The UK has been ranked the fourth most promising market for innovation, disruption and technology, behind the US and China.
• Shanghai, Tokyo, London seen as leading tech hubs outside Silicon Valley/San Francisco
• Significantly more startups adding jobs after 2018
The UK has been ranked the 4th most promising market for innovation, disruption and technology breakthroughs that have global impact, behind the US and China, according to KPMG’s 2018 Global Technology Innovation Report.
Around a fifth (19%) of nearly 800 technology industry leaders surveyed globally named the UK as the 4th most promising market for tech breakthroughs behind China at 26%, and the US at 39%, which was ranked number one for the 2nd year in a row.
The report found that the U.K. tech sector had another strong year in 2017 despite macroeconomic headwinds, with businesses posting robust earnings growth and strong cash flows that have seen continued investment in R&D and acquisitions. The UK sector saw a record level of Venture Capital investment of US$4 billion, almost twice the level seen in 2016 and more than the combined investment seen in Germany, France, Spain and Ireland.
Commenting on the results, Tudor Aw, Head of Technology at KPMG in the UK said:
“The U.K. tech sector continues to go from strength to strength, with robust performance by mature tech companies and spectacular investment by VCs in emerging U.K. tech firms. Innovation from the UK technology industries continue to drive economic value and this year’s survey underscores that point.
“There can be no room for complacency however, and in that context, it is heartening to see the government continue to state its view that the tech sector is at the heart of its industrial strategy. This will be vital to ensuring the United Kingdom stays at the forefront of emerging technologies and remains attractive.”
London takes bronze in the cities ranking
Technology industry leaders were asked which three cities, in addition to Silicon Valley/San Francisco, will be the leading technology innovation hubs over the next 4 years. Unlike last year, when the US and China dominated the Top 10, this year’s Top 10 includes 1. Shanghai; 2. Tokyo; 3. London and New York; 5. Beijing and Singapore; 7. Seoul; 8. Tel Aviv and Bangalore; 10. Berlin;
London drew a strong 19% response rate with its Silicon Roundabout despite Brexit concerns whilst tech hub rival Berlin drew 8% (down from 10% a year ago). The capital’s vibrant tech scene continued to enhance its reputation as a magnet for both tech talent and investment among European cities with some US$3.4 billion of venture capital investment—four times as much as the next largest city, Paris (US$785 million) and more than the total investment in the next nine European cities during 2017.
Key factors behind the record level of investment in U.K. tech firms include availability of talent, London’s finance and services industry, multiculturalism, favourable time zone, language, stable legal system, fiscal/tax incentives, a mature ecosystem of advisors and first-class universities (U.K. institutions taking the top three places in Europe and seven out of the top ten).
Commenting on the findings Patrick Imbach, Head of KPMG’s Innovative startup practice added:
“Innovation has become decentralised globally with some cities making great progress while others still face macroeconomic and infrastructure challenges. Many factors affect a city’s perception as an innovation hub, including favourable government policies and incentives, accelerators, tech parks, corporate investment, state-of-the-art infrastructure and, in all cases, at least a few highly successful and wildly popular success stories. London has all of the right ingredients to continue to lead the way as an innovative and supportive place to start and scale a business.”
Revenue growth now top innovation measurement
Technology business leaders globally said revenue growth is the top metric to measure the success of tech innovation in their organizations, replacing patents, which fell out of the top three. Geographically, respondents from the U.S. (38%), China and the U.K. (37% each), identified revenue growth as the top indicator to measure the value of innovation. Market share and return on investment were second and third.
Employee hiring set to grow due to confidence in economic growth
More than 90%of the global poll said they would hire up to 100 employees in the near future, a sharp increase from 68% a year ago. A stronger economic climate was reflected in the global startup survey responses and reflected in their optimistic plans to hire new employees, although one third indicated they won’t be hiring over the next 12 months.
For further information please contact:
Tech City and the London Region, and Trade & SMEs
Emma Murray - Communications Manager
T: +44 (0)20 7694 6506M
M: +44 (0)7956 629 361E
About the KPMG 2018 Global Technology Innovation report
Being released in two parts, the annual report captures tech innovation findings based on the views of 767 business executives globally (including 120 US) from companies, venture capital firms, and other investors that focus on technology. Part 1, Global technology innovation hubs: Forging new paths to outpace the competition, was released today.
UK policies to support tech and innovation
The government has reaffirmed previous policy that it sees the tech sector at the heart of its industrial strategy. Developments during the year included:
— Committing an additional US$32 billion to R&D to stimulate innovation
— Committing US$695 million to invest in AI, 5G and full fiber broadband infrastructure
— Investment of US$750 million to support the growth of electric cars and charging points
— Regulatory innovation to encourage the fintech sector and establish the United Kingdom as a clear leader in digital innovation
— Creating a new US$3.5 billion fund via the British Business Bank to ensure more fast-growth businesses have access to the capital they need to become the next U.K. unicorn
— Helping pension funds to finance the United Kingdom’s scaling digital businesses
— Funds of US$104 million to develop digital skills distance learning courses and improve connectivity on trains
About KPMG International
KPMG is a global network of professional services firms providing Audit, Tax and Advisory services. We operate in 154 countries and territories and have 200,000 people working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. Each KPMG firm is a legally distinct and separate entity and describes itself as such.