This document discusses the growth of the UK's digital tech economy. It provides statistics showing the sector's growth in revenue and investment. It identifies four key drivers of the UK's success: access to smart capital, a strong business environment, a rich ecosystem of talent and expertise, and the country's connectivity. The summary highlights Brexit as a potential challenge but also notes continued growth in late-stage deals and acquisitions in the UK tech sector after the referendum.

1.
Gerard
Grech
CEO,
Tech
City
UK
@TechCityUK
@gerardgrech
August
2016
Developing
a

2. Who
are
we?
1.
programmes
|
2.
policy
convening
|
3.
advocacy
-­‐
Founding
stage
-­‐
20,000+
UK
sign-­‐ups
-­‐
17,000+
in
training
-­‐
Later
Stage
-­‐
£1.2bn
raised
-­‐
£1.bn
on
the
LSE
-­‐
10
acquisitions
Most
comprehensive
annual
analysis
of
the
UK’s
Digital
Tech
Economy
-­‐
Mid
stage
-­‐
Mentorship
program
-­‐
£180M+
raised
Accelerating
digital
growth
across
North
of
England
Concierge
service
for
fast-­‐growth
US
tech
companies
Dedicated
Visa
Scheme
for
hiring
digital
tech
talent
Alliance
between
the
UK’s
many
thriving
tech
clusters

3. 3
British
Digital
Tech
Economy
is
growing
steadily
£161Bn
Total
Digital
Turnover*
+32%
than
the
wider
UK
Economy
Growing
Source: Tech Na.on 2016 Report, Tech City Uk/Nesta
*based on 58K iden.fied Digital Businesses
@techcityuk
@gerardgrech

4. Runway:
London/UK
has
a
strong
investment/VC
eco-­‐system
In
2015,
5x
more
VC
investment
than
2010.
>30%
of
all
EU
VC
money.
UK
companies
consistently
raise
>30%
of
all
European
VC
money
Source: PicthBook/EY May 25th 2016, CB Insights/L&P
UK
VC-­‐Backed
Investment
Activity
Top
Deals
&
Cities,
Q1’16
@techcityuk
@gerardgrech
$5B
$13B
$12B
$7B$7B
$5B
$3B
$2B
$0B
$2B
$4B
$6B
$8B
$10B
$12B
$14B
2016)YTD2015201420132012201120102009
Total-VC-Capital-Invested
UK Germany France Israel Russia Sweden Switzerland RoE

5. Brexit:
Tech
City
UK
Survey
–
1,205
respondents
–
27th
June
–
5th
July
2016
–
largest
&
fastest
survey
on
tech
Top
priorities
of
UK
Tech
Community
post
Brexit:
1. Access
to
Single
European
Market
(by
remaining
in
the
EEA
-­‐
like
Norway)
2. Retention
of
EU
Talent
3. Clarity
on
cross-­‐border
Data
standards
4. Access
to
R&D
funding
post-­‐Brexit
5. Access/Attractiveness
of
UK
for
investors
post-­‐Brexit
6. Cost
of
business
(taxes,
regulation
environment
in
the
UK)
7. Overall
economic
climate
of
the
UK

6. Brexit:
political
&
economic
upheaval
across
Europe
could
cause
a
little
2016
slow
down
but
growth
deals
are
increasing
which
is
exactly
the
kind
of
news
we
want
More
Growth
stage
deals

7. Acquisitions
&
IPOs:
Post-­‐Brexit
• Twitter
acquired
London
artificial
intelligence
startup
Magic
Pony
for
around
$150m
(£102m).
•
Magic
Pony
uses
machine
learning
to
create
high-­‐quality
videos
from
grainy
footage
-­‐
will
likely
be
integrated
into
Twitter's
live
and
video
services:
Periscope
and
Vine.
• IPO
values
the
company
at
£40.8m
• Has
raised
gross
proceeds
of
£8.5m
at
a
placing
price
of
100p.

8. July -­‐ $65 million (£49
million) Series C
Late
Stage
Deals:
Post-­‐Brexit
• UK investment ac.vity star.ng on strong note in Q3 2016
• In just under three weeks, at least $230 million (£174 million) invested to VC-­‐backed
companies in over more than 25 deals
August – $275 million
(£210 million) Series E
August – $28 million
(£21 million) Series E

9. 9
The
impact:
>40%
of
European
‘Tech
Unicorns'
($1bn+)
are
in
the
UK
@techcityuk
@gerardgrech
47
European
Unicorns
19
UK
Unicorns
European
tech
is
growing
sustainably
on
a
base
of
profit
and
revenue
Deliveroo:
latest
Unicorn

10. 3.
Rich
ecosystem
&
connected
nation
1.
Smart
capital
2.
Strong
business
&
policy
environment
4.
Creative
talent
&
critical
mass
of
expertise
4
Key
growth
drivers
powering
the
UK’s
digital
economy

