Tech Nation Report 2021

The future UK tech built:

The key statistics from the 2021 Tech Nation report, looking at trends in technology, investments and more.

Key statistics

UK VC investment hit a record high of $15bn in 2020

• The UK is strengthening its position as number three in the world for tech behind only China and the US.
• Despite uncertainties such as Brexit and Covid-19 pandemic, investment in Q2 of 2020 rocketed.

UK Deep Tech investment rose by 17% in 2020, the highest rate of growth globally.

• UK deep tech investment is third globally, but only around a tenth of that made into US companies.
• • However, R&D expenditure, which is a gauge of development activities in both the public and private sectors is falling behind global players.
• • In 2018, UK R&D expenditure (public and private spending) was just under £30bn, whilst in the same year, the combined R&D expenditure of Amazon and Alphabet (on their own R&D activities) was £33bn.

The UK is more open to global investment than ever – 63% of investment in UK tech came from overseas in 2020, up from 50% in 2016.

• Since 2016, investment from outside the UK has steadily increased. It reached its peak in 2019, at 69% of total VC investment before dropping by 6% in 2020.
• Last year, domestic investment made up a slightly higher proportion of the total, at 37%. Nevertheless, the UK tech ecosystem remains an attractive proposition for international investors, despite challenging conditions.

The UK is third in the world for impact tech investment. Investment has more than doubled since 2018 (160% increase) whilst in the US, it rose by 15% over the same period.

• European startups are more impact-focused than their global peers and that the UK has had a surge in impact investing – with a 9.5x increase between 2014 and 2019
• Impact investing now accounts for 15% of total European VC investment, a 3x increase when compared to a decade ago, and more than double the global average of 7%.
• The biggest rounds for UK impact startups in 2020 include Octopus Energy, Arrival, Connexin (Hull), Tokamak Energy (Abingdon), FiveAI (Cambridge), The Meatless Farm Company (Leeds).

London is fourth for tech VC investment globally behind San Francisco, Beijing and New York at $10.6bn

• Through 2020 US cities have pushed European counterparts down the rankings – with Berlin moving from 8th to 16th, and Paris from 13th to 15th place
• London has held its position at fourth in the world for VC investment in tech, but the gap between the UK capital and Shanghai has decreased by $100mn over 2019-2020.

The UK tech startup and scaleup ecosystem is valued at $585bn – 120% more than in 2017

• Over the past 6 years, the UK has seen a steady growth rate in value.
• This is more than double the next most valuable ecosystem, Germany, at $291bn

Investment in seed stage companies is decreasing as a proportion of overall tech VC investment (14% to 6% over 5 years), and series B and C investment is rising in the UK

• Investment in seed stage companies is decreasing as a proportion of overall tech VC investment, and series B and C investment is rising in the UK.

Tech’s contribution to the UK economy is on the increase, in 2018 UK tech was delivering £149bn to the economy

• The value of startups and scaleups in the UK is steadily climbing too; now worth over $585bn to the UK economy, and an upward curve.
• This represents a value double that of our next closest European neighbour, Germany, with $291bn

Source: Tech Nation 2021