Yorkshire Tech Is Of The Most Significant UK Hubs As National Sector Retains #1 Spot In Europe

Leeds, along with a growing number of its Yorkshire and Humber neighbours, continues to cement its place as one of the UK’s most significant tech hubs, driving innovation on a national and global scale.

End-of-year data from the UK’s Digital Economy Council and Dealroom shows that the Yorkshire and Humber region is now home to 2,521 startups and scaleups – only 300 fewer than the whole of Scotland. Of this number, six are unicorns or future unicorns – more than the North East and Wales.

Leeds alone is home to half of these unicorn and future unicorn companies, with billion-dollar firms SkyBet and TransUnion both being based in the city, alongside up-and-coming giant, Pharmacy2u.

Sustained investment and growth have forged a global tech powerhouse

As of the end of 2022, there are now more than eight cities across the UK that are home to two or more unicorn companies and collectively, the UK has produced a total of 144 unicorns. More than France (36) and Germany (63) combined.

Thanks to the success of its regions, the UK tech sector will end the year as Europe’s leading ecosystem, retaining its position as the main challenger to the US and China amidst a global backdrop of difficult economic conditions. During 2022, fast-growing UK tech companies have continued to raise at near-record levels (£24 billion), more than France (£11.8 billion) and Germany (£9.1 billion) combined. This takes the total raised over the past five years to nearly $100 billion (£97 billion).

Laying the groundwork for value-driven growth

Part of the UK’s strength in creating such a wide-ranging and expansive tech ecosystem is down to its focus on combining innovation with standards and values. Earlier this year the UK unveiled a new approach to regulating AI - based on core principles like safety, transparency and fairness - to take a less centralised approach than the EU to reflect how AI is used in their sectors. The Chancellor also announced that the government will bring forward legal powers for the Digital Markets Unit to drive up competition and level the playing field for challenger tech firms. All this goes towards creating the right environment to drive forward research, technology and growth.

Introducing new generations to tech

Upskilling and reskilling have become a key part of the UK's dominance in tech with nearly 3,000 edtech startups having raised a collective £1.7 billion in funding. Companies such as Academy, Code First Girls, Immersive Labs and Multiverse are focused on enabling people of all ages to gain the skills they need to succeed in tech roles, from tech apprenticeships to coding, development and cyber security.

According to smarter job search engine Adzuna, UK companies are increasingly hiring for entry-level tech roles, up from 6,596 in November last year to over 15,000 this year, as they seek to bring in a new generation of tech talent and develop them into future leaders.

Taking the lead in impact

Whilst the UK remains the dominant country outside the US for fintech investment (nearly £10 billion raised this year), it is also becoming a leading hub for impact tech - companies creating technological solutions to reach the UN Sustainable Development Goals. There are nearly 1,200 impact tech companies in the UK which have raised $3.8B in funding this year, ahead of last year’s record £3 billion.

Green energy receives the bulk of investment, such as Newcleo, a startup that is developing technology to enable safe uranium recycling (£258 million). Scaleups tackling healthcare inequality, such as Cera which bring technological innovation into social care raised £263m, while GrowUp Farms, a vertical farming company which uses technology to grow food more sustainably raised £100 million. The steady influx of investment into impact tech means the sector now employs more than 53,500 people, up from 37,500 last year.

Regional strengths make the difference

Innovation is spread out across the country with eight cities now home to two unicorn companies or more including Bristol, Cambridge, Edinburgh, Leeds, London, Manchester, Nottingham and Oxford. These high-growth businesses are using decades worth of science and tech research and development to revolutionise areas such as finance (Interactive Investor - democratising investing), sustainable travel (Vertical Aerospace - electric-powered aircraft), health research (Oxford Nanopore - portable DNA sequencing) and electronic device development (CSR - semiconductors).

Collectively, these cities are home to 112 unicorn businesses, more than France (36) and Germany (63) combined - demonstrating the strong pipeline of global tech leaders being created up and down the UK. In fact, Cambridge was recently named the number one university in the world for producing successful tech founders ahead of the likes of Harvard and MIT - with over 500 alumni founders raising more than $10 million in funding. Oxford came third with 410. Bristol (173), Nottingham (100) and London (98) all made it into the top 20, thanks to their deep tech and science focuses.

Finding the next sources of global innovation

This is also what is attracting international investors to expand their footprint in London and the UK to access the growing network of entrepreneurs in the new Silicon Valley.US investors including General Catalyst, Sequoia and Lightspeed have increased their teams in the UK in 2022 after opening new offices here last year, and global firm New Enterprise Associates hired its first UK-based partner in October. Whilst European investor Earlybird VC has opened a new office in London earlier this year. This follows another strong year of fundraising for UK-based funds, who have collectively raised £9.2 billion this year, up from £9 billion at the same time in 2021.

Digital minister Paul Scully said:
"UK tech has remained resilient in the face of global challenges and we have ended the year as one of the world's leading destinations for digital businesses. This is good news and reflects our pro-innovation approach to tech regulation, continuing support for start-ups and ambition to boost people's digital skills."

Chris Bischoff, managing director at General Catalyst, said:
"We established a presence in London as we believed the UK is a stand-out ecosystem globally. Our experience over the last 18 months has enhanced our appreciation for this remarkable ecosystem, enabling us to find and support early stage companies that are working toward accelerating change in their industries. As importantly, our values of responsible innovation and radical collaboration are perfectly in tune with the UK's approach to innovation."

Baroness Martha Lane Fox said:
“UK tech has built some incredible products that are solving everyday challenges people face across the country and the world. But if we want to make this industry truly world-class, we need to ensure that the sector not only employs people from all backgrounds but also funds founders from all backgrounds. This will improve UK tech for the better and drive real change.”