Report shows solid investment in UK tech industry, but a shortage of scale-ups and skills.
Skills still needed alongside funding.
By Jon Kingsbury, Head of Digital Economy and Creative Industries
With a virtual fanfare (and a foreword from the Prime Minister herself, no less), today saw the publication of the TechNation 2017 report.
With impressive statistical analysis (devised with the help of Nesta), the report highlights the digital tech ‘state of the nation’.
The report is significant, not least because, in its survey data of nearly 2,000 digital businesses, it has probably the best overview of the sector ever gathered. Tech City UK, in partnering with more than 220 national and regional partners, should be commended.
As I wrote a few weeks ago when the Government’s Digital Strategy was published, the digital sector is looking very healthy. Today’s report illustrates a total GVA of £97bn and a productivity rate double that of non-digital workers.
However, probe beneath the surface of the data, and there are three areas that point to where the UK can do even better.
To borrow from the narrative of the report, the drivers of growth are talent and investment.
Both the numbers of jobs and the total amount of private investment have grown over the last five years, and that is certainly cause for celebration.
But ask most digital businesses (especially start-ups), and they’ll tell you that there is an acute skills gap in the sector. This perception is intensifying, and is particularly keenly felt outside of the Southeast and London, which tends to attract talent from the rest of the UK. It’s too early to tell what role Brexit may play going forward, but clearly there is more work to do on skills and visas for digital workers.
On investment, there is good news. Tech Nation 2017 highlights nearly £7bn of private investment last year, twice that of any other European country. But regional investment remains underpowered. In 2015, it actually decreased. Remove the investment into Cambridge start-ups, and it’s clear that regional funding needs encouragement. It probably isn’t, but should be, high up on the agenda of the new wave of city and regional mayors once elected later this year.
Finally, the increase of average 10% of turnover of digital businesses over the last 5 years in today’s data doesn’t quite match the large number of high-growth firms cited in the report. As tech entrepreneur Sherry Coutu has stated before, not enough of these start-ups scale up.
Nonetheless, there is a lot to celebrate, and there are organisations that can help address these issues.
In times of skills shortages, collaboration becomes more important – vital, even. KTN can help connect your business to others that may be able to collaborate with you on developing new products and services.
For investment, our understanding of the financial landscape (both public and private) can help you identify funding and investment opportunities.
For increased profitability, we can connect digital businesses into profitable areas that are ripe for digital disruption, such as manufacturing, health and city infrastructure.
Please do get in touch to see how we may be able to help you.