Tech boost as West Midlands sees a rise in new firms

The figures, a rise to 2,797 last year, up from 2,230 the prior year, suggest the region’s tech sector remains resilient despite broader economic challenges, according to analysis by leading audit, tax and consulting firm RSM UK.

Helen Brocklebank, office managing partner, RSM Birmingham said: ‘It’s great to see such strong growth in the West Midlands’ tech industry; highlighting the various opportunities available for innovative start-ups to thrive in the region.

“The tech sector plays a significant role in the local economy, so if this momentum is to carry on, we need to continue building upon the tech ecosystem which enables these start-ups to grow. This involves providing certainty on innovation reliefs, supporting the development of critical skills and ensuring that funding is accessible to those that need it the most.”

The national data shows a total of 51,017 tech companies were incorporated in the UK last year, up 22 per cent from 41,972 the year before. Key sub-sectors that saw significant growth included software developers, data businesses and IT consultancies.

All regions in the UK saw an increase on the previous year, except for Wales which still incorporated 1,150 businesses, a small decrease from 2022. Tech incorporations in London rose by 26 per cent on the previous year’s figure to 26,060.

Ben Bilsland, partner and technology industry senior analyst at RSM UK, said: ‘Our research is testament to the resilience of the UK’s tech sector despite global challenges.

“The rise in tech incorporations shows there is cause for optimism in this key industry. Whilst it’s impossible to ignore AI as a driving force behind UK tech incorporations, especially for businesses working in data, there will be other factors to consider. It is a vibrant and energetic sector that consistently supports early-stage businesses.

“However, the sector has, and continues to be, marked by lay-offs, so it may be that these members of the workforce have been confident enough to go it alone, thereby fuelling incorporation growth.

“The Government has an important role to play if this trend is to continue. Making valuable resources, including AI compute, accessible for universities and early-stage entrepreneurs is critical.

"Funding and policy changes, including innovation reliefs, that ensure a world-class tech workforce are crucial both in terms aiding education and skilled immigration. For those businesses working in AI, clarity on future regulation will assist the ability to forward-plan."