A decade of tech growth: where have we got to, where will we go?
There was a lot of discussion among sci-fi aficionados as the last decade drew to a close against a backdrop of political instability – Brexit, Trump’s impeachment – but also relative economic prosperity.
To some degree, there was a sense of disappointment: flying cars remained at the fever dream stage; artificial intelligence still wasn’t all that smart; and conflict remained, sadly persistent and inevitable. But there was also relief. Bladder Runner’s vision of a dreary globalised dystopia controlled by unaccountable zaibatsus and stalked by blue-eyed replicants, fortunately also failed to materialise. Lucky for us given the film is set in 2019.
Here in the early months of a new decade, things look and feel far more in the realm of science fiction. The coronavirus outbreak and subsequent lockdown have done more to disrupt the economy and alter global population and trade patterns than any event since the Second World War. It has also brought about one of the most significant and abrupt shifts in working habits seen in this country.
TechNation’s 2020 report analysing the technological progress made in the UK is therefore pretty timely. Technology may be changing the world, but it also gives us hope of responding to a world where change has been thrust upon us.
Where have we got to?
According to the findings, the UK is now the third in the world for tech investment after the United States and China with a record £10.1bn invested into tech in 2019. The UK also ranks third in the world for unicorns, with 77 companies valued over $1bn. Within the UK, the tech sector itself is an outperformer. The Gross Value Added (GVA) of the tech sector grew nearly six times as fast as the UK economy as a whole from 2010 to 2018. That growth has brought employment benefits. Currently, tech employs 7.3m people which accounts for nearly 10% of the UK workforce – a 40% increase over the last two years.
As one might expect, a key driver of has been investment appetite. Across every tech vertical – fintech, deep tech, healthtech, enterprise software, foodtech, transport, and proptech– year-on year VC investment has increased. Fintech receives the most in funding and saw investment nearly double from 2018 to 2019.
The report suggests the UK’s historic strength in financial services, combined with world-leading policy and regulation in the space such Open Banking and the Financial Conduct Authority’s (FCA) regulatory sandbox have contributed to building a world-renowned fintech powerhouse in the UK. In fact, the UK is the second only to the US for fintech investment.
The human touch
Aside from the investment, the UK has a number of world-leading higher educational institutions carrying out research into everything from artificial intelligence to advanced manufacturing. These institutions have given rise to constellations of flourishing businesses such as Silicon Fen in the South and Manchester’s media, and advanced manufacturing hubs in the North.
These clusters are attractive places to live and pull talented individuals from across the world. In his TechNation introduction, Boris Johnson talks about “using the newfound control of our immigration system to fast track the talent for our continued success.” How that works out in practice remains to be seen, but it is clear the UK’s flourishing tech sector is global in origin and scope.
Although little more than a week old, the TechNation report seems a little optimistic. You don’t have to be telepathic to read the room when it comes to investing during the coronavirus outbreak: patterns will change, overall appetite will reduce for the short-term at least, and funds are likely to focus on very specific industries which offer the most chance of succeeding in today’s climate. Fintech payments and anti-viral healthtech firms are just two examples.
This is already borne out by statistics. The deVere Group reported fintech app use rose 73% in the last week alone. But even for other tech firms, the virus provides a real-time testing arena for how the UK operates in a world that has migrated almost entirely online. The appetite for investment will return once the virus abates.
Once it does, companies who have built a strong case based on the hard lessons taught to us by this experience will be ready to seize the opportunities and drive the UK forward into the 2020s. Who knows, by TechNation2030, we might have got those flying cars after all.