Developing a business in the digital space is proving a good choice for British entrepreneurs after recent research found tech companies are growing at 6 times the rate of other industries. The Tech Nation Report 2020, found that tech companies accounted for 7.7% of UK GDP in 2018, contributing £149 billion to the economy.
Staff numbers employed by the digital sector are rising along with revenues, up a whopping 40% from 2017 to 2.9 million people. Taxpayer-funded industry body Tech Nation said that digital sector employment now accounted for 9% of UK employment.
The UK’s tech start-ups also continue to do well when it comes to attracting investment, which last year reached record levels. A total of £10.1 billion was raised compared to £3.1 billion in 2018. That makes the UK tech and digital start-up sector by far the most successful in Europe when it comes to convincing investors to stump up cash.
British start-ups received a whole third of all of the venture capital invested in Europe and more than German and French peers combined. Globally, only start-ups from the far more populous USA and China attracted more venture capital.
UK ‘tech hubs’, regions that are home to clusters of tech start-ups, are also among the fastest growing in Europe. London, Manchester, Bristol, Oxford and Cambridge all feature in Europe’s top 20 cities for attracting tech-focused venture capital. Manchester was Europe’s fastest growing tech hub, with companies based in the northern city attracting £181 million last year compared to £48 million in 2018.
The UK is also home to a quickly growing roster of tech ‘unicorns’ – defined as start-ups that have attracted investment at a valuation of at least $1 billion. Eight British digital companies achieved that status over 2019, including payments firms Checkout.com and Rapyd, diagnostic app company Babylon Health and CMR Surgical, which designs medical robots.
Commenting on the report’s optimistic statistics, secretary of state for digital, culture, media and sport Oliver Dowden, stated:
“The tech sector is at the heart of our economy and creating jobs and wealth across the country”.
He also highlighted the government’s determination “to create the conditions digital businesses need to succeed”, before namechecking recent commitments to increase spending on high speed broadband and 5G networks as well as research and development.
Big international investors contributed as much of the venture capital attracted by British digital companies as domestic investors did, with half of the total coming from Asia and the USA. The sector has suffered less than others from the uncertainties surrounding Brexit over the past few years. Digital products and services are less threatened than physical goods, which could be subject to tariffs and border checks if a trade deal is not agreed with the EU.