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Tech secretary sets out goal to make UK a ‘scaleup powerhouse’

Tech secretary Michelle Donelan
Tech secretary Michelle Donelan speaks at the AI Safety Summit. Credit: Rory Arnold / No 10 Downing Street

The science and technology secretary is aiming to make the UK a “scaleup powerhouse” and increase its proportion of tech unicorn companies across Europe.

In a speech to tech industry leaders outlining her department’s priorities for 2024, taking place later today in east London, Michelle Donelan is expected to say that the UK has “the right ingredients to become a scaleup superpower if we tap into our unlocked potential – particularly those companies on the cusp of scaling”.

Donelan is expected to outline a goal to make the UK home to half of all European tech unicorns – private companies valued at $1bn or more – by 2030.

The UK currently accounts for around a third of unicorn companies across Europe, including the likes of Revolut and Multiverse.

“I believe the UK should account for at least 50% of all new unicorns created by Europe as a whole… a true scaleup powerhouse, where opportunity and high skilled jobs fuel economic growth across the country – including outside cities,” Donelan is expected to say.

The UK has strong foundations to meet this goal. Research published by VC firm Creandum in July last year shows that the UK is home to 34% of Europe’s future unicorns – also known as ‘futurecorns’.

But increasing the proportion to 50% will require significant growth off the back of a slow year for unicorn creation and a continued slowdown in tech investment. Generative AI firm Synthesia and data business Quantexa were among the few UK companies to achieve the milestone.

‘Dragon’s Den-style’ pitching events

The head of the Department for Science, Technology and Innovation (DSIT) is expected to announce a raft of measures aimed at supporting scaleups.

They include a scaleup forum to bring input from founders and investors into Whitehall and a regulatory support service for science and tech businesses.

The government will also launch a scaleup support service pilot to provide targeted support to up to 20 high-potential businesses.

To encourage startups to pick the UK by matching them with investors, the government will launch a series of “Dragon’s Den-style pitching events”.

While the UK leads Europe for tech unicorn creation and attracts the most startup funding, there are signs that Europe is gaining ground.

Research published by VC firm Atomico in November found that venture capital funding in the UK fell by 54% year on year, down from $27.9bn in 2022. It is a steeper fall than the average across Europe, which stands at 45%.

“Despite leading Europe, we need to make sure our future unicorns continue to make their home here in the UK,” Donelan is expected to say.

Elsewhere, the tech secretary is expected to say the government will explore ways to improve access to public sector data to support scaleup growth.

There are also plans to simplify the R&D funding process via UK Research and Innovation (UKRI), the non-departmental funding body.

Donelan, who is the UK’s first tech secretary, will add that the government “wants to help crack open the powder-kegs of UK investment and see more homegrown scaleups fuelled by home-raised funding”.

The speech comes almost a year after Prime Minister Rishi Sunak created DSIT, spinning it out of the Department for Culture, Media and Sport and the Department for Business, Energy and Industrial Strategy.

“Scaleup powerhouse” is not the first tech slogan deployed by the government. Since 2022, it has said it plans to make the UK the “next Silicon Valley” and a “science and tech superpower”.

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