The UK's tech industry - companies involved in technology - continues to be one of the most important sectors of employment, with many jobs to its credit as it has extended its lead over France and Germany in attracting technology investment.
According to figures from Tech Nation, UK tech investment rose by 44% last year to £10.1bn – an all-time high, up from £6.3bn the year before. German and French tech companies didn’t fare too badly, with investment up 40% and 37% respectively.
Tech Nation noted that UK tech companies had grown more than those in France and Germany combined. However, the UK still ranks third in tech investment compared to the US (£81.9bn) and China (£32.2bn). And while it may be doing well compared to its neighbours, when it comes to investment in emerging technologies, London is far behind San Francisco, Beijing, New York and Santa Clara and only slightly ahead of Mountain View and Pittsburgh.
Tech Nation said the UK tech sector now accounts for 7.7% of the UK economy. Last year, 2.9 million people were employed in digital technology – around 9% of the workforce. The research also found that 45% of the UK’s high-value companies are based outside London, suggesting that the tech boom that started in London a few years ago has now spread to other parts of the country.
Financial technology (aka fintech) is the strongest area for the UK tech industry, with £4bn of investment in fintech companies in 2019. The UK’s 29 billion-dollar fintech companies make up almost 40% of the UK, reflecting the importance of Fintech to UK technology. Only the US beats the UK in investment in this sector.
AI (artificial intelligence) is often cited as an area of research where Britain is doing well, but investment from 2014 to 2019 came in at a third and the UK had the same investment as Israel last year – £3.1bn.
The report highlights a potential concern for the UK tech industry. Four-fifths of UK tech investment was in high-growth, high- productivity, which employ at least 10 people and are growing at least 20% year-on-year.
Part of this is likely the result of the growth of the UK tech industry, with successful companies maturing, growing and increasing their investment over time. Just a few years ago, so-called “megarounds” of investment of over $100 million were almost non-existent in the UK.
The concern is that if more money goes to larger, older companies involved in technology, less goes to smaller, newer companies.
The UK saw very little growth in funding and pre-funding in 2019, compared to France and Sweden where it increased (although it actually fell significantly in Germany). And this is not the first time there have been concerns about the lack of funding for tech start-ups in the UK
London also remains the largest tech hub in Europe (although it is no longer in the European Union). Around $9.5 billion was awarded to London-based companies, compared to £4.5 billion to companies in Berlin, £3.2 billion for Paris and £1.7 billion for Stockholm.
This relatively positive picture will, of course, be disrupted by the ongoing coronavirus (COVID-19) pandemic, but to what extent? “These are unprecedented,” said Russ Shaw, founder of London-based Tech Advisors, commenting on the research. “My hope is that technology will respond to this global pandemic with advances in network capabilities, health technology solutions and new tools in the workplace – which will secure the entire economy in the months and years to come.”
