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UK records a 16% increase in new tech startups

RSM credits the growth to an increase in demand for technology to support remote working

The number of new UK tech startups increased by almost 16% in the third quarter of 2020, according to Companies House data analysed by consulting firm RSM.

The three-month period saw the incorporation of 3,641 tech startups, a 15.5% rise compared to the first quarter of 2020 when 3,150 new startups were recorded.

Scotland saw the strongest growth in the number of new tech startups (a 57% increase since Q1), followed by the West Midlands (48%), Northern Ireland (44%), the East Midlands (36%), and north-east England (29%).

Despite most areas of the UK experiencing growth in the number of tech startups, areas such as Wales, the east of England, and Yorkshire and the Humber saw declines of 6%, 1.4%, and 0.8%, respectively. 

Commenting on the findings, RSM’s head of the technology, media and telecoms team, David Blacher, said that “at a time when many sectors are feeling crippled by the impact of the pandemic, it is encouraging to see the tech industry experiencing growth”. 

“This can be attributed in part to the lockdown, which drove an increase in demand for technology to support remote working. The huge increase in working from home, as well as leisure time spent at home, has meant far greater need for digital technology and a growing demand for digital entertainment,” he added.

The news comes as research from Tech Nation and Dealroom found that investment into UK startups addressing one or more of the UN Sustainable Development Goals increased almost ten-fold between 2014 and 2019.

In 2020 so far, the UK’s impact startups have managed to raise €1.4 billion (£1.27 billion) in capital, with the largest rounds going to Octopus Energy and Cambridge-based FiveAI.

Other significant UK impact startups include Arrival, Connexin, Tokamak Energy, Compass Pathways, Cera, Highview Power, and The Meatless Farm Company (Leeds), which have a combined 390 job vacancies in the UK, according to database lists from Impact & Innovation.

Tech Nation head of insights George Windsor said that UK tech must continue to play a key part in tackling some of the world's toughest challenges, including climate change”.

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“UK impact tech firms have come on leaps and bounds over the last six years - with nearly 10x more investment made into groundbreaking companies in 2020 than 2014,” he added.

“This revolution is happening right across the country. Tech Nation is pleased to work with some of the leading companies in this space through our world-first Net Zero programme - ensuring that companies working in this sector can scale to have the greatest impact.”

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