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6 April 2021

Tech Nation report reveals Scale Ratio as key to Cambridge tech success

Cambridge is one of the UK’s most ‘mature, balanced ecosystem’ of scaling tech companies, according to a recent report by growth research platform Tech Nation, published in January 2021. The CB1 Estate is home to several top tech businesses across all scales, from Microsoft, Amazon and Apple to nCipher and Trustonic.

Scaling companies are companies that see increased revenue, without a substantial increase in costs. In the tech sector, these companies were responsible for driving 81% of the investment into the UK during 2019. These companies are creating high quality jobs and improving the lives of many. However, for healthy scaleups to grow, they must be nurtured by balanced ecosystems.

Technation’s Scale Ratio report explores the ecosystems of cities and sectors across the UK, showing the trajectory of UK tech’s growth and development across regional economies.

Using data from approximately 35,000 tech companies, the report compares the numbers of businesses at different scales (seed, early growth and late growth) to create the ‘Scale Ratio’; revealing that a 5:3:2 ratio of seed (50%), early growth (30%) and late growth (20%) is the golden ratio for investment*.

Cambridge – alongside Manchester and London – exhibits the 5:3:2 balance ratio; thought to be indicative of a mature, balanced ecosystem for high-performing regional tech hubs. “These clusters are well placed to benefit from the accelerated growth of late-stage companies while creating the next wave of tech scaleups,” the report says. A strong pipeline of seed-stage scaleups is crucial for sustained growth and inward investment.

Dr George Windsor, Head of Insights, Tech Nation:

“Tech scaleups hold the key to the UK’s competitiveness in the next decade through job creation and investment. Scaleups are already driving investment into UK tech, representing 81% of the UK total and creating employment, with approximately 150,000 jobs in 2019. From established firms to startups, it’s important to remember that companies at all stages make up the local and regional economies that give UK tech its global reputation.”

* The report defines ‘seed’ as a company of fewer than 10 people and/or less than £1m in funding; ‘early stage’ as 11-50 employees and/or £1-10m funding and ‘late stage’ as more than 50 people and/or funding of over £10m.

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