The recent news has been a “sea of troubles” for the British lion and yet great news about the economy has passed largely unnoticed. The UK currently leads Europe in the creation of billion dollar plus technology companies, often known as “unicorns” because of their rarity.
Only the United States and China are home to more unicorns than the UK and are much bigger countries. The running total for the UK is 72 companies in the category, which includes 13 new members joining the club in the last year. The UK’s nearest European rival, Germany, has created 29 unicorns over the same 20-year period.
Where does this exciting economic phenomenon come from? Firstly, the UK performs strongly in tech sectors with well-established expertise in FinTech, bio-medical sciences, IT and communications. The technology sectors have a broad base in the UK, with big clusters of small technology forms in software and computing, biotechnology and technical support for financial services at several locations across the country. While the London, Cambridge and Oxford clusters are well known, Bristol, Leeds, Manchester and Edinburgh form an important part of the mix.
Access to capital is very important in the growth of companies. The UK has a sophisticated market for the funding of innovation, probably only rivalled by the USA. Company founders often bemoan the lack of capital, yet the evidence would suggest a wide range of sources of funding are available in the UK. A wide range of debt, equity and grant sources are, in fact, available and significant funds are there for business opportunities that are presented well to funders. In addition schemes such as the R&D tax credit scheme, the Patent Box and the Enterprise Investment Scheme make the UK an attractive location to establish and grow technology businesses.
For all its faults British higher education continues to produce innovative and creative graduates who increasingly seek to create start-up companies rather than joining the “milk round” and signing up to a “job for life”. Alongside graduate aspirations the universities have become far more active in “technology commercialisation” with technology transfer offices to encourage and support the conversion of academic ideas into new products and services. The UK now vies with the USA in expertise in the commercialisation of academic research.
The past 50 years has seen the demise of mass manufacturing in the UK. However, at the same time we have seen the growth of “tech Britain”. The unicorns are the tip of the iceberg, 90 percent of the technology industry revolution is below the surface. We of course celebrate the seventy-two British companies that are members of the elite club, but their success is built on the back of hundreds, if not thousands of entrepreneurial innovators who have created the vibrant environment for ideas, products and services which are now at the heart of our industry.
We might fear the potential impact of a no-deal Brexit. Trade in manufactured goods, tariffs and logistics may well be disrupted significantly, but threats also bring opportunity. We have created a cohort of bold and creative businesses who have carved out valuable niches in some of the most advanced sectors of the global economy. Further, we have already made successful major shifts in the structure of our economy and have the tools to deliver further successes going forward.