The UK tech industry could quadruple in value to $4 trillion by 2032 with Government support and more venture capital investment, according to Tech Nation.
The technology support agency, which recently lost its Government contract to Barclays, said that the UK’s tech companies would be worth $2.6 trillion in 10 years, if momentum gathered over the last decade is maintained for the next.
This could “potentially” breach a $4 trillion valuation if Government rhetoric converts into action. Prime Minister Rishi Sunak said this month that he wanted the UK to become “a tech and science superpower by 2030”.
The industry hit a $1 trillion valuation for the first-time last year, making it only the third country to hit cross this threshold after the US and China.
Dr George Windsor, Tech Nation director of data and research, said: “The UK tech ecosystem is at an inflection point – either the bubble risks being burst, or future growth can be promoted, and augmented.”
However, The 2023 Tech Nation Report, launched today, pulls no punches as to the difficulty in reaching this $4 trillion target.
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Tech investors have started to pull back over the last six months, as part of a slowdown in the broader global economy. Technology investment in 2022 receded by 32 per cent globally, and 28 per cent in the UK.
UK startups raised $30bn in 2022, which though 72 per cent higher than the 2020 total, is down from the heights of 2021 when funding peaked globally.
Last year also saw a decline in the rate of unicorn creation (companies valued at $1bn plus), with growth at 4 per cent, compared with 41 per cent the year before.
On the other hand, the numbers of future unicorns – companies valued at between $250m and $800m (so-called “soonicorns”) – rose by 45 per cent between 2021 and 2022.
This suggests that the UK is getting better at supporting companies to scale, but not at the uppermost end of the value spectrum, and that there is a glut of unicorns to come.
If the UK is to reach this $4 trillion valuation within a decade, three things must happen, said Tech Nation.
First, long-term venture capital (“patient capital”) needs to be plugged into all stages of company growth, not just early-stage companies. In particular, investment in deeptech and climate tech needs to be 15x higher.
Second, more must be done to include minorities and underrepresented people in tech, better reflecting society itself.
Third, there needs to be more emphasis on exits, enabling capital and talent to be recycled through the ecosystem to build future scale-ups and unicorns.
Commenting on the report, Ledgy co-founder and CEO Yoko Spirig, warned that despite the UK still being the number one tech hub in Europe by some margin, other tech hubs such as Berlin and Paris were building capacity and talent, rapidly closing the gap.