A new technology business was created every half an hour during 2020, with nearly 19,500 registering in total across the UK, industry figures reveal.
Data analysed by industry body Tech Nation for the Department of Digital, Culture, Media and Sport (DCMS) – based on figures provided by the Office for National statistics (ONS) and Companies House – shows that 19,465 new businesses were registered in the information and communication sector between January and December 2020.
The increase in the number of technology businesses coincided with a record year for venture capital (VC) investment, which saw UK-based technology firms raise a total of $15bn – a significant proportion of the $43.1bn raised by European companies throughout 2020. However, most of the capital raised by UK firms ($10.5bn) went to those in London.
The pandemic also accelerated the adoption of various digital technologies as people were forced to work, educate and shop online, presenting new opportunities for tech startups and scaleups.
For example, the 10 startups that raised the most capital in 2020 belonged to sub-sectors that were vital during the pandemic, including insurance, e-commerce, online payments, healthcare and medical, and mobility.
Digital secretary Oliver Dowden welcomed the findings, claiming the rate of business creation has doubled since 2018 when it was one every hour.
“Tech will lead the way in helping us build back better, and it’s fantastic to see so many people kicking off new businesses and creating thousands of jobs up and down the country,” he said.
“We want to be the most pro-tech government ever and drive a new era of growth. That’s why we’ve announced a raft of measures to back our brilliant tech firms, attract top tech talent and help small businesses grow.”
Other sectors also experienced high levels of business creation during 2020 – including real estate (12,135), arts, entertainment and recreation (10,830) and finance (10,730) – bringing the total to 407,505 across all sectors.
Alberto Menolascina, co-founder and CEO of new delivery startup Dija, said: “Launching a new business during a pandemic isn’t the easiest thing to do. There’s been a few extra hurdles from hiring an entire team remotely, to pitching for investment by video call to not being able to hash out ideas with my co-founder next to me.
“Yet last year helped demonstrate that there is a real need for a swift and efficient service to provide easy access to food and groceries. We can’t wait to bring innovation and technology to this sector in 2021.”
Gerard Grech, CEO of Tech Nation, added that startups and scaleups formed during the pandemic will be ones to watch going forward: “Just as companies like Zoopla, DeepMind and Wise were born out of the last financial crisis, these figures give hope that the UK’s next big tech firms will be born out of this one.”
ONS figures also show a surge in tech company hiring at the start of 2021, with more than 185,000 tech jobs being advertised in the first two months of the year. Further figures from job search engine Adzuna show that more than 116,000 live tech jobs were advertised in March alone.
This brings tech hiring back in line with pre-pandemic levels, with both February 2020 and 2021 seeing 111,000 tech jobs advertised. Tech job vacancies now make up more than a seventh (14.3%) of all job vacancies in the UK.
Overall tech employment in the UK has increased by 11% in two years to almost three million, with 37% of those employed in the sector now working in non-tech roles such as legal, marketing, HR and administration.
Data from elsewhere also suggests the sector is thriving despite initial pandemic uncertainty – a report from the CIPD, for example, found high levels of confidence in tech sector employment over the past year, second only to healthcare. The report also found that around 67% of employers in the ICT sector intend to recruit in the first quarter of 2021.
With many suggesting technology will play a role in the UK’s recovery post-pandemic, tech skills are as important as ever, with many working on their digital skills during lockdown, and some expressing an interest in shifting into the tech field.