Diverse Founders in Advanced Digital Technology: A Summary
Lily Ruaah, 09 November 2023
Recently, we worked with Digital Catapult to bring you our report: Diverse Founders in Advanced Technology.
Digital Catapult partners with companies in five core advanced fields: immersive tech, quantum computing, distributed systems, future networks, and artificial intelligence/ machine learning (AI/ML)—these make up our digital technology companies.
It’s a huge market. There are currently 2,865 active digital technology companies in the UK. Over a decade spanning from 2013 to 2022, investors have recognised this potential, putting a staggering £20.6b in equity investments into these firms.
This unique report delves into the diversity of founders in firms within these domains, assessing equity investments by gender, age, ethnicity, nationality, and education.
Methodology
High-growth companies
Beauhurst identifies ambitious businesses using eight signals suggesting a company has high-growth potential.
Equity investment
To be included the report, any investment must be:
- Some form of equity investment
- Secured by a non-listed UK company
- Issued between 1 January 2013 and 31 December 2022
Announced and unannounced fundraisings
Unannounced fundraising is an investment made into a private company that is completed without press coverage or a statement from the recipient company or funds that invested. These transactions are an integral part of the UK’s high-growth economy, accounting for around 70% of all equity transactions.
To find out more on our data sources for this report, see the Data Methodology section.
Key findings across industry
High-growth company activity
2,076
number of high-growth companies in AI and ML
736
number of high-growth companies in future networks
492
number of high-growth companies in distributed systems
549
number of high-growth companies in immersive tech
118
number of high-growth companies in quantum
Immersive tech
Gender
In 2022, the immersive tech industry displayed a diminishing investment disparity. All-female founder teams captured 13.7% of the yearly investment, while mixed-gender teams achieved a record 16.6%.
Age
During 2022, the largest share of investment in immersive tech was secured by companies with founders aged 40-49 which secured £381.8m (68.5% of the annual total).
Ethnicity
In 2022, immersive technology companies led by Asian founders raised £325m, making up 63.9% of the year’s total investment. This was the highest percentage of funding received by Asian-founded companies in any of the five digital tech sectors for that year.
Quantum computing
Gender
In 2022, the quantum computing field witnessed mixed-gender teams clinching a majority of the funding at 61.9%. However, over the past ten years, teams founded solely by men had drawn the bulk of investment, amounting to £379m or 79.9%.
Age
In the quantum computing sector, 2022 saw founders aged 40-49 achieve a landmark £55.2m in investments, accounting for 43.5% of the total. They were closely trailed by the 30-39 age bracket, who secured £50.3m or 39.7% of all investments. This indicates a changing trend in the investment scene, leaning towards companies initiated by younger founders.
Ethnicity
In 2022, quantum firms with one or more Asian founders raised £8.45m, representing 7.47% of the year’s investment. Meanwhile, companies with a Black founder garnered under 0.1% of that year’s total.
Distributed systems
Gender
For 2022, all-male-founded firms in distributed systems garnered 93.2% of the equity investment, reflecting their presence in the high-growth community. Over the ten-year span, they secured 94.8% (£3.09b) of the cumulative £3.26b investment.
Age
Investments in distributed systems predominantly favoured companies with founders aged between 30 and 49. Interestingly, the 60-69 age bracket managed to obtain a significant 6.02% of investments, even though they constituted just 2.58% of the active community.
Ethnicity
In 2022, distributed systems firms with a Black founder secured £7.51m, marking the second-largest amount ever raised, trailing only the peak of £11.2m in 2018.
Future networks
Gender
Between 2013 and 2022, all-male-founded firms in the future networks sector raised £2.19b, accounting for 89.7% of the overall £2.44b secured.
Age
Within the future networks digital tech sector, firms led by founders between the ages of 40-49 and 50-59 attracted the lion’s share of investments. Conversely, companies spearheaded by those in the 20-29 age bracket faced challenges in garnering notable funding, comprising a mere 2.66% of the entire active community.
Ethnicity
In 2022, future networks firms led by an Asian founder attracted £17.0m, equating to 2.33% of the equity investment. In contrast, companies with a Black founder raised £60.1k, which is below 0.01% of the year’s total investment.
AI/ML
Gender
Over the past decade in the AI and ML sector, companies founded solely by men garnered an impressive £9.58b in equity investment. In contrast, mixed-gender founding teams received £1.14b, while all-female founder teams secured £136m.
Age
In the AI and ML domain, companies led by founders in the 40-49 and 50-59 age brackets received the most funding. Interestingly, younger founders aged 20-29 experienced a marked increase in investments between 2019 and 2022, amassing more than £512m in 2022 alone, even though they made up just 5.85% of the active community.
Ethnicity
In 2022, AI and ML firms with one or more Asian founders clinched an unprecedented £708m. Meanwhile, companies with a Black founder garnered £44.8m, representing 1.83% of that year’s equity investment.
Our summary
The landscape of the UK’s digital technology sector is vast, encompassing an array of advanced fields and showcasing the impressive potential of the nation’s entrepreneurs. Our recent report with Digital Catapult underscores both the crucial importance of diversity within this sector and how this market is growing.
Stay informed by downloading the report.
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