UK tech could reach $4tn with right support, says final Tech Nation report

UK tech 2032 Image credit: Tech Nation

Tech Nation is calling for “tangible support” for the UK’s tech ecosystem, which the startup growth network estimates could help quadruple the industry’s value to $4tn by 2032.

The report, Tech Nation’s last before it closes this month, estimates that the UK tech sector will grow to $2.6tn by 2032 if conditions and momentum for scaling tech companies remain the same.

Last year, the UK’s tech economy became the third country to hit a valuation of $1tn, following the US and China.

The report calls for greater deployment of patient (or long-term) capital at all growth stages, which it estimates could provide a $450bn boost to the sector over the next decade. It also recommends a 15x increase in current deep tech and climate tech investment levels.

Making the UK’s tech industry more accessible to founders and employees from unrepresented backgrounds could unlock a further $400bn in the economy, Tech Nation said.

Elizabeth Scott MBE, client engagement director at Tech Nation, said: “There is outsized growth to be achieved by backing under-represented founders who have identified and are best placed to execute on disruptive opportunities.

“While the data shows that some progress is being made, it’s slow and we all know that UK tech still has a lot of work to do.”

Tech exit drought

Tech Nation added that the UK needs to create more incentives for UK firms to complete “high-value exits”, which it said could unlock an extra $550bn in value.

The UK has consistently lagged behind the US for tech IPOs. Earlier this month, Cambridge-headquartered chip designer Arm opted for a US-only listing in a blow to London’s public markets.

London-listed Noventiq recently announced it was looking into a dual listing on the US Nasdaq as a result of “very limited trading volume” in the UK.

According to Tech Nation’s findings, based on Dealroom data, UK scaleups have created $583bn in exit value since 2014. This could rise to $2tn in the coming decade with the right support, Tech Nation said.

Dr George Windsor, data and research director at Tech Nation, said that UK tech is “at an inflection point, with a profound opportunity for future growth”.

It comes amid challenging economic headwinds that triggered a decline in startup funding last year, bringing an end to an investment boom fuelled by low-interest rates. Last year, UK tech funding dropped by 28% compared to the 2021 peak – a smaller drop than the 32% global figure.

The number of new UK unicorns – private companies valued at $1bn or more – also declined to just 4%.

At the end of the month, Tech Nation will cease operations after losing out on a £12m government grant to a bid by Barclays Eagle Labs.

Since it was launched by then-Prime Minister David Cameron in 2010, Tech Nation has had a hand in the development of some of the UK’s most well-known startups, including Revolut, Darktrace and Deliveroo. Its alumni have collectively raised over £28bn.

“We urge ecosystem stakeholders, investors and government to continue optimising the business environment for tech businesses, from opening up new pathways for talent to increasing sources of funding,” said Gerard Grech, chief executive of Tech Nation.

Grech added: “Despite the challenging headwinds at present, I’m optimistic about the next decade and the UK’s ambition to become a science and technology powerhouse.”