New data shows how UK tech boomed in 2021, with start-ups raising £26bn, doubling last year’s figures and creating a record number of unicorns.
According to research from the UK’s Digital Economy Council, tech investment made up 35 per cent of the total £76bn that flowed into the European tech ecosystem this year.
UK venture capital firms had a record year, raising £7bn with record-breaking fundraising from London firms.
The £26bn raised by UK startups and scale-ups was nearly double the figure raised in Germany (£13.5bn) and is more than three times that raised by France companies (£8.6bn).
However, the majority of the money coming into UK tech is from the US, with 38.2 per cent of all funding coming from the States, up from 31.5 per cent last year, with the majority of it going into fintech and health tech companies.
More funding means more unicorns, with 29 created this year including the e-commerce platform Depop, payments platform GoCardless, car selling platform Motorway, insurance disrupter Marshmallow, and the challenger bank Starling Bank.
This takes the UK’s total unicorn figure to 116 meaning 25 per cent of the UK’s total unicorns were created in 2021 alone. The UK has more unicorns than France (31) and Germany (56) combined.
Of all the unicorns created in the UK, 35 per cent are outside of London and 35 per cent of futurecorns are also based outside of the capital, suggesting that the growth in tech in the regions will continue strongly in the next five years.
By region, Cambridge is the leading regional tech city in the UK thanks to its combination of high levels of VC funding, venture capital rounds, advertised tech salaries, number of unicorns (tech companies worth more than $1bn) and futurecorns.
Manchester was a close second, with Edinburgh, Cardiff and Belfast in the top ten for capital raised.
The number of jobs in Manchester increased by 164.6 per cent in 2021 and the highest advertised average salaries outside London were in Edinburgh – £58,405.
Almost £9bn of all VC invested went into startups and scaleups outside London and the South East and the regions are home to nine of the 29 unicorns formed this year.
The London market hosted more than twice as many transactions as the next most active European market, with £16.5bn raised through IPOs, and the 34 tech and consumer internet companies achieved a combined market cap of £30.9bn.
This landscape was buffered by government increasing its investment in R&D to £20bn by 2024-25, in order to support the UK’s research institutions, universities and businesses with an aim to increase this to £22bn by 2026-27.
This investment is aimed at securing the UK’s future as a global science superpower, supporting businesses as they transition to becoming more innovative and productive and creating highly skilled jobs across the country.
At the same time, there has been increased private investment in deep tech firms, totalling £6.2bn in 2021, up from £2.8bn in 2020.
One of the biggest deep tech deals of the year was the £396m Series D raise by AI drug discovery company Exscientia, of Oxford, which helped the company achieve unicorn status.
Discussing the findings, Digital Minister Chris Philp said: “It’s been another record-breaking year for UK tech with innovative British startups helping solve some of the world’s biggest challenges.”
“Capitalising on this fantastic investment across the country is a crucial part of our mission to level up, so we are supporting businesses with pro-innovation policies and helping people to get the skills they need to thrive in this dynamic industry.”
Saul Klein, partner and co-founder at LocalGlobe, added: “It’s 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 R&D, financing and established tech hubs across the country from New Palo Alto in Kings Cross, to Cambridge, Edinburgh and Manchester.”
He added that the key differentiator for investors in future will be a willingness to take an ethical approach to building businesses.