UK tech network Tech Nation has released its final report ahead of its closure at the end of March, highlighting the need for support in the UK tech ecosystem’s future growth.
Tech Nation has played a crucial role over the last decade in helping startups such as Monzo and Revolut achieve notable success. The organization announced its plans to cease operations after losing a £12.09 million Digital Growth Grant to Barclays Bank, stating that it could not continue without government funding.
The report, titled How to Build a Scale Up, predicts that the UK tech sector could reach a value of $2.6 trillion in the next decade, up from its current valuation of $1 trillion. It asserts that a $4 trillion ecosystem is attainable if greater opportunities for scaling are created.
Dr. George Windsor, research director at Tech Nation, noted that scale-ups in the UK have been valued at just under $600 billion over the last decade, with expectations to replicate that growth rate. He pointed to recent microtrends within the sector, including a decline in investment in 2022 and a slower rate of unicorn formation.
“There are tailwinds and inevitable headwinds in maintaining high growth. Investors have started to pull back over the last six months, a slowdown that reflects broader economic trends and partially contributes to them,” said Windsor.
He also mentioned that the number of future unicorns (companies valued between $250 million and $800 million) increased by 45% from 2021 to 2022, suggesting two possible scenarios: that the UK is effective at helping companies scale but struggles at the higher end of the valuation spectrum, or that an influx of unicorns is on the horizon, as many companies are well positioned to increase their valuations and potentially reach the billion-dollar mark.
The report outlines the conditions for growth in the UK tech sector over the past decade, provides strategies for tech firms to respond, and suggests ways for companies to accelerate growth. It emphasizes the importance of boosting diversity, prioritizing value realization, and improving financial accessibility within the sector.
Tech Nation CEO Gerard Grech stated: “The last decade of UK tech has been an incredible success story. The UK is now third in the world for tech investment, following the US and China. However, there’s still much more to be done and value to be unlocked if we establish the right conditions for future growth. We urge ecosystem stakeholders, investors, and the government to continue optimizing the business environment for tech businesses, from expanding pathways for talent to increasing funding sources.”