High levels of venture capital funding and the creation of startups valued at $1bn or more have helped Cambridge become the UK’s top tech hub outside of London, according to government research.
Cambridge is home to startups and scaleups such as GeoSpock, Riverlane, Fetch AI and Healx. It is also where cybersecurity firm Darktrace was founded in 2013. This year, the company went public on the London Stock Exchange in a £1.7bn IPO.
Favourable conditions in Cambridge have helped it become the leading regional tech hub, according to data compiled by Dealroom and job search engine Adzuna for the UK government’s Digital Economy Council.
The research looked at the number of unicorns – startups with a value of $1bn or more – tech job salaries, venture capital rounds and the number of so-called “futurecorns”.
Using these metrics, Cambridge comes out top and is closely followed by Manchester, which is home to ecommerce company THG. In 2021 the number of tech jobs in Manchester increased by 165%, the research showed.
Oxford, Edinburgh and Bristol close out the top five UK regional tech hubs. The highest advertised average tech salaries outside of London were in Edinburgh, with an average of £58,405.
It comes against a backdrop of record levels of UK tech funding, with startups and scaleups raising a collective £29.4bn in 2021 – double that of Germany and nearly three times more than France.
Luisa Alemany, associate professor of management practice in strategy and entrepreneurship at London Business School’s Institute of Entrepreneurship and Private Capital, said it’s currently a “founders’ market” in which investors “want to be there at the very beginning”.
Top 10 UK regional tech hubs 2021:
Cambridge
Manchester
Oxford
Edinburgh
Bristol
Leeds
Birmingham
Newcastle
Cardiff
Belfast
Year of the unicorn
In 2021 there were 29 newly created unicorns, bringing the country’s total unicorn count to 115 – more than France and Germany combined.
Among the UK unicorns created this year are insurtech Marshmallow, ecomerce platform Depop and challenger bank Starling Bank.
The majority of venture capital – 37% – came from the US, with much of that cash being put into UK healthtech and fintech companies.
The combined value of UK tech companies founded since 2000 now stands at £540bn. And the UK, which has historically struggled to attract technology companies to its stock exchanges, became the most active venue globally for IPOs outside of the US and China. The 118 companies that chose the London markets raised a cumulative £16.8bn – the highest level since 2007.
The research, which cites the government’s “levelling up” policy that aims to address the imbalance between London and the rest of the country, shows how UK tech companies continue to look outside of the capital.
The shift to remote working has boosted the trend, with startups outside of London able to attract a wider pool of talent from across the country while also benefiting from lower operating costs.
Of the 29 companies that reached unicorn status this year, nine are located outside of London. They include Interactive Investor in Glasgow, Vertical Aerospace in Bristol and Touchlight Genetics in Hampton.
Cambridge: A deeptech hub
Cambridge has become a magnet for deeptech companies operating in areas such as quantum computing. Earlier this month Cambridge Quantum Computing completed its merger with US-based Honeywell Quantum Solutions to create a quantum computing powerhouse named Quantinuum.
And last week, Cambridge-based post-seed accelerator Deeptech Labs announced the startups in its latest accelerator cohort, suggesting the next Quantinuum could emerge from the city in years to come.
“With such a record tech investment year, it’s becoming increasingly evident that the UK is very good at rearing and cultivating startups and scale-ups into successful global companies right across the UK, unlike its continental European neighbours, where it tends to be more in capital cities,” said Gerard Grech, founding CEO of Tech Nation, a government-funded body.
“A true network of digital excellence is emerging right across the country through entrepreneurship, driving new job and wealth creation.”
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