As most people across the insurtech sector already know, 2021 was a stellar year for investment, both from within the UK and outside VC, private equity and other companies, such as major insurers. The big disappointment is that Cambridge, the home of elite privilege with Oxford a close second, is leading the way in attracting start-up money.
Our message to investors is simple; follow the talent, not the plummy accents. You’ll get a better return for your money.
What is obvious from the data is that Manchester is a genuine hive of tech activity and insurers who make the trip to BIBA in 2022 should seize the opportunity and meet with the best and the brightest in the city.
Here’s an extract from the government press release on general tech sector investment.
Cambridge is the leading regional tech city in the UK thanks to its combination of high levels of VC funding, venture capital rounds, advertised tech salaries, number of unicorns (tech companies worth more than $1 billion) and futurecorns, according to new analysis for the UK’s Digital Economy Council by Dealroom and the smarter job search engine Adzuna.
Manchester was only narrowly beaten by Cambridge to the number two position, and Edinburgh, Cardiff and Belfast are also in the top ten for capital raised, showing how the tech sector has spread across all regions and countries in the United Kingdom. The number of jobs in Manchester increased by 164.6% in 2021 and the highest advertised average salaries outside London were in Edinburgh – £58,405.
With more money than ever flowing into UK tech – £29.4 billion this year, up 2.3x from last year’s figures of £11.5 billion – almost £9bn of all VC invested went into startups and scaleups outside London and the South East and the regions are home to nine of the 29 unicorns formed this year. The combined value of UK tech companies founded since 2000* is now £540 bn, after the biggest year-on-year increase since 2013/14.
Levelling Up Power Tech League 2021:
Record investment in UK tech
This regional growth took place against the backdrop of an incredible year for the UK tech industry. Tech investment grew 2.3x this year, the highest growth since 2013 to 2014 when it grew from $2 billion (£1.5 billion) to $4.6 billion (£3.5) billion.
UK tech captured more than a third of investment into Europe
The £29.4bn raised by UK startups and scale-ups was double the figure raised in Germany (£14.7billion) and almost three times that raised by France companies (£9.7 billion). UK tech investment accounted for a third of the total £89.5 billion that flowed into the European tech ecosystem this year. UK venture capital firms have also had a record year and raised £7 billion with record-breaking fundraisings from London firms including Index Ventures, Balderton Capital, 83North and Eight Road Ventures.
More US investment
The majority of the money coming into UK tech is from the US, with 37% of all funding coming from the States, up from 31.5% last year, with the majority of it going into fintech and health tech companies. Over 28% of UK venture funding came from domestic capital. Competition for deals among VC funds is heating up as more US venture funds launch offices in the UK, including Bessemer Venture Partners, General Catalyst, Lightspeed Venture Partners and Sequoia Capital.
More unicorns created than ever before + more than France and Germany combined
More funding means more unicorns, with 29 created this year including the e-commerce platform Depop, car selling platform Motorway, insurance disrupter Marshmallow, and the challenger bank Starling Bank. This takes the UK’s total unicorn figure to 115 meaning 25% of the UK’s total unicorns were created in 2021 alone. The UK has more unicorns than France (31) and Germany (56) combined.
30% of new unicorns created this year are outside of London
Nine out of the 29 unicorns created this year are outside of London including Interactive Investor in Glasgow, Vertical Aerospace in Bristol and Touchlight Genetics in Hampton. Of all the unicorns created in the UK, 35% are outside of London and 35% of futurecorns are also based outside of the capital, suggesting that the growth in tech in the regions will continue strongly in the next five years.
Digital Minister Chris Philp said:
It’s been another record-breaking year for UK tech with innovative British startups helping solve some of the world’s biggest challenges. Capitalising on this fantastic investment across the country is a crucial part of our mission to level up, so we are supporting businesses with pro-innovation policies and helping people to get the skills they need to thrive in this dynamic industry.
Gerard Grech, founding Chief Executive, Tech Nation, said:
With such a record tech investment year, it’s becoming increasingly evident that the UK is very good at rearing and cultivating startups and scale-ups into successful global companies right across the UK, unlike its continental European neighbours, where it tends to be more in capital cities. A true network of digital excellence is emerging right across the country through entrepreneurship, driving new job and wealth creation. Tech Nation is committed to identifying and fueling the growth of these high-potential businesses through its programs and initiatives, removing geographic and financial barriers as quickly as possible.
Ashley Ramrachia, co-founder of Academy, based in Manchester said:
While acknowledging the huge achievements the UK tech sector has made, we also need to realise that difficulty recruiting and retaining talent could affect the success of an increasing number of scaling tech companies. That is why we urgently need to reinvent recruitment and development by putting diversity and inclusion at its heart.
Matthew Scullion, CEO of Matillion, based in Manchester said:
These figures are evidence that high-growth start-ups are thriving all across the UK, and it’s no surprise to see Matillion’s home of Manchester appearing so highly. While the city has not always had the playbooks, flow of capital, or awareness that we can build unicorns, the data shows that’s changing and doing so rapidly. We’re very proud to have played our part in this upwards trajectory, as the region’s most recent (and only enterprise software) unicorn, and we hope we can play our part in making the flywheel spin even faster in over the coming years.