten global computer science institutions are based in the UK and four of Europe’s top 10 universities and business schools whose alumni have created $1bn companies are based here.
Matt Hancock, Secretary of State for Digital, Culture, Media and Sport, said: “These new figures show the UK is the digital dynamo of Europe and we are achieving our goal to be the best place in the world to start and grow a tech business. More than a third of Europe’s tech firms worth more than a $1 billion were developed in the UK and venture capital investment into our country last year exceeded Germany, France and Sweden combined. Through our Digital and Industrial Strategies we are creating the right conditions to turn brilliant tech ideas into world-beating global businesses and pushing the boundaries of science to change people’s lives for the better.”
Two of the UK’s most active tech investors are Woodford Funds, which invests in early-stage companies through its Patient Capital Trust and Baillie Gifford, an early investor in technology which has had success with Funding Circle, Orchard Therapeutics, Skyscanner and Transferwise in the UK. Other institutional investors have also indicated their intention to step up early-stage investing including Legal & General and Aviva. Meanwhile the UK’s leading universities have launched large funds that are intended to bring the best and most innovative of the universities’ research to market. Oxford Sciences Innovation has raised over £600m to invest in developing the next generation of spinout companies, while Cambridge Innovation Capital, which is focused on healthcare and technology startups, has raised £125m to date and is currently raising additional capital.
Gerard Grech, chief executive, Tech Nation, said: “At Tech Nation we are helping ambitious tech entrepreneurs to build their businesses and are seeing new companies formed every day. The UK has so many advantages including world-leading universities and capital markets that are helping to drive the UK’s position at the centre of European tech. As we prepare to leave the EU, there is an unprecedented opportunity for growth. We must make the most of it.”
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