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Innovation thrives in the UK

Date: 3 October 2019

 

The UK is currently enjoying an innovation boom. European and global investment is flooding in, boosting an already thriving start-ups community in the country. London is a particular focus for the fintech sector, and there are also significant hubs elsewhere in the country.

 

London is an innovation destination

 

London’s well-established financial services industry is a major attraction for British and European companies. Proximity to the City of London and Canary Wharf mean companies can tap into a vast wealth of venture capital funding. With the sector investing an estimated £5.5bn in start-ups so far this year (£8.27bn in 2017 and £7bn in 2018), it is clearly worthwhile to be where the money is.

 

The importance of the UK for new companies is not recent. Since 2010 and the Cameron government’s ‘Silicon Roundabout’ policy in Old Street, London, companies have enjoyed low rents in close proximity to the financial district of the City of London. 

 

London is also something of a destination for highly educated and talented people. The start-ups headquartered here are able to recruit and retain some of the best minds in the business – a truly invaluable resource for small companies.

 

Initiatives like events, co-working spaces and accelerators also provide support and collaboration opportunities. All this has helped London position itself as a global and European hub for start-ups, with the highest concentration of technology innovation outside Silicon Valley itself.

 

The result of investment

 

Concerted direct and indirect investment has paid off. Following $35bn (£27bn) of investment in the British tech sector between 2013 and 2018, the success of British companies is clear. According to data from TechNation and Dealroom, the UK now hosts 72 ‘unicorns’ (private companies valued at $1 bn or more), with 13 reaching that status in the past year.

 

The UK is also out-performing the rest of Europe, with more than a third of the fastest-growing European tech companies based in UK. The majority are in London, but Cambridge, Oxford, Manchester, Leeds, Bristol and Edinburgh are all important hotspots elsewhere in the country. 

 

Town versus country

 

Given the UK economy is weighted to the capital, it is not surprising that many of the best-performing start-ups are headquartered here. Yet with high and rising overheads, London can be a challenging place for a young company, so innovation hubs across the UK are becoming increasingly important.

 

Programs run by the UK’s leading universities provide very involved support on funding, scaling a business and forming networks. Examples include the Startup Incubator and Accelerator programs in Oxford; ideaSpace in Cambridge; and SETsquared of Bristol University. Nevertheless, there is some criticism that their formula stifles entrepreneurship by demanding a high percentage (sometimes as much as 50%) of profits. 

 

These university programs have in turn fuelled innovation zones where discounted business space and proximity to similar projects provides attractive conditions for innovation. The Bristol Enterprise Zone, the Edinburgh BioQuarter and the Cambridge Science Park are all good examples of innovation and entrepreneurship beyond direct contact with universities.

 

A jewel in the crown

 

London is without doubt a jewel in the crown of European innovation. The proximity of an established financial centre encouraged by government policy has created ideal conditions for start-ups to thrive. This exciting trend has generated momentum for a new generation of companies, which can rival those on a global level.

 

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