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London’s annual Tech Week has rolled around again – an opportunity to bang the drum for Britain’s economically crucial technology sector.
And to mark the start of the event, Tech Nation – a body set up to promote technology sector growth across the entirety of the U.K. – and business information provider, Dealroom.co have released some eye-catching statistics charting the continued rise of the home-grown unicorn population.
According to the London Tech Week Update 2019, 13 new unicorn companies (valued at $1 billion or over) have been created in the U.K. over the past year, bringing the national total up to 72. The majority are concentrated in and around London, but six other British cities are home to at least two unicorns.
The report is not slow to make comparisons. With a total of 18, London has more fintech (financial technology) unicorns that San Francisco (15), although marginally fewer than the Bay Area as a whole. And across the whole tech sector, the capital’s 45 $1 billion companies trumps both Berlin (10) and Paris (9).
A Measure Of Success
But apart from giving us Brits something to look cheerful about amid the Brexit chaos, what does this all mean? Totting up the unicorn population clearly provides one measure of the health and strength of Britain’s tech startup sector, but do the figures tell us anything that is useful? When it comes to milestone valuations, the phrase “one billion dollars” clearly has a nice ring to it, but it is also something of an arbitrary figure.
Tech Nation CEO, Gerard Grech acknowledges that the unicorn count is just one measure of tech industry success among many, but he, nonetheless, sees the rising population as evidence of an increasingly fertile environment – one that is providing young businesses with the support they need to scale up successfully. “What it shows is the strength of the ecosystem,” he says. “The U.K. economy is creating high-value companies.”
It is, he says, an increasingly joined-up ecosystem that includes, universities, incubators, mentors, advisors and investors. “All the linkages between them create a good environment for startups, scaleups and unicorns,” he adds.
A Growth Pipeline
There is, perhaps, a degree of validation too. Britain has yet to create a Google or an Amazon. And while the tech sector is growing rapidly, the presence of thousands of ambitious startups doesn’t necessarily feed through to a sustainable innovation economy. Failure rates are high. But as businesses scale up towards unicorn status, they are less likely to fail and more likely to become global players.
And importantly, there is a pipeline. The Tech Week Update says 75 companies are now valued at $250 million or more and are, therefore, considered to be well on their way to hitting the $1 billion milestone.
But will the rise of the U.K. tech unicorn fall foul of the economic changes that are being wrought by Brexit? For instance, fintech has thrived in Britain – particularly in London – because of the presence of a financial sector that contributes 13% of the country’s GDP. Not only does the sector provide customers, it has also allowed startups to draw on a deep well of expertise.
So all is well and good for fintech ventures, but what about say, a startup that is working on battery technology (for electric cars) or A.I. for driverless vehicles? What we’ve seen over the past few months is a succession of car companies announcing cutbacks in their British operation. Only last week, Ford gave details of a plan to close an engine plant in Wales. What does this mean for tech companies in the supply chain?
Centers of Excellence
Grech is optimistic. You need centers of excellence for the technology,” he says. “But in a globalized economy, as long as we have the centers of excellence here in the U.K., we don’t necessarily need to be building the cars.”
Looking across the U.K. regions, he sees new hubs emerging, sometimes reflecting local factors. “Manchester is strong on e-commerce,” he says. “And Belfast is punching above its weight on cybersecurity. Oxford punches above its weight in bioscience.”
It is often said that the future economic health of the UK is dependent on the continued growth of the tech startup sector – indeed, acting Prime Minister, Theresa May said as much this morning when she announced £1.2 billion in technology-focused inward investment. The presence of a herd of unicorns may be a very rough measure of success, but it also suggests that the forward march of the innovation economy has now got real weight behind it.
June 10, 2019 at 07:06AM
Forbes – Entrepreneurs