Wales Strengthens Its Claim as a Global Innovation Centre

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Wales is in a strong position to develop into a globally recognised centre for innovation as it develops world-leading specialist tech clusters.

That’s the view of a new report from UK Tech News (UKTN) which looks at the state of the Welsh tech ecosystem.

It says that advanced cybersecurity and semiconductor developments in particular are becoming important enablers for growth in other sectors. The report cites the UK Government as identifying semiconductors as one of five critical technologies which will create opportunities for growth and capitalise on existing UK strengths.

It says: “With one of the UK’s main semiconductor clusters, Wales will undoubtedly play a key role in developing the sector further, and South Wales is already seeing trickle-down effects including more interest from international investors and companies.”

And it quotes Andy Sellars, strategic development director at CSA Catapult in Newport, as saying that the other four critical technologies – AI, engineering biology, future telecomms and quantum technologies – will depend on semiconductor innovation.

The report, which is supported by Tramshed Tech and sponsored by the Development Bank of Wales and KPMG, highlights that the tech sector in Wales contributes approximately £8.5bn to the economy annually, and says the number of tech enterprises in Wales has grown by 20% over the past five years.

It lists Wales’ specialisms as being fintech & insurtech; compound semiconductors; advanced manufacturing; cyber; medtech and creative tech.

The report highlights the following figures:

  • 45,000 employees in the Welsh tech & digital sector
  • 3,500 technology companies in Wales, including home-grown & multinationals
  • £157m: venture capital invested in Welsh companies in 2023, across 28 rounds
  • £802k: average size of an equity investment into a Welsh business
  • 39.3%: five-year business survival rate
  • 20,675: new startups created in Wales in 2023
  • £1bn spent on research and development by Welsh businesses in 2022

Alongside the opportunities for the Welsh economy from its emerging clusters, the report identifies areas of challenge.

It says: “A commonly reported challenge among key tech stakeholders and founders in Wales is that the tech funding landscape hasn’t prioritised growth-stage companies. In research interviews, multiple people told UKTN that while the key Welsh investors, accelerators and angels provide significant support for early-stage startups, many startups struggle to raise funding when they are at a critical growth point.”

Louise Harris, co-founder and CEO at Tramshed Tech, is quoted as saying:

“Access to the right investment at the right time is an ongoing challenge for Welsh startups. Wales only receives 2.5% of the UK’s equity investment deals despite being home to 3.5% of its high-growth companies. Inward investment is a key catalyst for growth in Wales.”

Other challenges highlighted include talent acquisition, with skilled individuals often leaving Wales, and market opportunities for B2B companies being limited as the private sector is less developed than elsewhere, and selling to public sector organisations is seen as time-consuming and bureaucratic.

A survey of more than 100 senior managers at technology companies found that investment into digital connectivity came out top as the factor that would drive growth for Wales’ tech sector.

Read the full report here: https://www.uktech.news/regional-tech-report-wales

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