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Scottish cities ride high as UK tech sector hits landmark $1 trillion valuation
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Business & Economy

Scottish cities ride high as UK tech sector hits landmark $1 trillion valuation 

Scotland is home to two of the UK’s most lucrative tech cities, as new figures show the UK’s tech ecosystem is now worth $1 trillion (£764m).

Edinburgh and Glasgow are among the top five cities when it comes to tech investment so far in 2022, with companies from both raising a combined total of £115 million financing.

Some of the key players in Scotland, according to figures calculated by database management company Dealroom and analysed for the UK’s Digital Economy Council, include leading audiobook app PocketFM which recently raised £50m, and the global RegTech provider Encompass Corporation – headquartered in Glasgow – which raised £25m this month. 

Announcing the figures at the West Midlands Tech Review in Birmingham today, digital minister Chris Philp said that the UK tech sector has become only the third in the world to ever reach $1 trillion valuation, after the US and China.

Today’s figures follow a successful 2021 for Scotland, with firms across the country raising a collective £228 million through over 50 venture rounds. These include health tech Current Health, foodtech Parsley Box, and tidal energy company Nova Innovation.

The nation also has the highest regional salary for tech roles at £49,288 outside of London and the South-East, with Edinburgh having the highest average advertised salary of £58,405.

The Scottish capital has also produced two unicorns – high-growth tech companies worth more than $1 billion in valuation – Skyscanner and FanDuel. Skyrora, the next-generation space launch vehicles startup, is predicted to reach this same valuation in the next few years.

Scotland’s digital economy is predicted to grow by at least £2.2 billion in annual GVA – gross value added – and create a further 34,000 jobs over the next three years. 

Wayne Johnson, chief executive and co-founder, Encompass Corporation: “The Scottish tech industry has been punching above its weight on a regional level for some time, and it has been great to see, and be part of, its growth.

“We’re delighted to be at the heart of what is a thriving community and are grateful to have received wonderful support in Scotland, which has been vital to the continuing success of our business. One of the reasons we chose to have a base in Scotland was because of the vibrant and innovative tech ecosystem we found there, and these latest figures just go to show what a good decision that was.”

The UK’s digital economy is now worth more than double that of Germany’s and is almost five times larger than France and Sweden, according to the new data.  

Mr Philp said: “Our tech industry has gone from strength to strength, overtaking the rest of Europe and entering the history books as the third country ever to reach this milestone.

“We’re working hard to make the UK the best place in the world to found, grow or float tech businesses – whether they’re early-stage startups or global innovators – ensuring they have the best talent, investment and regulation to thrive.”

Julia Hawkins, general partner at LocalGlobe, added: “This is a brilliant milestone for the UK tech industry. Despite the overwhelming challenges of the past few years, UK tech has provided the means to keep us connected and moving forward and helped transform industries across the country, particularly in the healthcare sector. It’s exciting to be a part of this dynamic ecosystem and I look forward to seeing these startups and scaleups grow over the next few years.”  

This rapid rise in the value of UK tech comes following sustained investment into the industry over the past few years. The Covid-19 pandemic, in particular, triggered a wave of tech adoption from digital health apps, to education platforms, video conferencing and e-commerce.  

In 2018, the UK tech ecosystem was valued at $446bn and was steadily growing until 2020 when it surged 42 per cent to $942bn because of increased investment activity into digital tools during the start of the pandemic.

This has reportedly helped to catapult the valuations of many companies from unicorns to the rarer ‘decacorns’ – companies worth $10bn or more. 

The UK is now home to 13 decacorns:

  1. Markit – big data
  2. WorldPay – fintech 
  3. Checkout.com – fintech 
  4. Revolut – fintech 
  5. ARM – semiconductors 
  6. FNZ – fintech 
  7. Wise – fintech 
  8. Rapyd – fintech 
  9. Ocado Group – e-commerce
  10. Admiral Group – fintech
  11. Global Switch – data centres 
  12. eToro – fintech 
  13. Deliveroo – e-commerce 

The exclusive club is set to grow in size over the next few years, with 14 UK companies with valuations of between $5bn and $10bn expected to become the next decacorns. 

These include cyber security company Synk, zero-emissions transport company Arrival and virtual events platform Hopin.

This growth is only set to continue. Research by DCMS published last year found that the UK digital sector is on track to add £190 billion in value to the UK economy by 2025.

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