11. 1.
More
funds
now
exist,
opening
up
new
opportunities
and
securing
the
growth
potential
of
talented
teams

12. Selected
Recent
UK
IPOs
$552M
Gross
Proceeds
$3,341M
Gross
Proceeds
$2,042M
Gross
Proceeds
$597M
Gross
Proceeds
$580M
Gross
Proceeds
2,074 2,010
2,536
590
1,672
638
364
318
146
29
0
500
1000
1500
2000
2500
3000
LSEG NYSE NASDAQ SGX HKSE
#ofCompanies*
London
Stock
Exchange
is
a
hub
for
international
businesses
Source: Bloomberg 2015, EY Tech Trends 2016
Domestic
International
@techcityuk
@gerardgrech

13. 8
2.
End-­‐to-­‐end
policy
conditions
for
tech
growth
are
ripe
>£2.75
Bn
latest
market
Cap
>£1.1
Bn
latest
market
Cap
4.
Corp
Tax:
17%
(joint
lowest
in
the
G20)
1.
Seed
Enterprise
Investment
Scheme
&
EIS:
50%
relief
on
capital
gains
tax
3.
Visas:
Entrepreneurs’
Visa,
Tech
Nation
Visa
2.
R&D
Tax
Credits:
fueling
innovation
5.
London
Stock
Exchange
high
growth
segment
@techcityuk
@gerardgrech

14. UN
E-­‐Government
Survey
2016–
UK
ranked
No.1
• E-­‐Government
development
Index
ranked
UK
No.1
• E-­‐Participation
index
ranked
UK
No.1
• E-­‐government
to
provide
public
services
through
one
stop-­‐platforms
&
online
transactions
• Ensures
that
public
institutions
are
more
inclusive,
effective,
accountable
&
transparent
• Drive
towards
Open
data
for
public
information
&
scrutiny
• Participatory
decision
making
• Increased
effort
to
utilize
electronic
and
mobile
services
for
all

15. 3.
Rich
Ecosystem:
>60
UK
tech
accelerators,
>100
co-­‐
working
spaces
&
50+
tech
business
support
orgs
@techcityuk
@gerardgrech

16. 1
6
+2.8x
1.56M
UK
Tech
Jobs
Jobs
growing
41%
In
non-­‐digital
industries
like
educaOon
&
Finance
Faster
than
the
wider
economy
£50K
Average
UK
Tech
salary
+36%
Higher
than
UK
average
salary
4.
The
UK’s
tech
talent
pool
is
growing
fast
Source: Tech Na.on 2016 Report, Tech City Uk/Nesta
@techcityuk
@gerardgrech

17. 8
The
pool
is
deep
&
extensive,
with
international
HQs,
world
class
institutes
&
top
research
universities
International
&
EU
HQs
Technology
Institutes
World
–
Class
Universities

18. Impact:
17000+
in
training
in
20
months
50%
<30
years
old,
40%
female.
Access
to
Education
Access
to
Opportunity
@techcityuk
@gerardgrech

19. 38
ROUNDS
£1.5
Bn
RAISED
+
£1.22
Bn
RAISED
FROM
5
IPOs
+
10
ACQUISITIONS
In
the
last
20
months…
Good
conditions
create
great
companies
@techcityuk
@gerardgrech

20. Examples
of
UK
Tech
‘Unicorns’
(Barclays
Scale-­‐Up
UK
April
2016)
Company
Valuation
(date)
Total
reported
equity
Funding
(Missing
data
on
at
least
one
funding
round
for
each
company)
Description
$
1.0
b
(Mar
2015)
$195m
Online
retail
for
high-­‐end
fashion
boutiques
$1.05b
(Apr
2015)
$237m
Peer–to-­‐peer
or
non-­‐bank
lending
S1.03b
(Feb
2015)
$125m
App
for
music,
TV
shows
and
ads
$1.79b
(Jan
2016)
$197m
Provides
online
travel
search
comparisons
$0.96b
(Jan
2015)
$
90m
Money
transfer
service

21. Disruptive
technologies:
Advances
that
will
transform
life,
business,
and
the
global
economy
–
6
specialisms
in
the
UK
Autonomous
Vehicles
Mobile
Internet
Artificial
Intelligence
Automation
of
Knowledge
Network
Cloud
Computing
Internet
of
Things

22. Why
is
all
this
so
important?
Because
we’re
building
a
sustainable
ecosystem,
driving
effective
cultural
change
&
global
ambition
InsBtutes
UniversiBes
Govt.
Dept.
(naBonal
&
Inter).
Local
AuthoriBes
Investors
Entrepreneurs
Corporates
Incubators
Accelerators
Stock
Exchanges
Colleges
InternaBonal
hubs
@techcityuk
@gerardgrech
Developers

23. |
Thank
you
for
listening.
Gerard
Grech,
CEO,
Tech
City
UK
Visit
our
website:
Techcityuk.com
Follow
us
on
Twitter:
@techcityuk
@gerardgrech