Some interesting statistics are arising from this report from Tech Nation. The UK has established leading global base in tech, with over £10bn invested last year alone (up 44%) and Gross Value Added growing at nearly 6x the rate for the rest of the economy. 3rd place behind the US and China, and, if the trajectory is maintained, with the potential to ease past China in short order.
Here at Polestar, the optimistic outlook for this space is still shared despite the current negativity one can read across the economy more widely. In some cases this is even accentuated, with drivers for heightened interest including:
- The active prod that Covid-19 has given to all in business to consider/accelerate adoption of new ways of working and improvements to efficiency
- Adaptability of more agile tech businesses to flex their solutions to meet changing needs
- Financial performance frequently escaping relatively unscathed from the downturn in the wider economy - many tech businesses more easily adapt to remote working (if indeed they were not already using it to some degree) and while new contract wins have generally been more difficult to get signed up, interest and new client pipelines are strong and existing revenues have tended to remain solid
- Funds - It is undoubtedly the case that there are still funds out there to be deployed for strong businesses - with valuations perhaps even strengthened in some cases for businesses able to demonstrate actual performance through a tough trading period. We are seeing this not just from UK based funds but also from overseas (particularly US ) tech investors actively approaching clients to provide investment.
Accounting for nearly 10% of UK employment, the government has been keen to support, with applications for the Future Fund having opened this month to support those businesses whose investors may be under pressure. The Future Fund is equity funding (not cheap debt) and does require a least matching funds from other investors. However, for those businesses that fall under its remit, it may provide useful additional liquidity.
Let's hope we can all maintain a bit of positivity as our individual contribution to moving things forward. It is easy to be pressurised into a negative mindset by a lot of the news stories out there and too much of this saps energy, just at the time when all of us, owners, staff, suppliers and customers, need it most.
There is always opportunity - just some days it takes a bit more searching than others!
If we can help align your compass in a positive way we, at Polestar, are always happy to talk and suggest solutions.
UK tech GVA has rocketed over the last eight years Fuelled by increasing levels of tech investment, the UK tech sector’s GVA or Gross Value Added contribution (which is the Gross Domestic Product + Subsidies on products - Taxes on products) is now growing six times faster than that of the wider economy. Digital tech contributed £149bn in GVA in 2018, accounting for 7.7% of the UK economy. Over the last eight years, digital tech sector GVA has increased by 43%, from £104.2bn in 2010 to £149bn in 2018.