Three quarters of UK tech companies operate outside London

Technology is not just doing well in London. Tech City UK blog

The government just announced the launch of “Tech Nation”, an interactive data project by its Tech City UK drive, which champions digital enterprise and investment. Naturally, it’s based in London’s own “Silicon Valley,” home to numerous startups and, in fact, Business Insider’s UK office.

But while the UK’s tech hub is in London, around three-quarters of all digital companies in the UK operate outside it. In fact, as the government notes, “analysis shows that the UK’s tech clusters are driving economic growth nationally and that the growth of digital business reaches far beyond the capital.”

The crucial stat is this: 74% of digital companies are based outside of the M25 ringroad around the capital. Everyone knows that London is evolving into its own city-state that’s separate from the rest of the country. But, apparently, not in the tech world.

It’s a good thing: tech is massively important to trade and investment. It might even be argued that tech is the gateway to reducing London’s bubble effect and seeing other areas of the country attract young graduates and entrepreneurs.


Some other notable points from the Tech Nation report today include the “fastest growing tech clusters” in terms of digital companies formed since 2010. Liverpool, Belfast, Manchester, Brighton & Hove, and even Bournemouth make the list. Just an aside: we’re told Brighton is home to the highest density of Mac users. (Unsurprising if you’ve been there.)

Another key point is that the highest rates of employment in the sector in addition to the capital are in Bristol, Bath, Reading, and Manchester.

More findings from the Tech Nation report today:

  • Digital job growth is predicted to outperform all other occupation categories by 2020
  • 1.46 million people — 7.5% of the entire UK workforce — are currently employed in the digital industries
  • Clusters with the highest density of digital companies (as a proportion of overall companies) are Brighton & Hove, Inner London, Berkshire (including Reading), Edinburgh and Cambridge
  • Clusters with the highest average company turnover are Greater Manchester, Belfast, Sheffield, Inner London and South Wales
  • 77% of digital companies within clusters say they benefit from access to a network of entrepreneurs to interact with and to share ideas

An easy case study is Cambridge — which is its own tech hub. In fact, the town was filled with tech businesses long before London’s startup scene started making waves.The cluster of hardware and software companies has even been dubbed “Silicon Fen.” It’s a real tech hotspot, largely because of its proximity to the science and engineering talent coming out of Cambridge University, as well as its closeness to London — but with much cheaper rents. It’s also home to Google DeepMind too of course.

That’s not to say London isn’t doing well too, though. Last year, London startups raised double the amount of venture capital than in 2013. Companies are reported to have accrued some £1.4 billion in investment in 2014 alone. That trend is continuing this year, too. One new app, Dojo, just got £800,000 in new investment — some of which came from the Mayor of London’s fund for tech innovation.