While there has been much concern about the City’s competitive position this year – with Amsterdam overtaking London as Europe’s biggest share trading center and the value of the French stock market overtaking that of the UK – new figures show that the UK’s tech sector continues to grow enjoys a significant lead over its European counterparts.
Figures produced by data and intelligence platform Dealroom for the Digital Economy Council show that fast-growing UK tech companies have raised £24bn this year – more than their counterparts in France and Germany combined.
This brings the total raised by UK tech companies over the past five years to £97bn.
The numbers are all the more striking because for most of the year capital has become harder to find as interest rates have risen and investors around the world have become more skeptical of the technology sector.
Dealroom figures suggest the UK tech industry is now worth $1 trillion. – making it only the third country, after the United States and China, to achieve this milestone and establishing it as a leading European technology ecosystem.
Germany’s tech sector is now valued at $467.2 billion, while France’s is worth $307.5 billion.
Not only is the UK tech sector attracting more venture capital than its European peers, the figures show, it is also creating more value for investors.
The figures show that since the turn of the century, the UK has spawned 144 ‘unicorns’ – start-ups that have reached a valuation of more than $1 billion – and 237 so-called ‘futurecorns’, companies that are valued north of $250 million and which are believed to be on their way to achieving unicorn status.
That’s up from 116 unicorns and 204 future nipples at this time last year.
Paul Scully, Minister for Digital, said: “UK technology has remained resilient in the face of global challenges and we finished the year as one of the world’s leading destinations for digital business.
Image: Paul Scully says the figures in the report highlight the importance of government investment in technology
“This is good news and reflects our pro-innovation approach to technology regulation, continued support for start-ups and ambition to upskill people digitally.”
The figures highlight the UK’s growing attraction to international venture capital firms.
This year has seen some of the biggest US tech investors, including General Catalyst, Sequoia Capital and Lightspeed – all of which opened offices in the UK last year – increase their presence by hiring more staff.
They were joined in the UK this year by New Enterprise Associates, the 45-year-old US venture capital firm that has backed companies such as TikTok owner ByteDance and Earlybird, the Berlin-based venture capital firm.
UK-based funds have raised £9.2bn this year – just above the £9bn raised in 2021 – to support fast-growing companies and start-ups.
Chris Bischoff, managing director at General Catalyst, said: “We established a presence in London as we believed the UK was a standout ecosystem globally. Our experience over the past 18 months has strengthened our appreciation of this remarkable ecosystem, allowing us to find and support early-stage companies working to accelerate change in their industries.
“Just as importantly, our values of responsible innovation and radical collaboration are fully in sync with the UK’s approach to innovation.”
Dealroom data also shows that technological innovation is spreading across the UK.
Image: The university city of Cambridge is among those home to at least two tech unicorns. Photo: Cambridge University Library
There are now eight cities – Bristol, Cambridge, Edinburgh, Leeds, London, Manchester, Nottingham and Oxford – that are home to two or more unicorns.
Some of these are now seen as challenging the dominance of America’s leading technology ecosystems in certain disciplines: Cambridge was recently named the world’s third-largest science center behind only the San Francisco Bay Area and Boston, Massachusetts. Oxford was fifth on the list.
The University of Cambridge also recently topped the world rankings for producing the most successful tech founders, with more than 500 of its alumni having raised at least $10 million in funding.
The universities of Oxford, Bristol, Nottingham and London are included in the top 20 globally, along with leading American institutions such as Harvard and the Massachusetts Institute of Technology (MIT).
Amid a tight job market, with more than three million people working in technology in the UK, the sector is increasingly hiring entry-level people. Job search engine Adzuna reports that there were more than 15,000 entry-level tech positions in November – up from 6,596 last November.
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This has led to the emergence of a number of so-called “edtech” startups dedicated to giving people the skills, such as coding and cybersecurity, needed to build successful careers in technology. These include Multiverse, the UK’s first edtech unicorn, which was founded by Ewan Blair, son of Sir Tony Blair, former prime minister.
Some of them, like Code First Girls, are specifically aimed at increasing the number of women working in the technology sector.
Anna Brailsford, CEO of Code First Girls, said: “From using AI to tackle health inequality to designing and building space missions, amazing tech businesses are being launched and scaled every day in the UK.
“Yet too few women have the opportunity to work for these impactful startups because they have not previously been encouraged to pursue careers in technology or learn key skills.
“We aim to train 26,000 women across the UK over the next five years and place them in technology positions so they can use their knowledge and experience to change this industry for the better.”
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