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The UK’s digital tech sector grew six times faster than the rest of the economy and now represents nearly a tenth of the national workforce according to digital entrepreneurs network Tech Nation.
According to the Tech Nation report 2020, the UK digital tech sector contributed £149bn to the economy in 2019, accounting for 7.7% of the nation’s gross value added.
The number of people employed in the sector has also increased by 40% since 2017, meaning it now employs 2.9mn and accounts for 9% of the overall national workforce.
“The success of these businesses will be grounded in the UK tech ecosystem's ability to build deeper and broader knowledge networks between various constituents such as experienced investors and entrepreneurs and to truly fuel growth across the country,” said Tech Nation chief executive Gerard Grech.
“We need to stay responsive, with smart regulation, ever increasing access to growth capital and new markets. Every effort we put in now will repay many times over, as the past few years have already shown.”
The report cites investment in late stage scaling companies as a major driver of the UK’s digital tech sector growth. In 2019, 81.2% of investment went to scaling firms, compared with 80% in 2018. As a result the UK is now home to 95 ‘high value’ scaleups worth between $250-$800m, the most ever on record. For comparison, France is home to 61 high value scaleups, while both Germany and Israel have 46 each.
“Companies at the pinnacle of growth, scaleups, are becoming an ever more important part of UK tech, with nearly 82% of tech sector investment now being made into these job-generating, value-creating powerhouses of the future,” said forewords in the report by Grech and Eileen Burbidge, chair of Tech Nation and a partner at Passion Capital.
Read more about the digital tech sector
- Tech Nation has announced the 10 winners of its second-ever Rising Stars competition, which is designed to showcase the most exciting pre-Series A funding companies in the UK.
- Tech Nation has selected 30 of the fastest growing technology companies to take part in its Upscale programme, which is now in its fifth year.
- The UK’s cyber security industry is reaping the rewards of a three-year boom, with the number of active security firms in the UK growing by 44% to 1,200 since 2017, making total sales of £8.3bn, up 46%, and contributing £3.7bn to the economy, up 60%, according to the Department for Digital, Culture, Media and Sport (DCMS).
On top of huge investment in and subsequent growth for scaling tech companies, 35 pence of every £1 invested into new technologies in Europe, like artificial intelligence (AI) or blockchain, went to UK-based companies.
For example, from 2015 to 2019 UK companies secured £7.8bn in cyber security investment, £3.2bn in AI and £8.9bn in blockchain. This leaves the UK third in the world for cyber security (where it is joint with Israel) and AI investment, and fourth for blockchain investment.
A further £1.18bn was raised by UK healthtech companies in 2019, accounting for 61% of the total European market worth £1.93bn.
Fintech, however, remains the UK’s largest tech investment sector, witnessing a 100% rise from 2018.
In total, 44% of Europe’s Fintech unicorns (companies valued at over $1bn) and high value scaleups are based in the UK This puts UK firmly at third in the world for investments into new or emerging technologies, behind only the US and China.