UK falling behind European competition in efforts to produce powerhouse tech companies

Despite producing more billion-dollar tech companies than any other European country in recent years, the UK is lagging behind the Americans and Chinese, research shows.

A report by advisory company GP Bullhound has said six billion-dollar tech companies have been created in the UK in the past year, bringing the total figure for the country to 26 since 2000. These businesses have added $64bn in value to the European tech industry, while the likes of Germany and Sweden have produced eight and seven billion-dollar companies respectively.

However, Swedish-based music streaming service Spotify saw 122% valuation growth across the past year to make it the leading tech company in the continent, at $28.8bn. There are six overseas technology companies valued at more than $50bn, with Facebook leading at $498bn.

The report highlights a key difference between Europe, the US and China in the ability to attract significant investor funding. Since 2000, the six major US and Chinese tech companies have received $7.3bn in funding, compared with $1.6bn for the best billion-dollar European tech companies.

Based on valuation increases over the past year, GP Bullhound expects Spotify, food delivery services Just Eat and Delivery Hero, AI-powered search platform Yandex, or e-commerce website Zalando to be the next European powerhouse – only one, Just Eat, is UK based.

However, Marvin Maerz, associate at GP Bullhound, told Computer Weekly the UK is in a strong position, with the number of billion-dollar tech companies it already plays host to – and Brexit is unlikely to change that.

“The UK is very much setting the pace for the rest of Europe, and we see no signs that this should change as we approach the Brexit date,” he said. “With so many world-leading, ambitious tech companies coming out of the UK, the country will remain an attractive prospect for investors and we anticipate a very optimistic outlook for the UK’s tech industry over the next decade.”

A London & Partners report in June 2018 said UK tech companies had received more venture capital funding than France, Germany and Sweden combined since the referendum vote in June 2016.

In this period, the British companies have generated £5bn, and whilst major Sadiq Khan said London remains the “undisputed tech capital of Europe, it is vital we continue to ensure we can attract the very best talent and investment from all over the world in the aftermath of Brexit”.

Other findings from the GP Bullhound report show European countries had nine funding deals worth at least $200bn in 2017, compared to four in the previous year.

Europe now makes up 14% of the billon-dollar tech companies worldwide, with Asia at 35% and the US 48%. However, Europe is ahead of those markets for its 31% increase over the past year, compared to Asia (22%) and the US (21%).