The number of technology companies incorporated in the UK jumped by 62% in 2021, with more than 38,200 tech firms registering as limited companies, according to an analysis of Companies House data.
London accounted for the highest number of incorporations, with 18,549, which translates to a 94% increase on the 9,572 London tech businesses incorporated in 2020. This was follwed by the South East, with 4,115 (up 35%), and the North West, with 2,371 (up 43%).
In terms of the highest growth areas outside of London, the analysis conducted by audit, tax and consulting firm RSM UK showed the number of tech companies incorporated in the West Midlands grew by 61%, the North East by 59%, and Northern Ireland by 44%.
Overall, 38,240 tech firms were incorporated in the UK in 2021, up from 23,579 in 2020. RSM UK collated data on tech business creation for the past three years, with 2021 having the highest number of incorporations within that time period.
“Our analysis shows an unprecedented level of tech incorporations. As expected, London saw the biggest take-up, but the regions aren’t getting left behind. To be seeing incorporations increasing by between 40% and 60% in regions throughout the UK is very encouraging, and it is clear to see that the tech sector has thrived in conditions where other industries have either slowed or declined,” said David Blacher, partner and head of media and technology at RSM UK.
“Covid-19 has encouraged more businesses to embrace technology, both to operate successfully during periods of disruption and to adapt to shifting consumer demands. The roll-out of 5G and experimentation with new ideas such as the metaverse and crypto has led to more companies perceiving themselves as a tech business, which wouldn’t have been the case in the past.”
“To see incorporations increasing by between 40% and 60% in regions throughout the UK is very encouraging, and it is clear the tech sector has thrived in conditions where other industries have either slowed or declined” David Blacher, RSM UK
Separate Office for National statistics (ONS) data analysed and released by industry body Tech Nation in March 2021 showed that a new technology business was created every half an hour in 2020, with nearly 19,500 registering in total across the UK.
That increase in the number of technology businesses coincided with a record year for venture capital (VC) investment, which saw UK-based technology firms raise a total of $15bn – a significant proportion of the $43.1bn raised by European companies in 2020. However, most of the capital raised by UK firms ($10.5bn) went to those in London.
Other sectors also experienced high levels of business creation in 2020 – including real estate (12,135); arts, entertainment and recreation (10,830); and finance (10,730) – with a total of 407,505 across all sectors.
In March 2022, the UK’s tech ecosystem was valued at $942bn after growing by 42% between 2020 and 2021, largely as result of greater investment in software and digital companies at the start of the pandemic.
The increased investment has also helped catapult a number of unicorns (companies valued at $1bn or more) to decacorn status (companies worth over $10bn), of which there are now 13 in the UK.
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