Christine Hockley: Unleashing the UK’s start-up clusters is vital to our global competitiveness
Focusing on AI and fintech in Scotland and university-supported start-ups in Edinburgh and Glasgow, Christine Hockley discusses the investment opportunities in the tech start-up scene outside London, as remote work and tech training in STEM roles making these regions more appealing for start-ups.
For many years, London has been the captain of the UK’s burgeoning tech start-up scene. Home to a number of world-leading universities and investors, the capital has been an incubator and breeding ground for a host of UK technology leaders such as Hopin, Thought Machine and Wise.
In 2021, London accounted for over three fifths of the UK’s total technology venture capital investment. One in every five US dollars invested by European VCs was in London-headquartered companies, highlighting the dominance of the capital as a place for technology start-ups to do business.
However, it would be wrong to dismiss the market opportunity to invest in technology firms beyond the M25. From Aberdeen to Cardiff, from Bristol to Newcastle, a number of tech start-up clusters are appearing and thriving across the UK. In Scotland, tech companies secured more than £3bn in funding between 2011 and 2021.
Furthermore, over a quarter (28%) of Scotland’s high-growth businesses are technology companies, skewing heavily towards AI and fintech, and located predominantly in Edinburgh, Glasgow and Aberdeen. Ultimately, if the UK is to remain competitive on the global stage, start-up clusters and ecosystems like these will need to flourish in the years ahead.
Beyond a greater share of VC investment, business leaders and start-ups need the right support structures in place to enable their growth. Across the UK, there are already a number of key drivers building momentum.
Access to talent, one of the biggest deciders of whether a start-up succeeds, is vital to ensuring clusters are well-resourced and able to thrive. Remote working and the rising cost of living in London is making tech hubs across the UK more appealing, and, coupled with greater availability of tech training in STEM roles, there is a widening the pool of human capital that start-ups can access. These developments are central to ensuring UK tech clusters can thrive in the long-term.
Elsewhere, we have seen how local support structures are crucial to championing our business ecosystems. Start-up incubators and accelerator programmes are now popping up across the UK, supporting new businesses and entrepreneurship networks. Co-working spaces are also creating greater opportunities for business community networks to emerge and facilitate structures that allow start-ups to grow during their early stages.
Furthermore, backing our universities will be essential to the UK’s long-term ability to remain the home of European innovation and entrepreneurship. Analysis by Beauhurst ranked Edinburgh University among the top 10 by total number of spinouts, with 58 since 2011. During the same period, 34 businesses have commercialised research from the University of Glasgow, raising a total of £41.2m equity investment.
We are already seeing some brilliant work supporting our tech clusters with 15 non-London based unicorns created over recent years. This is a good start, but it would be wrong to believe it is ‘job done’. For UK plc to flourish in the future, it is vital that start-up clusters across the UK are backed with long-term capital investment, expertise, and the right structures to grow.
Christine Hockley, is managing director, funds, at British Patient Capital