Tech firms confident of navigating Covid crisis
Skyscanner: one of Scotland’s unicorns (pic: Terry Murden)
Britain’s tech firms believe they can navigate the coronavirus crisis after new figures showed they continue to attract the bulk of European investment.
In the first five months of the year, they raised $5.3bn compared to $4.1bn in the rest of the continent combined.
However, there are concerns that many of these deals were agreed in principle before the onset of the coronavirus, which has reset expectations.
Capital inflows in the second half of the year are unlikely to be as strong as those in 2019 and will leave lingering questions about the resilience of the tech sector.
Figures compiled by Tech Nation and Dealroom for the Digital Economy Council show that:
- Two-thirds expected revenues to drop by more than a quarter
- 39% of business to consumer companies saw March revenues drop by over 50%
- A third of companies have slowed hiring, while almost a half have frozen hiring
- Two-fifths of companies believe they have less than 12 months of funds
Even so, UK tech companies are still advertising vacancies and are optimistic that they can get through the crisis, according to the report which is more optimistic than some others published in recent weeks.
A survey of 100 tech startups and senior executives by Turing Fest at the end of April found that many startups would not survive the COVID-19 crisis without further government support.
That same month the UK Government unveiled its Future Fund of £250m of matched funding for startups, so that tech companies which are typically loss-making could access support.
In the first 12 days, 464 applications were received from companies. Small and medium-size businesses focusing on research and development will also benefit from £750m of grants and loans.
The Scottish government has also attempted to underpin SMEs, including those at a sensitive stage of development, though concerns remain that some are still not getting all the support they require.
In a letter to Scottish government ministers last month a dozen tech leaders warned that many companies “are incredibly apprehensive about using their cash reserves to keep their businesses going whilst they are unable to generate any significant revenue.”
Vacancies still growing
Tech Nation’s report shows that the sector now employs more than 2.93 million people across the UK with salaries that are, on average, £10,000 higher than other sectors. Salaries climbed between 3% and 9% in most tech clusters in 2019.
Advertised vacancies were continuing to climb at the start of 2020 before the coronavirus and lockdown took its toll. Despite this, more than 90,000 tech sector jobs were being advertised at the end of April. This is twice the number of openings in accounting and finance, the next sector with the most vacancies.
Although London is still a key driver of digital tech jobs and growth – accounting for 53% of advertised roles in 2019 and offering the highest average salaries – tech hubs in other cities continue to thrive.