Tech Nation, which is a scaleup network for entrepreneurs, has launched its inaugural Scale Ratio, which compares the number of seed stage, early growth and late growth companies in the UK’s tech ecosystems.
It reveals that a 50:30:20 ratio of seed (50%), early growth (30%), late growth (20%) companies in a UK regional tech hub is indicative of a mature, balanced ecosystem, well placed to benefit from the accelerated growth of late stage companies while creating the next wave of tech scaleups.
Tech Nation’s newly launched ‘Scale Ratio’ suggests the 50:30:20 ratio results in the highest performing hubs – areas with the largest number of scaleups attracting the most significant VC investment.
London, Manchester and Cambridge generally exhibit the 50:30:20 ratio and attracted the most investment in the UK in 2020, with 70% of investments made into late stage companies.
As a whole, the South West closely follows a 50:30:20 ratio, and Bristol exhibits a desirable ratio, at 50:27:23. Exeter, with a Scale Ratio of 59:14:27, is revealed as a tech hub to watch in 2021, with one of the highest proportions of seed stage companies in the UK.
However, Bath, with a Scale Ratio of 37:33:29 has a high reliance on late stage tech scaleups and a less developed seed stage pipeline, which is crucial to driving sustained growth.
Dr. George Windsor, Head of Insights, Tech Nation, comments: “Crucially, the Scale Ratio tells us about the growth potential of the UK’s tech hubs and provides the levelling up agenda with new evidence to boost regional ecosystem development. It highlights exactly where scaleups are not receiving the support they need to grow from seed stage upwards to ensure these gaps are plugged. Despite the challenges of the past 12 months, the growth and potential of homegrown tech pioneers gives us something to celebrate.”
Tech Nation also identified two South-West firms as the UK’s most promising tech companies
This report comes as Tech Nation reveals the latest cohort of its Upscale programme, 33 of the fastest-growing and most promising home-grown tech businesses in the UK.
The programme has been able to increase participation from across the UK, with 48% of finalists coming from outside London. Two of the 33 companies joining the programme are from the South West, Rovco and Virti: