Overview

The Deloitte UK Technology Fast 50 programme recognises the world-class achievements of the UK tech sector and celebrates the innovation and entrepreneurship of high-growth tech-enabled companies. In this special 25th anniversary edition of the programme, our report focuses on 25 years of incredible success stories of Fast 50 companies and on this year’s cohort of Fast 50 companies, which are growing at a tremendous pace despite the volatile post-pandemic environment.

The Fast 50 awards programme has four categories: the Technology Fast 50; the Fast 50 Women in Leadership; the Regional Winners; and the Rising Star award. For the Technology Fast 50, Fast 50 Women in Leadership, and Regional Winners, rankings are based on four-year revenue growth rates. The four categories are described in more detail below. Of course, all companies must be technology companies, which requires them to meet at least one of the following criteria:

• Owns proprietary intellectual property or proprietary technology that contributes to a significant portion of the company’s operating revenues
• Manufactures a technology-related product
• Devotes a significant proportion of operating revenues to research and development of technology
• Is technology intensive, or uses its own unique technology to solve problems

The Deloitte UK Technology Fast 50 programme categories

The UK Technology Fast 50 is a ranking of the country’s 50 fastest-growing technology companies, based on percentage revenue growth over the last four years. It has been produced every year since 1998.

The Fast 50 Women in Leadership category is new to this year’s programme and recognises those companies within the Technology Fast 50 that are either led by a female CEO or have a founding team comprised of at least 50% women. The ranking is still judged on the same percentage revenue growth over the last four years as the UK Technology Fast 50 and has the same entry qualifications.

The Regional Winners category recognises the fastest-growing business within each region of the UK, based on where the company is headquartered. The ranking is determined by percentage revenue growth over the last four years and entry qualifications are the same as the UK Technology Fast 50.

The Rising Star award recognises the innovation and achievements of UK tech businesses that are leading the way but have not been in operation for four years and therefore do not qualify to enter the Technology Fast 50 awards. Deloitte and the Fast 50 sponsors nominate and name a Rising Star as part of the programme.

Equity investment can be critical for high-growth companies as it provides entrepreneurs and leaders with much-needed capital to help them grow and scale their businesses. It can also help companies to attract and retain top talent, as employees are often attracted to companies where they have the potential to share in the financial success of a company upon exit. Finally, equity investment can also give companies a valuable stamp of approval, which can help them to attract even more investment in the future. This breakdown provides some insight into the investors that have backed this year’s Fast 50.

Equity Gap is the most frequent funder of companies in this year’s Fast 50 based on a total of 245 equity investment deals since 2012. The angel investment syndicate focuses on high-growth companies based in Scotland. It often co-invests with Scottish Enterprise - a governmental body that focuses on the economic development of Scotland. The two funds co-invested into Sunamp (ranked 40), a company that develops thermal energy storage devices, on three occasions between March 2015 and October 2018, with the deals totalling £6.6m.

Equity crowdfunding platforms Seedrs and Crowdcube also feature among the top investors, having participated in 10 and five deals respectively. This shows the continued support crowdfunding platforms provide early-stage businesses and aligns with the investment activity in the UK’s wider high-growth ecosystem.

Charles Claisse
Partner, Head of Corporate, Deloitte Legal

Whilst the funding environment has become increasingly challenging, there remain significant pools of capital available for investment from both venture funds and, in later-stage businesses, private equity. In addition, businesses are also able to look to venture debt from both banks and a variety of debt funds offering “venture debt”.

Despite the challenging environment, we are not currently seeing the level of down rounds (i.e. lower valuations than on the last round) for later-stage businesses that might be expected - businesses are looking to avoid the negative implications of down rounds through flat rounds, extension rounds and other mechanisms including convertible debt.

Investors who are concerned about valuation are increasingly looking at how they structure liquidation preferences and whether any features beyond 1x return of money should be put into the capital structure to better capture risk and the cost of funds (indeed we have seen >1x preferences as being a mechanism to bridge differing valuation expectations, particularly to prevent a down round).

For early-stage businesses, the challenges in this environment are likely to feed more directly into a lower valuation but other terms are more standard - it is businesses at this stage that are typically having the most challenges raising capital but there are a number of tax incentives made available by the UK government that do support including R&D tax incentives and the ability to raise money using SEIS, EIS or fund VCT funds.

Software dominates the sector ranking for this year’s Fast 50 companies. Over the last 25 years, the sector has transformed the tech industry by making it possible for companies to offer new products and services that were not possible before and to create them faster and more cheaply. In the famous words of US venture capitalist Marc Andressen “Software is eating the world”. Fast 50 companies in this sector include Suffolk-based EO Charging, which develops software to support smart technology for electric vehicles, and London-based Cognism whose platform assists businesses in sourcing and ranking sales opportunities.

The fintech sector describes companies at the intersection of financial services and technology. Companies in this area provide a wide range of innovative and tech-enabled ways of delivering traditional financial services such as payments, lending, investing, and money transfer. The UK has real strengths in financial technology, reflecting London’s role as a major financial centre and the experience and expertise this creates in the economy. Layering this with the UK’s strengths in technology, supported by world-class universities, creates an environment in which financial innovation can flourish. Of course fintech can be found outside of London, for example Bristol-based LOQBOX which develops a suite of online financial tools for consumers, helping users to improve their credit ratings; and Railsr which develops an API that connects banks and fintech companies, facilitating the creation of new financial products and services.

While not as dominant as software and fintech, media and entertainment and healthcare, with four companies each, are also areas where the UK is historically strong. These are two sectors in which it is harder to scale companies, which is reflected in the lower population numbers. The environment for media and entertainment companies is increasingly volatile and companies in this area face significant competition as the barriers to entry are lowered by digital tools. Still, Fast 50 companies like Tripledot Studios are showing how creativity can be married with incredible financial performance.

Healthcare is also a challenging area as the sector is highly regulated. Wales-based Aparito, which develops mobile applications to deliver patient monitoring outside of the hospital, is showing how digital technologies can change the status quo.