28 July 2023
The number of new technology incorporations in the UK during the first half of 2023 is on track to overtake 2022’s figures if growth continues at the same rate – demonstrating the health of the UK tech sector.
Our analysis of Companies House data shows a total of 24,437 technology companies have been incorporated so far this year, which accounts for 53% of the 46,474 incorporations in 2022*. Ten out of 12 regions in the UK have already reached 50% of last year’s incorporations, evidencing the strong growth across the country which isn’t limited to the UK’s capital.
However, there has been a minor slowdown in the second quarter of 2023, with incorporations dropping slightly from 12,342 in Q1 to 12,095 in Q2. Is this a sign that technology incorporations are peaking?
It’s no surprise to see a fall, as a reflection of the myriad of economic pressures which are starting to bite in the tech sector. Rising interest rates and economic uncertainty have created a challenging environment for investment which has been reflected in a general slowdown in deal activity from mid-2022.
Layoffs continue to be an area of concern. Sustained entrepreneurship has meant the early-stage tech ecosystem remains fruitful, which could have been helped by layoffs of talented individuals who decided to bring their own ideas to life. In some cases, the large tech loss, has been a start-up’s gain. The UK is home to some of the most exciting and emergent technology companies in the world – including the fast-growing field of artificial intelligence.
Funding and access to capital remains the key challenge for technology businesses, and crucial if the country wants to compete on the global stage. Some recent positive news was the UK chancellor Jeremy Hunt’s Mansion House Compact, which in collaboration with many of the UK’s largest defined contribution pension schemes, representing around two-thirds of the UK’s entire DC workplace market, commits to allocating at least 5% of their default funds to unlisted equities by 2030. The compact is designed to unlock billions in investment into high growth companies. Within early-stage tech this funding will be hugely welcomed and could be a driving force to reinvigorate the tech space.
While it’s far from plain sailing for the tech industry as it’s no longer shielded from the pressures that other sectors have been facing for much longer periods, the incorporation figures are encouraging and show it’s far from the end of the sector’s growth journey.
Percentage of 2022 tech company incorporations achieved in H1 2023
|Region||2022||H1 2023||H1 2023 as a % of 2022|
|East of England||2,881
|Yorkshire and The Humber||1,583