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Professional services giant KMPG has launched its annual competition to identify and support the UK’s most innovative scale-ups, as the sector navigates a challenging investment landscape.
Now in its 12th year, the competition has served as a launchpad for a diverse range of startups – from healthtech pioneers to AI disruptors.
Previous finalists include notable names like Babylon Health, What3Words, and VividQ, and a number have gone on to secure international investment or achieve acquisition.
This year’s finalists will compete in a national pitch event in July, before representing the UK at the global finals held during Web Summit in Lisbon.
UK’s volatile investment landscape
The competition comes at a critical time for the UK’s tech ecosystem, as venture capital (VC) investment in British firms has dropped significantly in recent years.
What’s more, a recent report from the Academy of Engineering found that in the first half of 2024, 32.5 per cent of deep-tech venture capital (VC) deals for British companies involved no UK investors. That’s up from 29.8 per cent in 2023.
Lord Vallance of Balham, the science minister, said: “Too often, cutting-edge innovations and burgeoning companies are stymied in their growth or forced to leave the UK, due to a lack of access to capital.”
This is especially true for the UK’s tech startups, which have long depended on frictionless access to American customers and capital.
Russ Shaw CBE, founder of Global Tech Advocates and Tech London Advocates, warned that even a 10 per cent tariff could be “disastrous” for young firms in the tech space.
He told City AM: “Startups certainly have the most to lose from ‘Liberation Day’ – in times of financial difficulty, small firms tend to be the first to go.”
Despite this downturn in investment, the UK remains the leading tech hub in Europe by investment volume.
In the first half of 2024, UK startups secured $7.7bn in VC funding, according to KMPG’s Venture Pulse report, demonstrating a 2.8 per cent year on year increase in total value despite a 17.8 per cent drop in deal volume.
Impact and global reach
Last year’s winner, Halocycle, a plastics recycling startup, was recognised for its pioneering use of microwave technology to break down PVC and other chlorine-based materials.
The firm has since gained broader industry exposure and investor attention.
“The competition gave us a lot of exposure in the UK and put our brand on the global tech stage, which we would not have got otherwise,” said Dr Henrietta Boyd, co-founder of Halocycle.
“It also helped us bring a strong network across the tech sector to share ideas and explore collaboration.”
Policy support
While efforts such as the Advanced Research and Invention Agency (ARIA) a recent changes to R&D tax credits signal the government’s commitment to innovation, founders continue to voice concerns about access to growth-stage funding and scaling.
Industry bodies including TechUK and Innovate Finance have called for greater alignment between government, private capital and corporates to enable UK startups to scale globally.
Sir John Lazar, the academy’s president, said: “We feel we, as a country, need to upskill our venture capital community so they are not just focusing on pure software plays or fintech, which we are so good at in this country … but actually beginning to understand the importance of investing in deep tech”.
Vallance added: “We are delivering a fellowship that will make more investors aware of the formidable potential of the UK’s tech and life science sectors.”
Opportunity amid uncertainty
Despite headwinds, there are areas of significant growth across the UK tech scene.
KPMG reports that this year’s competition has seen strong interest from companies in AI, medtech and sustainability, reflecting broader trends in tech adoption across various sectors.
Companies will be judged on criteria including innovation, scalability and market potential. While the deadline for entries has not yet been announced, applications are open to tech-led or tech-enabled businesses across the UK.
