What’s underpinning the UK’s leadership in European tech

As London Tech Week begins, new figures prepared by Dealroom and Tech Nation for the Government’s Digital Economy Council demonstrate the strength of the UK tech ecosystem. This new 18 page report was co-authored by Dealroom and Technation and looks everything from talent pools to venture capital investment, and from to $billion+ exits to emerging unicorns.

Report - UK tech report – London Tech Week 2018

1: investment in UK tech is at record levels

In 2017, $7.9 billion in venture capital was invested in the UK, more Germany, France and even Sweden combined. UK investment also surpassed all of the Rest of Europe combined. The below chart highlights the astonishing growth in the last year.

While London is the financial epicenter, businesses are scaling across the United Kingdom. Cities like Cambridge, Oxford and Edinburgh are at par with major tech cities like Barcelona, Amsterdam, Helsinki, and Madrid, in terms of investment and by number of unicorns formed.

2: the UK is dominating Europe’s unicorn landscape

The higher level investment is also yielding dividends, as the UK accounts for 13 of Europe’s 34 unicorns, or 38%. This includes Farfetch, The Hut Group, Deliveroo, Transferwise and many others. The below image shows just how dominant the UK by number of today’s unicorns.

These unicorns with a combined value of about $23 billion, which is about 37% of total European value of $62 billion.

Within the UK London leads of course, with 9 unicorns, but Cambridge and Oxford also have multiple unicorns on their name (Immunocore, Darktrace, Oxford Nanopore).

3: UK is the most consitently delivering $1 billion exits

So far that’s just a snapshot of unicorns today. But historically, too, UK has been the most consistent in delivering exits above $1 billion in value almost every year. Only Germany comes close in terms of consistency. As a result, the United Kingdom has astonishingly delivered as many unicorns as Israel, Germany and Sweden combined, since 2011.

4: the UK is well positioned to deliver more unicorns in the future

What about future unicorns? Looking further ahead, the UK also leads Europe by number of potential future unicorns, measured as growing companies valued between $250 million and $1 billion (such as WorldRemit, Secret Escapes, Graphcore, Monzo, Atom Bank, Made.com, and others). The following chart shows 51 of such companies for the UK, versus 31 for Germany.

5: the UK is a vital part of and biggest contributor to the European tech ecosystem

Is it fair to frame this as a competition? On the one hand, some healthy competition between ecosystems may eventually benefit its constituents (startups). However, it is also too simplistic. The below chart shows that investors from the UK are the biggest source of European venture capital.

The above partly reflects that the UK has the biggest venture capital sector in Europe. However, UK investors are also most active in investing outside their own country. The below chart shows the UK leading by number of non-domestic rounds in 2017.

6: the UK is home to Europe’s top investors

As a result of the above, most of Europe’s most succesful VC firms are London based: Index, Accel, Balderton, Northzone (dual HQ in Stockholm and London) and seed investor LocalGlobe. The below league table by Dealroom shows that the UK is home to 7 out of 10 top unicorn hunters.

If you have any questions about this data please feel free to contact us via [email protected]

Report - UK tech report – London Tech Week 2018