Nearly 20,000 technology businesses were started in the Information and Communication sector in the UK in 2020. Job creation from the tech sector is also growing rapidly. There were 116,000 live vacancies in the first week in March, representing a recovery to pre-pandemic levels.
The Data came from the Department of Digital, Culture Media and Sport, based on figures from the Office of National Statistics (ONS) and Companies House. It shows that between January and December 2020, 19,465 new businesses were registered in the Information and Communication sector. This sector covers software development and applications, web building, computer programming and consultancy.
More entrepreneurs launched businesses across the Information and Communication category than in agriculture (4,955), production (14,435), motoring (6,405), finance (10,730). In addition to real estate (12,135), education (3,125), health and social care (5,915), arts, entertainment and recreation (10,830).
In total, 407,505 businesses were born in 2020 across all sectors, according to the ONS. This represents the highest yearly total since 2017. In fact, business births have been rising at an average of 4% year-on-year for the past four years.
Bouncing back after Covid-19
The ONS data shows that business births were strong across all regions. While most businesses were born in London (107,310), followed by the South East (54,730). Company incorporation was also strong in the North West (43,420), Yorkshire and Humber (25,270) and South West (26,520). In the technology sector four cities outside London – Oxford, Leeds, Newcastle, Glasgow – achieved record levels of VC investment in 2020.
The technology sector has shown its ability to bounce back after the coronavirus pandemic. UK tech companies are actively hiring, as a result of strong levels of venture capital investment in the sector. As a result, there is increased demand for digital products and services from consumers and businesses. One in 10 advertised job roles are in the tech sector, according to figures compiled by Job search engine Adzuna.
Adzuna has released new figures that showed 116,000 live tech jobs were advertised in March. This has increased from the January figure of 85,000 roles advertised. Vacancy levels in February (111,000) and March (116,000 so far). This trend highlights that technology sector is almost back to the same level of hiring as last year. Before the impact of the coronavirus pandemic on the economy. February 2020 saw 111,000 tech jobs advertised and average salaries in the IT sector reached £54,726 (compared with £51,219 12 months ago).
A tech business born every 30 minutes
According to Digital Secretary Oliver Dowden, “Back in 2018 a new tech business was born in the UK every hour. We said we wanted to double that rate and we have. Tech will lead the way in helping us build back better. It’s fantastic to see so many people kicking-off new businesses and creating thousands of jobs up and down the country.”
Julia Hawkins, general partner at LocalGlobe, which has invested in more than one company founded in 2020, said: “Dynamic companies are created in challenging circumstances. There’s an overwhelming need for digital tools and services over the past year. It’s no wonder that new tech businesses are starting up to counteract the problems of 2020. With more investment appetite than ever and an urgent need to solve the issues we’re facing. The new enterprises established last year could become the future tech giants defining the way we live and work in years to come.”
Enterprise Times: What this means for business?
2020 was a record year for VC investment in the UK. Technology companies received $15bn worth of investment, a figure higher than France and Germany combined. Despite the economic downturn caused by the global coronavirus pandemic, Crunchbase records show $5.7bn was invested in startups formed in 2020 across the world.
COVID-19 has speed up digital trends taking place throughout society. It has accelerated eCommerce penetration as a percentage of total retail sales to 21.3% in 2020. So, it’s not surprising that the top 10 startups founded in 2020, in terms of capital raised, are in sectors that were vital during the pandemic. Namely insurance, e-commerce, online payments, healthcare and medical, and mobility. The key for these new businesses will be understanding the new customer behaviours and the shifting landscape in how consumers shop.