The UK produced over 70 unicorns in the last 20 years – more than almost any other country. What makes us such a hotspot?
72. That’s how many ‘unicorns’ the UK has produced in the last 20 years, more than any other country in the world, bar the US and China.
We don’t seem to be slowing down, either. According to Tech Nation, 13 of those companies – including household names Deliveroo and Ovo Energy – reached billion-dollar status in the last 12 months.
For comparison, Germany, our nearest European rival, produced just 29 unicorns – less than half the UK’s total. This, despite having an economy $1.2 trillion bigger than the UK’s, and a population 25% larger. Clearly, the UK is punching well above its weight.
Unicorns – why should we care?
True, the number of unicorns produced is not the be-all-end-all measure of a country’s support of entrepreneurship. And it’s certainly not a measure of its ability to distribute the rewards innovation reasonably amongst its population.
But without doubt, our ‘unicorn count’ – which sounds like some bizarre measure of a person’s aptitude for street magic – is significant. It speaks, to some extent, to the UK’s capacity to support innovation and to help at least some founders take their companies to the top. For me, these are vital components of an economy that rewards ambition and embraces invention.
So, why all the Unicorns?
All this raises the question: why does the UK produce so many unicorns?
The answer lies in the strength of our tech ecosystem; the complex and highly interdependent network of invention, capital, regulation and intellectual resources on which fledgeling ideas rely.
Just like a biological ecosystem, each individual node of the tech world’s interconnected web must be strong if the entire system is to thrive. To labour the analogy, while lions might prey on impalas, healthy populations of both are required if either is to flourish.
In the case of technology, these figurative ‘nodes’ are really pockets of resources.
They are, to name a few: financial institutions with an eye for good ideas, well-funded schools and universities producing an educated workforce, government schemes which de-risk innovation, access to foreign markets through frictionless trade, an influx of ideas and intellectual capital through immigration, and finally a safety net, provided by a strong benefits system, which stops would-be entrepreneurs risking destitution if their venture fails.
The UK is not a perfect country. None of these nodes functions as well as they could. It could even be argued that these nodes are competing with one another, like animals in the wild, for a finite supply of space and energy. As one grows, another dwindles.
Still, it’s the unique balance between these (at least relatively) well-functioning nodes which gives the UK tech industry its vibrancy, it’s buoyancy, and its outsized knack for helping companies grow from garage-band startups into billion-dollar businesses.
What’s next for British unicorns?
It seems that it’s full speed ahead for the UK tech scene. Tech Nation’s report detailed a 61% increase in investment for digital tech scaleups compared with last year, a 56% increase in London tech scaleups, and a 600% increase in AI investment since 2014.
Good news, and more good news. But will this last forever?
Each of the ‘nodes’ in the tech ecosystem is important, but some play a bigger role than others. Tech Nation’s report points to Britain’s international relationships, and status as a ‘global tech hub’ as having a particularly large impact on our unicorn production, and our ability to nurture startups and attract overseas investment.
As Gerard Grech and Eileen Burbidge, Chief Executive and Chair of Tech Nation respectively, say in their joint forward for the report “It shows that the UK is a critical hub in the global tech ecosystem and a strong economic performer. An exploration of companies, communities and technologies highlights the key elements in this era of global tech.”
The UK’s leadership in technology helped us attract 5.2% of global investment in high-growth companies. Only America, China and India ended up with larger slices of the pie. This investment will push the next wave of scaleups towards unicorn status.
But will our tech scene look so appealing if and when Brexit happens, and we wall off our ‘critical hub’ from our neighbours?
Unicorns after Brexit
If the Brexit does reach a fateful conclusion, and we choose to dim our spotlight on the world stage, can we expect to count on the same levels of high-growth investment? Or to draw on other wells of international finance, for that matter?
If our sources of foreign investment dry up, we might have to bid some of our magical stallions a teary farewell, as they head overseas for greener, more welcoming ecosystems.