London, Manchester and Cambridge generally have the perfect balance of the number of seed stage, early growth and late growth tech companies, a new analysis has revealed.
Scaleup network Tech Nation used its scale ratio to find the perfect balance of companies in a technology ecosystem.
It revealed that a 50:30:20 ratio of seed (50 per cent), early growth (30 per cent), late growth (20 per cent) companies in a UK regional tech hub represents a mature, balanced ecosystem.
This ecosystem is well placed to benefit from the accelerated growth of late-stage companies while creating the next wave of tech scaleups.
Tech Nation said that London, Manchester and Cambridge generally exhibit the 50:30:20 ratio and attracted the most investment in the UK in 2020, with 70 per cent of this investment made into late-stage companies.
The firm highlighted Belfast (54:32:14), Dundee (54:26:20) and Exeter (59:14:27) as the tech hubs to watch in 2021, with scale ratios that indicate they have the highest growth potential. These cities have the highest proportion of seed stage companies compared to any others in the UK.
However, Milton Keynes, Watford, Reading, Peterborough and Slough have as many as 52 per cent of total scaleups in late-stage growth and less developed seed stage pipelines.
Fintech, healthtech and enterprise software are the most mature scaleup sectors, where the number of companies are heavily weighted towards late-stage companies.
“Crucially, the scale ratio tells us about the growth potential of the UK’s tech hubs and provides the levelling up agenda with new evidence to boost regional ecosystem development,” said Dr George Windsor, head of insights at Tech Nation.
“It highlights exactly where scaleups are not receiving the support they need to grow from seed stage upwards to ensure these gaps are plugged. Despite the challenges of the past 12 months, the growth and potential of homegrown tech pioneers gives us something to celebrate.
“Tech scaleups hold the key to the UK’s competitiveness in the next decade through job creation and investment.”
Read more: UK tech sector shows its resilience in 2020
“These new figures show the resilience and potential of the UK’s regional tech hubs which continue to create new investment and jobs,” said MP Caroline Dinenage, minister of state for digital and culture in the department for digital, culture, media and sport.
“We are working hard to create the right business environment through skills and talent training, investment in digital infrastructure, and research and development, so we can build back better from the pandemic.”
Tech Nation has also revealed the latest cohort of the Upscale programme, 33 of the fastest-growing and most promising home-grown tech businesses in the UK.
This year 18 per cent of the cohort is made up from healthtech companies and 48 per cent of the firms are based outside of London.