Wales politics

Wales business: Could growing tech firms into 'unicorns' help secure the future?

a unicorn Image copyright Thinkstock
Image caption Wales currently has no unicorn firms, with most being based in London

Wales could have tech "unicorns" if it develops and attracts digital talent and the right level of investment, according to a top business expert.

Britain is one of the best places for $1bn technology start-ups, or unicorns, but none are currently in Wales.

Prof Dylan Jones-Evans said having unicorns would help brand the nation as a place where such businesses can grow.

Welsh ministers said they were focusing on "creating the right conditions for businesses of all sizes to thrive".

Research shows Britain has produced 72 tech unicorns over 20 years, including 13 in the last year.

Most are in London with hubs in Oxford, Bristol, Edinburgh, Leeds, Manchester and Cambridge, none were listed in Wales.

Prof Jones-Evans, Professor of Entrepreneurship at the University of South Wales, said attracting sufficient capital and skills was a big issue for "peripheral economies" like Wales.

"London has become a particular hotspot for financial technology, or FinTech companies, mainly around the city of London because the demand is there for this type of disruptive technology, that can make a real difference to the market place. And also there's a lot of capital in London at this time.

"And now, because of the situation where you have lots of the companies, Google and Microsoft and other major companies going there, they can attract a certain type of individual who can actually create these kind of businesses that may hopefully grow into unicorns based on the disruptive technology they develop."

Image caption Dylan Jones-Evans: "You need to attract an enormous amount of investment"

Prof Jones-Evans said, however, that over the last five years Cardiff has been recognised by the UK entrepreneur network Tech Nation as being a future hotspot, particularly for digital and financial technologies companies.

"At the moment I would say there are probably three or four companies in Wales.

'If, and that's always a big if, because remember these are uber-growth companies that are a very small part of the population, if everything goes well for them they could become unicorns in the future."

Cardiff-based business intelligence and research firm AMPLYFI has been tipped to become one of Wales' first unicorns.

It started in 2015, offering innovative products, such as surface and deep web search engines, to global customers and it is now set to reach a turnover of £130m in the next four years.

Image copyright Getty Images
Image caption Wales is home to some of the most innovative tech firms in the world, say Welsh ministers

Prof Jones-Evans said that to grow "world class businesses" into unicorns "you need to be in a position where you can attract an enormous amount of investment" and attract and develop "digitally skilled individuals".

"Wales can't do that on its own, it has to have a far more liberal immigration policy than we have now and one that it is targeted at attracting those people. That's what every investor and every entrepreneur in this field says. We need the talent."

"And the second thing is the finance. We have a Development Bank of Wales that has been going for 18 months.

"The key for the Development Bank is that, clearly, it can help to take companies up to a certain level, but when you need major equity or venture capital investment we still do not have that in Wales.

"I think there's a role for organisations such as the British Business Bank, to say rather than concentrating as they do the majority of investment of the south east of England when it comes to venture capital or equity, they should be looking to places like Wales, Northern Ireland and the north east of England that really don't have that base or venture capital to grow unicorns over time, and to actually make sure that that public investment goes into those regions."

'No apology'

Wales Economy Minister Ken Skates said: "Wales is home to some of the most innovative and highly regarded tech, cyber, fintech and semiconductor companies in the world and we can be rightly proud of the business environment and skills we continue to nurture and attract here.

"We are bucking the trend too, with leading research group Beauhurst recently identifying that Wales had the highest number of investments on record over the past year, whilst equity deals in the UK had dropped.

"We make no apology for focusing, through our Economic Action Plan, on creating the right conditions for businesses of all sizes to thrive in Wales."

A UK government spokesperson said: "Through our modern Industrial Strategy, we've driven £50m into Wales to boost game-changing research and innovation, while the British Business Bank is currently supporting £341m of finance for nearly 3,000 Welsh businesses.

"The Development Bank of Wales has done an excellent job at building strong relationships with local tech incubators, universities, business angels and venture capital funds, and the British Business Bank is developing similar networks across the whole of the UK, including Wales.

"These strong local networks of research, innovation and investment mean that the UK remains the location of choice for world-beating unicorn companies."

Sunday Politics Wales is broadcast on BBC One Wales on 30 June at 11:00 BST. Watch later on iPlayer.

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