Tech City UK's Future Fifty start-ups raise £470 million funding

UK start-ups on a government-backed growth scheme raised 470 million in the first nine months of 2015 - 63 per cent more funding than they received over the whole of last year.

The companies in question are part of government quango Tech City UK's Future Fifty Programme, a collection of Britain's fastest growing scale-ups, and Tech City UK said the total amount raised by entrepreneurs on the scheme now stands at 1.1 billion.

Gerard Grech, CEO of Tech City UK, told IT Pro: "The conditions for growth have been consistently optimised over the last few years, so we're seeing a lot more fast-growth companies in the system and these companies are growing extremely quickly."

This expansion is underlined by a third of Future Fifty companies' 9,000 employees being based outside of the UK, Grech's organisation claimed, with these start-ups now operating in 170 countries, while 22 of the firms are run by first-time founders.

One Future Fifty member, FX trading business LMAX Exchange, said being part of the programme was more beneficial to smaller start-ups than those further along in their development.

CEO David Mercer told IT Pro: "They're more useful to the smaller companies than us perhaps, for practical support or advice. They provide access to the government, and other government initiatives that start-ups and young tech companies wouldn't have access to.

"If investors are looking they're almost looking to see who's been accredited before, recognised before. There's so many new technology companies setting up, when somebody's looking around I think they need to have various filters and this is one."

Mercer said the support and involvement of Tech City UK is "as direct as we want it to be", and being a Future Fifty member helps attract top tech talent in an increasingly crowded marketplace.

"Any awards or memberships like this are useful when attracting UK talent," he said. "Certainly for us, winning technology awards is certainly more important than winning awards in the capital market space. Technologists are the new rock stars, they're scarce and it's hard to attract the key ones. They look for interesting challenges and interesting companies."

Grech said London's Tech City hub continues to grow rapidly, and the city was this week named as the EU's best city for start-ups.

But Tech City UK's recent Tech Nation research also revealed that the UK's tech industry employs 1.46 million people across Britain, and Grech said the formation of Tech North, though being launched at a slow pace, demonstrated his organisation's commitment to promoting UK start-ups outside of London, after criticism it has been too focused on the city.

"Tech North, which is actually supporting the seven Northern cities, is very much about capitalising growth and change and making sure it has an impact on making businesses grow, but also making sure that people that have a role to play in the economic growth of a region," he said.

He added: "We're a small team, but I think Tech Nation is very inclusive in the way that it's making sure the UK's definitely at the forefront of digital innovation and that's a way of policymakers being aware of what's going on in the UK, but also making sure that international investors get a full view of the opportunities they have in the UK."

But with a high-density of investors in London, Grech called on Northern councils and universities to prioritise digital growth strategies in their areas, too.

"Cities have to do their bit prioritising digital in their growth strategies locally, ensure universities and colleges are contributing to the growth of the sector locally," he said.

On how Future Fifty membership can help as a start-up grows into a scale-up and beyond, Rhydian Lewis, CEO of Future Fifty member, and peer-to-peer lending site RateSetter, said the programme provides the ability to learn from other start-ups in similar situations.

"Scaling a business presents founders with an entirely new set of challenges to those experience in a company's early days," he said. "Overcoming these barriers often requires a different mindset, an appreciation that what worked at a start-up with 15 members of staff might not cut it when your team is in the hundreds.

"We've always valued being part of the Future Fifty programme, which provides a unique feed-back loop to the government in addition to tangible support. Being part of that community not only provides us with direct benefits, such as peer-learning, but ensures that our experiences help shape the wider scale-up ecosystem."