The UK is home to nearly 3,500 deep tech companies based on emerging technologies, from AI and robotics to virtual reality, according to the UK’s first comprehensive report analysing the national deep tech ecosystem, commissioned by the Royal Academy of Engineering’s Enterprise Hub. However, the sector is dominated by men, with more than 77% of founding teams being all-male. Only 15% of founder teams are mixed gender and just 7.5% are founded solely by women.
Deep tech encompasses a broad and evolving spectrum of innovative technologies grounded in innovative engineering and cutting-edge scientific advances – they tend to be capital, time and R&D intensive.
The State of UK Deep Tech, based on data commissioned from Beauhurst, reveals that the deep tech sector has a more pronounced gender disparity than the wider high-growth ecosystem[1], and the report attributes this, at least in part, to the historically low proportion of women studying STEM subjects in the UK[2]. It may also reflect investor attitudes and the need for more robust support for women entrepreneurs.
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The report also indicates that a complex funding environment continues to challenge the growth of UK deep tech companies. Following high levels of investment activity in 2021, recent investment activity has slowed with the total number of deals secured decreasing from a peak of 1,194 in 2021 to 1,181 in 2022. Over 50% of deep tech companies are currently at seed stage, with active scaleups representing less than 6% of all deep tech companies in the UK, highlighting an urgent need to improve funding access to enable early-stage deep tech companies to upscale and create a more competitive UK ecosystem.
The report assembles the first detailed picture of the deep tech ecosystem in the UK, analysing the geographic distribution of this key part of the economy and identifying sub-sectors, level of investment, investors and investees, growth trajectories, accelerators, funding and leadership composition - including gender, age, and nationality. It aims to inform wider debate and future policy to support engineering entrepreneurs.
Findings in the report include:
The State of UK Deep Tech will also continue to inform the work of the Royal Academy of Engineering’s Enterprise Hub in supporting deep tech entrepreneurs. Celebrating its 10th anniversary in 2023, the Enterprise Hub supports some of the sector’s fastest-growing companies such as Manchester-based Holiferm and Edinburgh-based Crover, referenced in the report.
Michelle Donelan, Secretary of State for Science, Innovation and Technology, said:
“We are a global leader in artificial intelligence, quantum computing and other emerging forms of deep tech. To maintain this position, we are working closely with partners like the Royal Academy of Engineering to harness talent up and down our country.
“I am committed to boosting STEM up-take among people from all backgrounds, to ensure everyone can fulfil their potential as we build a highly skilled workforce in the industries of the future.
“At the same time, we are backing innovation here and now; our recent reforms to rules on spinouts stakes will support more innovators to turn their ideas into blossoming businesses that create those expert jobs and grow our economy.”
Ana Avaliani, Director of the Royal Academy of Engineering’s Enterprise Hub, said:
“The State of UK Deep Tech report presents a comprehensive exploration of the cutting-edge advancements and technological landscape in the UK. It offers insights into current trends, challenges, and the transformative potential that deep tech brings to the UK’s technological evolution.
“While there is much to celebrate, the State of UK Deep Tech underlines the important work still to be done to support deep tech founders to scale and grow their companies in the UK. It is also vital for a more successful, inclusive ecosystem that the gender imbalance in deep tech leadership is addressed and that leadership diversity in deep tech enterprises is championed.
“This report reflects the progress that a thriving ecosystem can achieve in shaping the critical technologies for the future, developing solutions in everything from AI to semiconductors, engineeirng biology to telecommunications. Deep tech is engineering a legacy of excellence with companies creating economic growth and innovations right across the UK that are pushing the boundaries of what’s possible.”
[1] For the wider high-growth ecosystem, the equivalent figures are 75.4%, 11.8%, and 12.8%, respectively
[2] Higher Education Statistics Agency, www.hesa.ac.uk