Tech City UK CEO, Gerard Grech, takes a look back at 2016
For UK tech, 2016 was both a triumph and an eye-opener. Just as the industrial revolution transformed not only the economy but also society and politics in the space of a century, so the digital revolution is achieving the same, just much faster. At Tech City UK, we are at the coalface of this transformation, and at the end of 2016 we can report that the future is indeed looking bright.
Looking back, it was a year that moved at breakneck speed.
In the first quarter alone, Tech City UK welcomed 15 new late-stage companies onto the Future Fifty programme. Companies, past and present on the Future Fifty programme have collectively raised over $3.5Bn via 40 rounds in the last 30 months.
Additionally, we saw 30 post-seed stage companies join our new Upscale mentoring programme, and we showcased another 20 companies (including 10 winners of Tech North’s Northern Stars 2015) to a bustling SXSW conference in Austin, Texas, US.
We have become well known for the Tech Nation report, our comprehensive analysis of the UK tech sector. In February, we published Tech Nation 2016 in partnership with Nesta, endorsed by the Prime Minister and launched with the Minister of State for Digital and the Minister for Cabinet Office at Sprint 2016.
The report is based on qualitative surveys from tech businesses around the UK and quantitate data from Burning Glass, AngelList and Crunchbase to name a few partners (analysed by GrowthIntel). We found that there are now a staggering 1.56m jobs in the UK digital tech sector, with an estimated turnover of £161bn in 2014 and its growing three times faster than the wider economy.
Tech Nation also found that an estimated 41% of people in tech are actually working in non-digital industries, such as the public sector, education and financial services, transforming traditional industries. Overall, the report highlighted the growing contribution of the digital economy to local economies, from Bristol to Manchester and beyond.
We followed it up with the Digital Powerhouse report on the many thriving tech hubs in the North of England, as well as Tech Nation Best Practice with Hackney Council on regeneration through promotion of enterprise.
One of our key areas of work is informing Government about the needs and challenges of the UK tech industry, to help ministers make tech-friendly policy decisions. We continue to forge a strong relationship with Government and Downing Street. But few of us predicted how urgent and impotent that relationship would become after June 23rd. The night before, we had celebrated Tech City’s fifth birthday, with 800 revellers.
The next morning, we learned that the UK had voted to leave the European Union. It was an unexpected result for most of us, but tech is nothing if not adaptable to change. Indeed, you could say tech thrives in challenging circumstances.
In the weeks that followed, we launched a nationwide survey (with 31 community partners) to nail down the precise challenges Brexit posed to digital entrepreneurs. With more than 1,200 completed surveys with the majority from company CEOs, it remains the most comprehensive survey of its kind in tech. The key concerns: access to EU talent, investment and data flow.
Since the referendum we’ve been working closely with Government ministers and departments responsible for the negotiations for exiting the European Union, hosting roundtables on Brexit’s potential affect on the tech sector, both at our offices and in Whitehall. As well as challenges, there are of course a myriad of opportunities for Britain outside the EU, not least in supporting our growing Artificial Intelligence, Internet of Things and FinTech sub sectors, which will underpin many aspects of the Digital Economy.
Tech stands to play a leading role in an independent Britain; indeed it’s up to our sector to take a dynamic part in shaping this whole new chapter of UK history.
The new Government administration appears just as committed to working with the tech community as the last. In the months since the referendum, Apple, Facebook, IBM and Google all announced significant expansion plans in the UK, showing confidence in the sector and substantial job growth in years to come. And there was good news too, for the UK’s growing FinTech sector. In October we announced the launch of a FinTech Delivery Panel in conjunction with Treasury, focused on accelerating the UK’s FinTech growth and impact.
Since last year, we have seen an eight-fold increase in monthly applications to our Tech Nation Visa Scheme since last year (with November 2016 being a record month), demonstrating that people continue to consider the UK at the forefront of digital innovation. We predict this upswing to continue for the next few years, as long as digital is made to be an integral part of the overall British economy, starting with the Government’s Industrial Strategy in 2017.
Talking of skills and growth, our Digital Business Academy, which this year we bought in-house, has seen over 13,000 people in training and going from strength to strength.
In November, Tech North’s Northern Stars programme crowned ten star-performing tech companies from across the North of England, after a huge grand final with well over 300 people in attendance to watch 20 companies pitch in total. Keep an eye out, because you’ll hear much more about them in 2017.
In December, we conducted our Tech Nation 2017 survey in preparation for the report, which saw over 2700 completed surveys by business across the UK, the highest number yet. Having opened application for Upscale and Future Fifty (Future Fifty is still open) in November, we will be sharing the names of the companies in early 2017.
More importantly we can’t wait to share more incredible moments with the UK tech sector over the next 12 months! I also want to take the opportunity thank our partners, sponsors and all the companies we work with, that make all this work possible.
I’d also like to thank our Chair, Eileen Burbidge, and our board and advisory panel for their continued support!
Finally, it is worth stressing what a privilege it is to interact with digital companies at every stage from seed to IPO, enabling us truly understand what support is required from Tech City UK and government policy-makers. The UK’s tech sector is now maturing rapidly and the results are clear for everyone to see.
Some highlights from the year in the industry include:
SwiftKey (Future Fifty Alumni) acquired by Microsoft for $250m
Farfetch (Future Fifty Alumni) raised $110m – total at over $300m
Deliveroo (Future Fifty Alumni) raised $275m
Magic Pony acquired by Twitter for $150m
Skyscanner (Future Fifty Alumni) acquired by Ctrip for $1.7bn
ARM Holdings acquired by Softbank for £24.3bn
Apple committed to £9bn London HQ project, centralising 1,400 employees
Google announced plans to hire 3,000 more people across the UK
Facebook announced plans to create 500 new UK jobs in 2017
IBM announced plans to open four new UK data centres
London Stock Exchange AIM market had a very strong year, companies raised on average £30m
These are all role-model companies which will no doubt inspire the next generation of tech companies and entrepreneurs. With the largest-ever funding rounds we’ve seen in UK tech as well as acquisitions and global expansions, our digital economy is becoming stronger with each passing month.
Here’s to 2017! Wishing you a joyful New Year,
Gerard Grech and Tech City UK Team