If I asked you to quickly describe the UK in, let’s say, four or five words, you’d probably mention some facts such as that it rains a lot there, they eat fish and chips, they enjoy drinking tea, and probably something related to Brexit would also come to your mind. But stereotypes aside, the UK is also the home of magical creatures as unicorns– and not only because of J.K. Rowling’s books-, but because of some great startups that have become valuable enough to obtain that name, as it’s the case of Revolut, Just eat, eTORO, or Deliveroo.
UK: home of unicorns
Currently, the UK headquarters 42 active unicorns, most of them located in London, and they belong to areas such as fintech, artificial intelligence, cybersecurity, or healthcare, being FinTech the most common industry for the UK-based unicorns.
In fact, the UK has the largest number of unicorns in Europe, and according to the Digital Economy Council, it ranks fourth worldwide, given that 91 unicorns were UK-based in 2021 and there are a total of 116 billion-dollar companies in the UK.
Taking this information into account, one may wonder, how is that possible? What is the United Kingdom feeding companies to make them become unicorns?
What makes the UK so innovative?
It is claimed that the UK is one of the best locations in the world to start a business, and one of the main reasons is its no-secret ingredient to feed startups: innovation.
Just like humans need water to live, companies need innovation to prosper. The UK knows it and consequently, it allocates a considerable amount of money to foster research and development, and also has designed a system to help companies cover some costs derived from investing in innovation. It is the case of the R&D Tax Credits, which is a scheme launched in the 2000s with the objective of covering up to 33% of the costs tech startups face when tackling technological or scientific uncertainty.
In addition, the Seed Enterprise Investment Scheme, also called SEIS, is another scheme that offers up to £150,000 for companies with less than 25 full-time employees. This program is a tax relief that can back up to 78% of companies’ investments during their first year, and its main objective is to encourage investments in early-stage startups and businesses across the UK.
The UK invests in innovation in different ways, such as Silicon Valley-style venture capital investment, government grants or crowdfunding, the latest being one of the most popular methods for raising funding for the UK unicorns; platforms suchs CrowdCube and Seedrs are the most popular ones. But also, the grants provided by different entities have played an important role to feed these startups and help them reach the status of unicorns.
Top 3 UK grants
Innovate UK Smart Grants
Innovate UK is part of the UK Research and Innovation and invests up to £25 million in form of a grant in projects. Any area of technology is welcome, but it should be applicable to an area of economy.
Energy Entrepreneurs Fund
The Energy Entrepreneurs Fund offers grants with the objective of supporting the development of cutting-edge technologies, processes and products in sectors related to power production and energy efficiency. This year, the fund has launched its phase VI worth over £10 million.
British Council Grants
The British Council Grants are provided by the Newton Fund, whose objective is to promote innovation and research with partner countries, such as countries in Africa, Asia and Latin America, by funding research, workshop and travel. There are different projects and opportunities that can be funded across many countries in Europe- not exclusively in the UK-, and the amount of the grant depends on the individual project applied for.
Benefits of the UK innovation
The fact that the UK invests in research and innovation is an asset for founders and entrepreneurs who seek to develop their breakthrough ideas. However sad it may seem, cash is king, and as such, startups need money to grow and to innovate, so the more willing the countries are to contribute to fund innovation, the greater ideas and projects could get to see the light. The UK is therefore attracting many entrepreneurs and startups across Europe and even elsewhere, who find it easier to finance their projects in the UK than in their home countries. In the knowledge era, being able to attract entrepreneurial talent is the new oil.