UK consolidates position as 'second most innovative tech start-up ecosystem in the world'

The UK has solidified its second place ranking in a league table of countries analysed for small technology business activity and support.

The study by StartupBlink, which rates nations according to various criteria including number of start-ups, amount of investment, number of accelerators, internet speed, diversity and presence of top universities, puts the UK in runner-up spot to the US.

It has been second since 2017 but the report said after a small lead last year, the UK has "substantially" increased its lead over Israel, the third ranked country.

The index also ranks cities and 78 from the UK are in the top 1,000 in the world. It is the only country other than the US with more than 50 cities in the list.

Six UK cities are in the top 100. Only the US and China have more.

London is in third place in the list of global cities, up from fifth last year. San Francisco Bay and New York are in first and second place.

The study said the UK capital ranks very high for fintech, and is also among the top five cities for marketing and sales technology, and social and leisure technology.

Manchester is the second best ranked UK city in 60th place, up from 68th in 2021. Cambridge is 63rd, Bristol is 94th, Oxford is 95th and Edinburgh is 96th.

Leeds, Reading and Newcastle saw strong increases with all three rising by more than 50 places. Oxford and Bristol however saw a decline, falling four and three places respectively.

At 359th place globally, Warwick is a newcomer to the top 1,000 cities.

For more information about city rankings, view the dashboard on Startupblink.com.

Opportunities and challenges for UK technology sector

Figures released to mark this week's London Tech Week back up the UK's second place position among tech start-up ecosystems.

They show that UK tech companies raised £12.4bn in venture capital funding in the first five months of 2022, more than during the whole of 2020. That puts the UK second only to the US, and ahead of countries like China, France and India.

Recruitment of tech talent remains a challenge though.

The StartupBlink report noted that although the UK has traditionally benefited from attracting global talent to London in particular, Brexit makes this harder.

The UK government recently announced a new visa scheme for technology graduates from the world's 50 top universities.

Through the 'high potential individual route', graduates in subjects such as science, engineering and research will be given a two-year work visa or three years for those with a PhD.

Unlike previous rules, they do not need an employer sponsor with a definite job offer, meet minimum salary requirements or demonstrate they are not taking on a role that could be done by a British employee.

Chancellor Rishi Sunak said the scheme "means that the UK will grow as a leading international hub for innovation, creativity and entrepreneurship", but critics claim such initiatives do not deal with the impact of Brexit on overseas recruitment.

Robin Stephens, a Liberal Democrat councillor and a technology entrepreneur who started a marketing technology business that was sold for $410m, wrote on Twitter that "Brexit has closed the door to the world's top graduates" and "hiring from abroad [is] now incredibly difficult".

He added:

"We simply don't produce enough developers here, and London was the tech capital of Europe so a very attractive place to come to. Our young British developers were exposed to brilliant international devs thereby improving their skills.

"I have also hired from non EU countries, especially India which produces top notch developers. It's incredibly difficult, tons of paperwork and very high risk with the time."

Chancellor Rishi Sunak opened London Tech Week and addressed the talent issue. Referring to the new 'high potential individual route' visa, he said:

"That should send a strong and clear message to the brightest global talent: If you come to the UK, we will back you to succeed.

Nothing like that exists anywhere else in the world. And it sums up our philosophy when it comes to visas: Less 'build it and they will come', and more 'let them come and they will build it'."

The government also unveiled its new digital strategy at London Tech Week with boosting access to talent a key ambition.

The document says that over 80% of all jobs advertised in the UK now require digital skills, but employers cite the lack of available talent as the biggest factor holding back growth. It is estimated that the digital skills gap costs the UK economy as much as £63bn a year in potential GDP.

The strategy announces the creation of a new digital skills council that will bring together experts from companies such as Starling, Amazon Web Services and Multiverse to encourage investment in employer-led training to upskill workforces and examine ways future technology workers from all backgrounds can be inspired to consider a digital career.

It also announces the new Office for Students which will provide £23m for up to 2,000 government funded university scholarships. Funding will be available for students from low socioeconomic backgrounds as well as black, women and disabled students "to ensure the AI built and used in the UK reflects the make-up of our society".

Another issue raised by the StartupBlink report was that with London dominating as the UK's biggest innovation hub, the country has struggled to "push another city into the top 50".

It called on the government to "focus on the major task of making sure that at least one additional UK city takes its place into the global top 50, finally creating a second strong international ecosystem in the UK".

Announcing the new digital strategy, culture secretary Nadine Dorries said:

"The strategy will ensure that businesses in every part of the UK are supported to take up the latest tech & that the benefits of our booming tech sector are felt right across the country."

In the strategy document, the government refers to various initiatives including its Help to Grow: Management training course for small businesses as well as its 'levelling up' agenda and the £2.6bn UK Shared Prosperity Fund (UKSPF) which replaces EU funding.

On UKSPF, it says:

"This scheme will give areas across the UK the ability to fund interventions in their local communities based on their local priorities, including interventions that have relevance to the digital and technology sectors.

"This includes funding for digital skills, funding to develop angel investor networks, funding for incubators and accelerators for local enterprise, and funding to support local entrepreneurial ecosystems."

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