UK regions come to the fore in producing $1bn tech companies
The UK’s leading tech clusters are competing head to head with European capitals, according to new analysis of company growth, in a sign that the success of the UK tech sector is pushing far beyond its London heartland.
Following the IPOs of Farfetch and Funding Circle, the UK is now home to 15 unicorns and six cities have produced so called unicorns $1bn tech companies according to research prepared for Tech Nation and the Government’s Digital Economy Council by venture capital analytics company Dealroom.co. This latest research is published ahead of the Secretary of State for Digital, Culture, Media and Sport’s first meeting with the Digital Economy Council on 24 October 2018.
Oxbridge beats Paris and Berlin creating nine unicorns
Looking at the creation of $1bn tech companies, Oxford and Cambridge combined have produced more fast growing tech companies than both Paris and Berlin.
The two cities, both renowned for their world leading research and scholarship, have thriving tech sectors and are home to some of the UK’s most promising tech companies. The presence of large number of pioneering tech companies across both cities is testimony to how academic research and excellence can contribute to the next generation of world leading companies.
Cambridge is home to Darktrace, which provides leading artificial intelligence cyber defence to the likes of Raspberry Pi and power company Drax. It was founded in 2013 by a combination of mathematicians from the University of Cambridge and experts from MI5, GCHQ and the CIA. Elsewhere, chipmaker CSR and chip designer ARM have maintained close links with Cambridge University after they were acquired for £1.5 billion and £23.4 billion by Qualcomm and SoftBank respectively. Both CSR and ARM continue to hire engineering and computer science expertise from the university.
Academic institutions are helping to create pioneering new tech companies
Oxford Nanopore, which has created a mobile DNA sequencer the size of a USB stick, was spun out of Professor Hagan Bayley’s University of Oxford lab and now collaborates with many universities around the world and its DNA sequencing technology is now available in more than 80 countries. Immunocore, a privately-owned biotech company which counts Microsoft co-founder Bill Gates among its backers, evolved from an Oxford University spin-off company and is now working with universities around the world.
Manchester has produced five unicorns, putting it on a par with Amsterdam
In the North of England, Manchester has become home to a thriving ecommerce cluster of retail businesses and has produced as many unicorns as Amsterdam, the Dutch capital. The North West city is headquarters for quoted tech companies including boohoo and AO.com, as well as privately owned The Hut Group. Travel business Onthebeach.com and publisher Autotrader are also notable tech companies in the city.
With a population that is significantly smaller than Amsterdam’s, Manchester now has 10 accelerators specialist business centres helping entrepreneurs create startup firms and had investment per head of population of $490 in 2017, higher than Amsterdam’s $400.
Across the Pennines in Leeds, two unicorns have been created in Sky Betting & Gaming, which was sold for £3.4bn to larger rival The Stars Group in 2018 and Callcredit, which was sold to TransUnion for £1bn earlier this year. Edinburgh counts SkyScanner and data consultancy group Wood Mackenzie as unicorns.
UK’s regional cities are competing head to head with Europe’s biggest capitals
The report compares the UK’s capital and its thriving regional cities with prominent tech hubs in Europe, to show how they measure up. It finds that the UK has created 60 unicorns in total, which equates to 35% of Europe and Israel’s total 168 unicorns. The latest data compares Oxbridge with Paris; London with Berlin; and Manchester with Amsterdam across a number of factors that help to contribute to tech ecosystem development. Besides number of unicorns, the report looked at population size, position of highest placed university in world rankings, number of accelerators and investment per capita in tech companies in 2017. Four out of the top 10 global universities are located in the UK, as are eight of Europe’s top 20 Universities.
UK has 54 potential unicorns
London is the acknowledged centre of Europe’s tech sector, producing 21% of the continent’s fast-growing unicorns. The capital has produced 36 unicorns worth $132bn, while Berlin has produced eight worth $32bn.
Looking further ahead, the UK also leads Europe by number of potential future unicorns. The UK has 54 potential unicorns or businesses that are worth between $250m to $1bn. The total value of these growing companies is $18.6bn. In contrast, Germany, the closest competitor in Europe to the UK on this measure, has 28 unicorns with a value of $8.8bn, while France has 27, worth $7.7bn. Israel, which comes third after the UK and Germany, has 25 potential unicorns worth $8.14bn emerging from its tech sector.
Jeremy Wright, Secretary of State for Digital, Culture, Media and Sport, said: “ The UK’s track record in creating fast-growing tech companies is second to none in Europe. These new statistics show Manchester and Edinburgh are now competing on a global scale and stellar tech firms are growing right across the country, spreading new jobs and investment. Through our Digital and Industrial Strategies we are creating the conditions to start up and grow brilliant tech ideas into world-beating global businesses and pushing the boundaries of science to change people’s lives for the better.”
Sam Gyimah, Universities, Science, Research and Innovation Minister, said: “This report shows that Britain is one of the best places to start and grow a worldchanging business. We’re backing the success of Britain’s entrepreneurs through our Industrial Strategy: investing more than ever in R&D, making it easier to raise finance for new ventures, and making sure our regulations encourage innovation rather than stand in its way.”
“The success of startups in Leeds, Manchester and Edinburgh shows how innovation and tech is driving growth right across the country. Our Strength In Places fund will double down on these advantages, investing in growing tech clusters all around the UK.”
About the Digital Economy Council
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.
About Tech Nation
Tech Nation is the new organisation to help accelerate the growth of the digital tech sector cross the UK. Launched in April, it builds on the past work of Tech City UK and Tech North to make the UK the best place in the world to imagine, start and grow a digital tech business. Its mission is to empower tech entrepreneurs to grow faster through knowledge and connections, to build a UK economy that is fit for the next generation. It does this by running growth programmes, developing digital entrepreneurship skills through its online Digital Business Academy, through its visa scheme for exceptional talent and by championing the UK’s digital sector through data, stories and media campaigns. www.technation.io
Tech Nation’s annual health-check on the state of the UK tech sector can be found at Technation.io/report2018
About Dealroom.co
Based in Amsterdam, Dealroom.co is a proprietary global database providing business intelligence on innovative companies and venture capital. Dealroom’s software, database and bespoke research help to stay at the forefront of innovation and identify growth & strategic opportunities. Among its clients are firms such as McKinsey & Company, Boston Consulting Group, Microsoft, Stripe, Deloitte, Ernst & Young, Sony, and other world-leading Silicon Valley firms, venture capital and buyout firms, multinationals and governments. Dealroom data has been extensively featured by the Financial Times, BBC, The Economist, The New York Times, The Washington Post, Bloomberg, Reuters and dozens of other leading publications.
