The number of UK ‘unicorn’ tech companies has increased tenfold over the past 10 years, making it the number one European location for fast-growing startups according to new research.
This has unsurprisingly coincided with an 840% increase in venture capital funding in the UK over the past decade to £11.3bn in 2020.
Between 2010 and 2020, the number of private tech companies valued at US$1bn or more has been catapulted from eight to 81, while the number of ‘futurecorns’ (ouch) capable of growing into a unicorn has accelerated from 10 to 126 in 2020.
The number of UK unicorns and potential unicorns reached 81 at the end of 2020 and has continued to grow in 2021 climbing to 91 in the first quarter, according to a report from Dealroom.co and the Digital Economy Council published to coincide with Scaleup Week.
On top of that, the number of potential unicorns with a value of between US$250mln (£179mln) and US$1bn (£718mln) and on a path to unicorn status has increased to 132.
Unicorns from 2010 such as Betfair and Ocado, which both went public that year, are now household names, while current ‘futurecorns’ (sorry again) are said to include renewable energy provider Bulb, rural broadband provider Gigaclear and digital bank Zopa.
The growth in the UK startup scene is attributed to a large part to the large amount of capital available for funding that is linked to the trend to de-equitisation, where many growth companies are shunning public stock markets in their earlier and faster-growing years.
“Whilst venture capital investment used to be concentrated at early stages, with 64% of funding going to companies at Seed, Series A and B rounds in 2016, for the past two years more than half of VC investment has been at later stages,” the report said.
“This is helping to build the UK’s next generation of tech stars, contributing significantly to the maturity of the UK tech sector and the increasing number of potential unicorns across the country.”
Regions and sectors
The numbers in the report indicate the UK is catching up with the development of the tech industries of US and China, with London fourth behind the US Bay Area, Beijing and New York in terms of the number of startups and unicorns created.
The UK capital's 83 unicorns also puts it well ahead of the whole of Germany, which had 31 in 2020 (up from had 1 in 2010) and France, which has gone from zero to 17 over the past decade.
Most of the UK unicorns were in the fintech sector, at 32, followed by enterprise software at 14 and health tech at 13.
Though the majority of the futurecorns are based in London, the report flagged the high-growth 'scaleups' all across the UK, with double figures in Cambridgeshire and Oxfordshire, including autonomous vehicle technology specialist Oxbotica and the self explanatory Cambridge Quantum Computing.
The North West has five potential unicorns, including cloud data wrangler Matillion; while Scotland has four, including biopharma Amphista Therapeutics and agriculture and animal health sustainability pioneer Roslin Technologies; with just one in Wales, invoice finance group Sonovate.
Future unicorns – the next generation predicted to notch up the US$1bn mark soon
- Zopa – digital bank (based in London)
- Moonbug - global kids entertainment company (London)
- Atom Bank - the UK’s first neobank (Durham)
- Wejo - global leader in connected car data (Manchester)
- Vashi - ethically-sourced engagement rings and fine jewellery (London)
- Gigaclear - rural broadband provider (Abingdon)
- Bloom & Wild - direct to consumer letterbox flowers (London)
- Truphone - global leader in digital connectivity software (London)
- Zilch - buy now pay later fintech provider (London)
- Tripledot Studios - mobile gaming company (London)
- Gryphon Group Holdings - insurtech revolutionising family insurance (London)
- Pollinate - fintech giving banks a modern toolkit for small businesses (London)
- Agriprotein - creates insect-based protein to replace fishmeal (Guildford)
- Bulb - renewable energy provider (London)
- Thought Machine - next-generation core banking platforms (London)
The government “will do all it can to support the entrepreneurs who have created this vibrant new part of our economy,” said digital secretary Oliver Dowden.
He added that the growth over the last decade has turned UK from “a nation of startups into one of scaleups”.
Next week he will meet several of the firms, including Babylon Health, GraphCore and Onfido, to discuss how the government and industry can work together to make the UK more attractive to tech companies.
Rana Yared, general partner at Balderton Capital, an investor in Darktrace and Revolut, said the range of unicorn companies demonstrates the calibre of tech talent coming out of the UK and Europe.
“From fintech to healthtech, insurtech and food, these businesses will go on to be global leaders in the same way that companies like THG, Checkout.com and Revolut have. It’s a really exciting time to be a part of the UK tech ecosystem,” she said.