Two thirds (65 per cent) of small and medium-sized tech and telecom firms plan to grow dramatically or moderately over the next two years, according to a report launched by venture capital investor Albion Ventures.
Only 7 per cent think they will shrink or wind down.
Based on interviews with more than1,000 SMEs including 150 tech and telco firms, the fourth Albion Growth Report sheds light on the factors that create and impede growth in post-Brexit Britain.
With nearly half (48 per cent) of tech entrepreneurs planning to grow their headcount over the next two years, finding skilled staff has emerged as the biggest challenge they face (48 per cent), followed by accessing new markets (31 per cent) participating in public procurement processes, leaving the EU, and broader political uncertainty (30 per cent).
The report shows that anti-Brexit sentiment is stronger among tech business leaders than other SME sectors; half (49 per cent) of tech entrepreneurs think that Brexit will hinder their ability to enter new markets compared to an all-sector average figure of 41 per cent. However, over a third (36 per cent) of tech CEOs are optimistic about Brexit and expect it to help their chances of winning new business.
According to the report, more than three quarters (76 per cent) of small and medium-sized tech firms would consider investment from venture capital, private equity firms or business angels, the highest of any SME business sector recorded. Almost four in 10 (37 per cent) of tech entrepreneurs said they would deploy equity finance to develop their business and a quarter (23 per cent) to invest in new products and services and recruit new staff.
Recent figures put the UK digital technology industry’s value at GBP161 billion in the UK, with revenue generated by 58,000 technology businesses nationwide. This sector of the UK economy grew 32 per cent faster than the rest of the UK (2010-2014) and employs 1.56 million people.
Ed Lascelles, partner at Albion Ventures, says: “This data supports what we are seeing in our portfolio, where our tech companies in particular find it hard to recruit top talent. Brexit has not helped this as the attractiveness of moving to the UK has diminished for many European developers.
“Nonetheless, the tech sector continues to grow rapidly and the UK still leads in some of the most exciting areas of innovation, such as artificial intelligence.”
