• What does 17 years of Tech Track 100 reveal about UK Tech companies?
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What does 17 years of Tech Track 100 reveal about UK Tech companies?

11 September 2017

Tony Spillett , Tax Partner & National Head of Technology and Media |

The 2017 Tech Track 100 of private technology companies sets several records. It also highlights how fast-growing technology companies are a driving force in the UK economy.

The companies on this year’s list, which rankings are based on compound growth in sales over the last three years, boast of an average sales growth of 99% a year. That is a new record for the 17 years that Fast Track, an Oxford-based research company, has compiled the lists. BDO has worked with Fast Track, attending 50 company visits, as sponsors of the Tech Track 100.  

This year’s companies had combined sales of £2.9 billion. They employ more than 15,000 staff and over the last three years have cumulatively filled 11,830 new positions – admittedly in part through making acquisitions. In comparison, companies in the first Tech Track 100 from 2001 had total sales of £414 million and a combined work force of 5,270 staff.

In connection with the launch of this year’s list, I have taken a look back through some of the previous Tech Track 100 tables. Below are some of the trends they reveal.

High Growth British software businesses rule

Looking through the list, software companies make up the biggest subindustry, with 21 companies. This picture is similar to what we have seen over the last few years. Interestingly, IT consulting and services companies are not a major category in this year’s league table (partly due to a change in the criteria to focus more on companies who develop and own their IP).

Rapid changes and disruption through new technologies characterises the TMT space. The Tech Track 100 mirrors this in its list of subindustries. A major re-labelling took place in 2014-2015 (including the introduction of Fintech as a category). However, looking back through the data from 2005 to 2014 shows that software has remained strong throughout.

A slight side note: some of the subindustries that haven’t made the top ten, such as health, have seen activity throughout the period. I mention health as it’s one of the areas within tech which I expect to see grow rapidly over the coming years, as AI and machine learning makes its presence felt in the space.

London in the driver’s seat

A clear majority of the companies in this year’s league table are based in London (57), followed by the southeast (12).

This is no different from previous years’ editions of the Tech Track 100 league table but is slightly more concentrated than last year. As can be seen in this map of companies from between 2010 and today, the capital is indeed driving activity.

However, comparing with previous years’ editions does reveal a number of developments. One is that we have seen a marked rise in activity in East London, while the M3/A3 corridor has dropped a little. North of the border, Edinburgh seems to be the clear tech hub, while activity in North England seems centred around Manchester.

Younger companies return

Tech Track 100 companies generally fit the description of young and dynamic, with 98 of this year’s entrants founded after 2000. Of those, 20 were founded within the last five years.

While it might border on pedantic, I’ve calculated the average age of this year’s entrants to be 8.47 years (to be unquestionably pedantic, that equals 3,091.55 days), and graphed out how that compares to previous years.

As evident in the figures, the entrants from the last few years are younger than their predecessors. While hard to make a sweeping, general statement based on these figures alone, I would argue that it reflects well on the state – and growth potential – of British technology companies. It is an indication that these companies are working with a market where potential clients are unafraid of signing on with relatively young companies, as long as their solutions are innovative and can help them thrive.

Much more to see

These are just a couple of highlights from the Tech Track 2017 report, which includes a lot of other insights, including:

  • 54 of the companies on the league table are majority-owned by an entrepreneur and/or founders, while 36 are owned by private equity or venture capital firms, seven by business angels, and three by management
  • Software companies in this year’s league table generated sales of £324m and employed 2,850 staff in their latest year
  • Fintech’s rise continues. Fintech companies on the league table generated sales of £614 million last year, and employed around 3,000 staff
  • The blessing of the Tech Track? Office of National Statistics data shows that around half of start-ups fail within four years. For companies who have featured on the Tech Track 100 lists over the years, that number is less than 10%.

About Tech Track

The Tech Track 100 adopts the amended London Stock Exchange’s (LSE) techMARK definition of a technology company as one that shows a ‘commitment to innovation, research and product development’ and operates in sectors including software, internet, telecoms and biotech.

Companies providing media and telecoms goods or services are also covered.

Qualification criteria companies were ranked by growth in sales over their latest three years of available accounts, predominantly between 2013 and 2016, or 2014 and 2017.

Tech Track 100 companies are not required to be in profit. 60 companies on this year’s league table reported an operating profit in their latest financial year with 11 having an OP margin of more than 20%. Combined profits of the 60 companies were £171.3m in 2016/17

Read the full report and download a free copy below.