A History of Start-up and Growth in UK Tech

UK Tech on the Global Stage

After the Second World War, the UK was at the cutting edge of the computer industry, with Manchester and Cambridge competing for the first implementation of a stored program digital computer.  In 1951 the UK achieved another first with LEO, the world’s first business computer.  LEO Computers Limited was the great-great-grandfather of the British flagship computer manufacturer, ICL, which was begotten by Government policy 27 years later with a gene pool including famous names such as GEC, English Electric, Ferranti, Powers Samas and EMI. However, even before it was born ICL was struggling to compete with overseas competition, most notably IBM.

Fast-forward to 2022 and the Tech industries are dominated by hardware, software and content gorillas including Apple and Microsoft, with market capitalisations of $2 – 3 Trillion each while the internet based services giants like Google and Amazon are valued at $1 – 2Trillion each. The USA is dominant, with Asia Pacific strongly represented and the UK way down the league table.

So, is the UK a 21st Century Tech success story or an also-ran?

20th Century Highs and Lows

Notwithstanding the dominance of overseas companies like IBM in hardware and Oracle and SAP in software, the UK developed a thriving Computer Services Industry in the 70s and 80s, doing systems integration and business transformation.

However, Richard Holway’s magazine System House observed that in the 5 years from 1985 to 1990 the 10 British companies leading that field lost the initiative as US and European mainland competition moved in.

A page from System House Magazine, September 1991

One of the two remaining major players in the UK at that time was Logica, and in 1993 they headhunted Dr Martin Read to avoid the company joining the rush to overseas ownership. The analysis in System House suggests that there were internal management issues that beset the UK software houses like Systems Designers and Scion, and the challenge of creating a major global player had as much to do with shareholders as innovation.

Martin Read

One oft-quoted problem then is that UK investors in the stock market do not value future growth in the same way as the USA or mainland Europe. For example, the FT of 6 March 2022, Lex In Depth, covered the issues in some detail, quoting ‘Technology groups dominate global growth as businesses compete to be the next Google, Apple or Alibaba. The UK is barely in that race. The technology sector accounts for less than 5 percent of the UK’s total market capitalisation. In Germany, it is 11 percent. In the US, it is almost a third.’

The commonly referenced example of a company that bucked the UK 20th-century trend is ARM, whose processors power the mobile world.  One of the first customers was Apple Computers swiftly followed by Nokia.

Sir Robin Saxby

Sir Robin Saxby was brought in to run ARM in 1991 after it was spun out from Acorn Computers. He devised the business plan which grew the company from a handful of people into an enterprise sold for £24 billion in 2016. ARM only designs Reduced Instruction Set Computers (RISC) and licenses out the manufacture and use of the designs to others.

Are we Doing Better in the 21st Century?

While the UK has not created a Google, Amazon or Microsoft, industry observers are positive about British success in growing Tech enterprises. The UK Government Department for Digital Culture Media and Sport reported UK tech captured more than a third of investment in Europe. The £29.4bn raised by UK start-ups and scale-ups was double the figure raised in Germany (£14.7billion) and almost three times that raised by France companies (£9.7 billion). UK tech investment accounted for a third of the total £89.5 billion that flowed into the European tech ecosystem this year.

Start-ups and Unicorns

One of the key measures of entrepreneurialism is the creation of ‘unicorns’: privately held start-up companies that reach a market valuation of over $1Bn.  Such beasts, pictured above, have traditionally been very difficult to find. Today, the UK tech sector reaches new heights with 100 UK tech companies valued at $1bn or more, according to new data from Dealroom and Tech Nation.

Vin Murria OBE is an outstandingly successful serial creator of Tech Unicorns and argues here that the UK has been held back by a tendency to sell out rather than grow. In conversation with Jane Bird for Archives of IT, she talked about how her early life and upbringing equipped her for a career as a Tech Entrepreneur and gave us some insights into how successful companies work and how to build them.  In an industry that struggles to attract its fair share of women, she tells how she achieved her success, observing that diversity brings many benefits to the business.  Read the full article here

Vin Murria

Andy Phillipps is an entrepreneur, who founded Active Hotels, which became part of booking.com and is now an angel investor.  Andy observes that their buyers got the benefit of huge growth potential but argues that the UK culture is changing.


How is the UK Encouraging Entrepreneurialism?

A variety of mechanisms aimed at increasing the number and value of new businesses are now in place, funded by Government and the private sector.  This seems to be an increasing trend and is resulting in growth in new businesses as detailed by the report of the Department of Business Energy and Industrial Strategy

Amongst the mechanisms that Government has to influence the development of the industry is an investment in research.  Paul Mason. The Director of Innovation Policy at Innovate UK, the UK’s innovation agency, explains how Government can facilitate the development of the UK Tech sector by picking where to encourage Research and Innovation.