The UK’s world-leading academic institutions are driving the creation of tech start-ups in university cities, with Oxbridge creating more business unicorns than Paris and Berlin.
Following the IPOs of Farfetch and Funding Circle, the UK is now home to 15 unicorns - $1bn start-ups - according to research prepared for Tech Nation and the Government’s Digital Economy Council by venture capital analytics company Dealroom.
Looking at the creation of $1bn tech companies, Oxford and Cambridge combined have produced more fast-growing tech companies than both Paris and Berlin.
The two cities, both renowned for their world-leading research and scholarship, have thriving tech sectors and are home to some of the UK’s most promising tech companies.
Cambridge is home to Darktrace, which provides artificial intelligence cyber defence to the likes of Raspberry Pi and power company Drax.
It was founded in 2013 by a combination of mathematicians from the University of Cambridge and experts from MI5, GCHQ and the CIA.
Elsewhere, chipmaker CSR and chip designer ARM have maintained close links with Cambridge University after they were acquired for £1.5 billion and £23.4 billion by Qualcomm and SoftBank respectively.
Oxford Nanopore, which has created a mobile DNA sequencer the size of a USB stick, was spun out of Professor Hagan Bayley’s University of Oxford lab and now collaborates with many universities around the world and its DNA sequencing technology is now available in more than 80 countries.
Immunocore, a privately-owned biotech company which counts Microsoft co-founder Bill Gates among its backers, evolved from an Oxford University spin-off company and is now working with universities around the world.
In the North of England, Manchester has become home to a thriving e-commerce cluster of retail businesses and has produced as many unicorns as Amsterdam, the Dutch capital.
The city is headquarters for quoted tech companies including boohoo and AO.com, as well as privately owned The Hut Group.
Travel business Onthebeach.com and publisher Autotrader are also notable tech companies in the city.
With a population that is significantly smaller than Amsterdam’s, Manchester now has 10 accelerators - specialist business centres helping entrepreneurs create start-up firms - and had investment per head of population of $490 in 2017, higher than Amsterdam’s $400.
Across the Pennines in Leeds, two unicorns have been created in Sky Betting & Gaming, which was sold for £3.4bn to larger rival The Stars Group in 2018 and Callcredit, which was sold to TransUnion for £1bn earlier this year.
In Scotland, Edinburgh counts SkyScanner and data consultancy group Wood Mackenzie as unicorns.
Jeremy Wright, Secretary of State for Digital, Culture, Media and Sport, said: “The UK’s track record in creating fast-growing tech companies is second to none in Europe.
“These new statistics show Manchester and Edinburgh are now competing on a global scale and stellar tech firms are growing right across the country, spreading new jobs and investment.
“Through our Digital and Industrial Strategies we are creating the conditions to start up and grow brilliant tech ideas into world-beating global businesses and pushing the boundaries of science to change people’s lives for the better.”
The latest data compares Oxbridge with Paris; London with Berlin; and Manchester with Amsterdam across a number of factors that help to contribute to tech ecosystem development.
Besides number of unicorns, the report looked at population size, position of highest placed university in world rankings, number of accelerators and investment per capita in tech companies in 2017.
Four out of the top 10 global universities are located in the UK, as are eight of Europe’s top 20 universities.
London is the acknowledged centre of Europe’s tech sector, producing 21% of the continent’s fast-growing unicorns.
The capital has produced 36 unicorns worth $132bn, while Berlin has produced eight worth $32bn.
Looking further ahead, the UK also leads Europe by number of potential future unicorns, with 54 businesses that are worth between $250m to $1bn.
The total value of these growing companies is $18.6bn. In contrast, Germany, the closest competitor in Europe to the UK on this measure, has 28 unicorns - with a value of $8.8bn, while France has 27, worth $7.7bn.
Gerard Grech, chief executive of Tech Nation, said: “The UK is fast becoming a network of digital excellence, with various strengths in different digital domains.
“Cities like Manchester, Oxford and Cambridge are producing significant companies including The Hut Group, Sophos, Oxford Nanopore and Darktrace.
“Increasingly these cities are competing with other tech hubs in Asia and the US and can go head-to-head with Europe’s capitals on many measures.”
Doug Gurr, UK country manager, Amazon, added: “The UK is taking a leading role in innovation in Amazon and that is why we are planning to create over 1,000 highly skilled jobs in the country’s tech hubs of Manchester, Cambridge and Edinburgh.
“Over the last eight years, Amazon has invested more than £9.3bn in the UK because of the very strong talent and engineering skills that we find here.”
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