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What can we learn from the Tech Nation Report 2021?

March 22, 2021
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2020 was a landmark year for technological innovation, to say the least. The outbreak of the COVID-19 Pandemic brought about incredible creativity and ingenuity in technology that helped us efficiently alter the way we safely work, socialise and relax in relation to the new, somewhat stringent health and safety measures required.

The Tech Nation Report 2021 first glances back on the year behind us before looking ahead to the future – exploring the exciting potential the U.K.’s tech landscape holds for innovation and development.

Read on to learn the key takeaways from this year’s Tech Nation Report.

What are the key facts to take away from this year’s Tech Nation Report?

  • Despite the disruption experienced by us all in 2020, the U.K’s VC investment reached a new high of $15bn – the third highest in the world after the United States and China.
  • The U.Ks investment in deep tech increased by 17% in 2020, the highest growth rate globally.
  • In 2020, 63% of tech investment came from overseas, this figure is up from 50% in 2016.
  • The U.K.’s investment in impact tech has increased by 160% since 2018. Comparatively, the United States investment into impact tech over the same period rose by just 15%.
  • Tech company investment in London is the fourth-highest globally at $10.6bn, after San Francisco, Beijing and New York.
  • The value of the UK’s tech and scaleup ecosystem has risen by more than 120% compared to 2017 to $585bn in 2020. This is more than double the value of Germany’s ecosystem which is the next most valuable after the U.K.
  • As a proportion of overall tech VC investment, investment in seed-stage companies continues to decrease from 14% to 6% over the last five years. However, Series B and C investment in the U.K. is on the rise.
  • Each year since 2016, the rate of tech GVA contribution has increased by 7% on average, meaning tech is becoming more important to the U.K.’s economy.

What does the Tech Nation Report 2021 say about the East of England specifically?

  • There are 24,525 digital tech firms within the East of England.
  • Five tech unicorns are based within the region alongside seven future unicorns.
  • The two largest tech hubs within the region are Cambridge (ranked fourth in the U.K.) and Norwich (ranked 12th in the U.K.).
  • In the East of England, the four sectors that gained the most investment in 2020 were health tech (£76.9m total investment), climate tech (£42.2m total investment), createch (£13m total investment) and Edtech (£10.9m total investment).
  • The areas that the public in East Anglia think technology will have the greatest impact on are education, health and research.
  • 10.5% of digital jobs in the tech sector are filled by women in the East of England, compared to 15.9% in non-tech sectors.
  • 11.6% of digital jobs in the tech sector are filled by BAME people in the East of England, compared to 14.9% in non-tech sectors.
  • 40.3% of digital jobs in the tech sector are filled by under 35s in the East of England, compared to 37.9% in non-tech sectors.

What else can we learn from the Tech Nation Report 2021?

Investment in Tech Clusters Outside of London Rises

The top cities in the U.K. for venture capital investment in 2020 were Oxford, Bristol, Cambridge, Edinburgh and Hull.

As a city, Hull gained €97.8m in investment, breaking its own record from 2017 of €12.4m. The scale of Hull’s investment growth in 2020 can be largely attributed to the £80m raised by Connexin, a smart city and IoT business. 

This shows how much the regional tech ecosystem can be changed by high-growth businesses in emerging tech markets, such as IoT.

Edtech Outside of London Grows

Excluding London, most of the U.K.’s edtech activity was centred around the East of England and the Midlands in 2020. Several companies in these areas are utilising deeptech to create adaptive education tools. 

For example, Birmingham’s FluenceWorld raised £355k investment to use for language analysis and insights, product identifying and creating personalised teaching resources. 

London’s Investment Advantage Debunked

The outbreak of Covid-19 brought attention to the importance of investing in health technology and remote medical services.

Amongst many other vital lessons learned as a result of operating during a pandemic, we also discovered that the idea of London tech companies having an advantage over tech companies based further afield was not reflective of the truth.

It was previously thought that London businesses benefited from being located optimally for face-to-face meetings and investment pitches, however, this was debunked last year.

In fact, most fundraising deals took place remotely last year with the North West of England experiencing the highest growth in health tech investment, rising 224% from £25m in 2019 to £82m in 2020.

Climate Tech Investment Boosted

The amount of capital invested in the climate tech sector increased by 81% between 2018 and 2019, then grew by another 63% between 2019 and 2020 to £1.3bn.

The Tech Nation Report identifies ‘the fact that this growth in dunsing has resulted from higher investment per feal, rather than a greater number of deals, also shows that climate tech is maturing with more investment now needed both for R&D and high-growth stage companies’.

Creative Technology Investment Declines

Almost every region except for Scotland saw a decrease in total investment into creative technology between 2019 and 2020. 

However, driven by its thriving gaming business hubs, Scotland saw an increase in creative technology investment between 2019 and 2020 from £4.6m to £7.6m.

Some createch companies that raised large investments in Edinburgh are:

  • Build A Rocket Boy, an online game development company based in Edinburgh
  • AdInMo, an online game advertisement service
  • Earthbound, a skills-based games development company
  • Incentive Games, a game design house

Changes to Technology Engagement Due to the Pandemic

Since the beginning of the Covid-19 outbreak in the U.K, our relationship with technology has changed drastically. In 2020, the role of technology shifted as our day-to-day lives were interrupted by restrictions and safety measures.

The main areas that consumers reported using technology more for in 2020 are:

  • Communication
  • Work or school
  • Entertainment
  • Shopping

What’s interesting about Tech Nation’s research into this area is that whilst the way we engaged with technology changed quite a lot, the overall levels of technology or device usage didn’t increase much at all.

Only 1% of consumers said they purchased more technology during the pandemic and only 9% said they were using their phone more.

Gender-Based VC Funding Disparity

Despite 49.8% of the U.K.’s entire labour market being women, only 25.5% of the U.K.’s tech labour market are women.

This gap widens even further when it comes to funding allocation, over the last decade 68% of the U.K.’s VC investment went to companies with founding teams made up of only men. 

However, only 32% of the U.K.’s VC investment went to founding teams that contain at least one woman and just 3% went to all-female teams.

BAME Tech Entrepreneurs Face Funding Disadvantages

The proportion of BAME people in the U.K.’s tech labour market (15.2%) is higher than that of the U.K.’s labour market as a whole (11.8%) – excluding Northern Ireland.

However, the issues faced by BAME tech entrepreneurs are clearly evident when looking at VC investment figures. Non-white founding teams only received 1.7% of VC investment in the U.k.

Black female entrepreneurs face the biggest disadvantage, receiving just 0.02% of VC funding this decade, equating to one black female founder, who Tech Nation believes to be Sharmedean Reid of BeautyStack.

White tech company founders receive the largest proportion of investment and as the investment stages progress, this proportion increases. However, Tech Nation notes that in conjunction with initiatives that aim to tackle imbalances such as these, business leaders are working towards increasing diversity too.

Are you interested in working with a company that has offices in two of the region’s largest tech hubs?

Last year, £217m and £33m were invested in Cambridge and Norwich respectively. With offices based in both of these cities, Coderus develops high-quality apps and software for clients in a variety of different sectors, from the MVP stage through to large multinational companies.

Get in touch with us today to explore the possibilities for your next project.

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