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UK tech startups raise almost £30bn in record year

The UK tech sector has achieved record growth in the past 12 months after the Covid pandemic paused investment

The UK tech sector has seen investment grow by nearly two and a half times over the last year as it recovered from the pause caused by Covid-19.

According to UK government figures, investors ploughed £29.4bn into UK startups and scaleups, compared with £11.5bn last year, when coronavirus caution held investment back.

A total of £89.5bn was invested in the European tech ecosystem in total, with £14.7bn invested in Germany and £9.7bn in France. 

During 2021, 29 unicorns were created in the UK, taking the total to 115. These included e-commerce platform Depop, car-selling platform Motorway, core banking fintech Thought Machine and challenger bank Starling.

The report also revealed that UK tech startup success is increasingly spreading across the country, with nine unicorns out of the 29 total created outside London. A total of 35% of the UK’s unicorns are based outside London, as are 35% of future unicorns. Cambridge came top of the list of hubs outside London, with Manchester close behind. Edinburgh, Leeds, Newcastle and Cardiff also featured in the top 10. 

Digital minister Chris Philp said capitalising on the investment across the country is a crucial part of the government’s mission to level up.

It is also good news for tech professionals, with a 50% increase in job vacancies in UK tech compared to last year, with 160,887 vacancies in November. Tech vacancies now make up 12% of all available jobs in the UK, half of those outside London and the South East.

Software developers are the most in-demand tech professionals, with average salary offers of £64,318 being made, which is a 12% increase on 2020. Specialist Java developers and IT systems architects command high salaries, averaging £80,000 and £93,000, respectively.

Saul Klein, partner and co-founder of venture capital firm LocalGlobe, said: “It has taken 20 years for UK tech to get to the starting line and things start to get interesting in the next 20 years. We have all the ingredients to become the leading tech ecosystem in the world, with record levels of research and development, financing and established tech hubs across the country.”

Klein added that a key differentiator for investors in future will be a willingness to take an ethical approach to building businesses. “We can be world class in this and, over the long term, this will set our companies apart from those built in the US and China,” he said.

Dealroom founder and CEO Yoram Wijngaarde said the UK tech ecosystem has exploded in the past year, with new unicorns being established. “This is significant because we know from research that employees at these companies often go on to found their own startups, some of which become unicorns themselves, which helps to shore up the ecosystem and lead to a new generation of global companies,” he said.

Gerard Grech, founding CEO at Tech Nation, said it is becoming evident that the UK is very good at rearing and cultivating startups and scaleups into successful global companies. “A true network of digital excellence is emerging right across the country through entrepreneurship, driving new job and wealth creation,” he added.

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