The year 2001 marked some seminal moments in the world of consumer technology. Wikipedia launched, Apple unveiled the iPod, and Microsoft released Windows XP and Xbox, all against the backdrop of the dotcom crash.
It was also the inaugural year of the Tech Track 100, a ranking of Britain’s fastest-growing private tech firms that was published in The Sunday Times. Early editions of the league table spotted fledgling companies exploiting new technologies that have since developed into corporate successes, with some floating on the stock market. Notable examples include financial website Moneysupermarket.com (£990m market value), chip developer CSR (£1.1bn market value) and biotech business Abcam (£765m market value).
The make-up of the first league table contrasts with this year’s crop of companies and offers an insight into the evolution of the UK tech industry. In 2001, more than a third (36) of the companies were software developers, fuelled by the dotcom boom of the late 1990s. The growth of the nascent internet and mobile markets propelled 13 telecoms firms on to the list, while database management, systems integration, and media and photography also featured strongly (10 firms each).
The face of tech companies in 2014
Fast forward to 2014 and the picture is very different. This year’s publication, produced by Oxford-based research company Fast Track and sponsored by Hiscox, charts the rise of new tech sectors such as mobile platform development (15 firms), digital advertising (13), online consumer services (10) and fintech (7). Software development is still the top industry, but now only accounts for a fifth of the table (20), followed by internet and network services with 16. Telecoms have shrunk to become the smallest sector (6).
What does this tell us about the changing nature of Britain’s tech scene and the companies that emerge and gain traction, fulfilling their promise and adding substance to what can often be hype?
The pace of innovation in the exploitation of the internet is well-documented and that is reflected in the types of companies that achieve a place on the table. Substantial new business have been created that did not exist 15 years ago – such as global giants Facebook, Google, and China’s Alibaba – which recently floated on the New York stock exchange valued at £141bn.
One industry observer that has witnessed the change is Sean Duffy, managing director at Barclays, who leads their national TMT team. Barclays has sponsored Tech Track 100 since 2009 and Duffy has been in the business for more than 10 years.
“The tech scene in the UK is vibrant,” he says. “You only need to judge that by the amount of tech venture capital money flooding in.” This flow helps create a buzz that encourages homegrown and overseas entrepreneurs, who can tap both local and international talent as they build their new ventures.
Duffy says the internet has changed the game for many industries and has already evolved from its initial ‘Wild West’ days. “We are probably at the beginning of what the internet can do and there is still no limit. The capacity of the internet to change anything is untapped,” he says, pointing to the recent £10m ‘series A’ funding of Purplebricks.com, an online-only estate agent. “You would have thought that would have been done many moons ago.”
A sector that keeps growing
Tech Track 100 has followed the rapid rise of the internet, with online shopping, gaming websites, price comparison, cloud computing and social media all reflected in the listings. Notable examples include takeaway website Just Eat, founded in 2001 and now worth £1.6bn, as well as bookmaker bet365, which moved online in 2001 and now generates sales of £1.4bn.
In fact, internet shopping is now considered so commonplace that online retailers, such as Graze.com, Naked Wines and BathEmpire.com, have migrated to the Fast Track 100 list of non-tech firms. Such companies are still ground-breaking, but the tech innovation that gave them the edge is now secondary to gaining market share, investing in customer service and managing the physical logistics of their supply chains.
That said, the growth in internet retail has inevitably created demand for online consumer services, a common industry on this year’s Tech Track 100 league table. This sector includes Edinburgh-based travel search engine Skyscanner, founded in 2001 and valued at £500m last year when it secured investment from Sequoia Capital – a rare foray into the British Isles for this Silicon Valley venture capital giant.
Mobile is another fast-growing area in the tech space, and this year there are 15 Tech Track 100 firms producing content for mobile platforms. These include app developers and mobile marketers, such as smartphone keyboard firm SwiftKey and MobileWebAdz, which runs 25bn ads a month.
Innovation in financial technology is also a common theme in this year’s Tech Track 100, with seven fintech firms on the list including the top-ranked company, LMAX Exchange, a foreign exchange trading platform, and peer-to-peer lender Zopa. These firms are redefining the financial services arena by devising new models for payments, banking, trading and lending.
But what will the Tech Track 100 of the future look like? It is tempting to dodge the question as most people will agree it is impossible to predict. If our recent league tables give an indication we would expect the internet and mobile devices to continue to play a prominent role, and we will look for more new companies commercially exploiting such trends as big data, wearable technology, device monitoring and 3D printing, on future lists.
Three of the 10 companies that appeared in last year’s Ones to Watch feature within Tech Track 100 progressed on to the 2014 league table. They were SwiftKey, collaboration software firm HighQ, and digital advertising services provider Crimtan. This year’s Ones to Watch include laser designer M Squared Lasers, data science consultancy Black Swan Data, and genetic testing company Elucigene Diagnostics. We will monitor how their businesses will perform.
Braver men than me are predicting the future. Skyscanner, for example, prophesies hotels on the moon, sub-aquatic holidays, and even holographic airport staff by 2024.
Whether British tech firms can position themselves to benefit from such predictions remains to be seen.
Read more information about the Sunday Times Hiscox Tech Track 100 here
Read Hiscox’s analysis of the 2014 Tech Track 100 here