As consumers are becoming increasingly concerned about the ethical credentials of digital products and services, tech companies that tackle social and political problems from healthcare to climate change are fast becoming an important area of the technology sphere, with the UK at the forefront of this.
Known as tech for social good, this refers to non-profit and for-profit organisations that are using digital technology to tackle some of the world’s toughest challenges.
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Tech Nation has issued its first ever report on the sector, looking at both not-for-profit and for-profit social enterprises, with the aim of explore the “tech for social good landscape in order to raise awareness of the types of organisations driving change in the UK, and the challenges for their future growth“.
It found that the UK tech for social good sector was worth £2.3bn in 2018, with a turnover of £732m, more than the amount generated by consumer electronics manufacturing in the UK for the same time period.
The growth of tech for good
The not-for-profit segment of social tech has had exponential growth in the last few years, with 2017 having the highest number of registrations with Companies House, bringing the number of not-for profit tech companies to 464.
With 490 companies falling under the for-profit tech for social good category, digital technology is allowing the possibility of different strategies for tackling social problems. However, these “young, dynamic” social enterprises in areas such as adtech, edtech, fintech and artificial intelligence are also generating money, raising over £1bn in venture capital funding to date.
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By GlobalDataThese businesses are also creating employment, with companies such as Bulb, a renewable energy supplier, Sweatcoin, which encourages users to exercise by paying them depending on how many steps they take, and Elder, which helps people find and manage live-in care, showing “supreme growth”.
The report also emphasised the importance of social impact investors that value both social and financial return, such as Bethnal Green Ventures and Big Society Capital. To date, profit-seeking tech-for-good businesses in the UK have collectively raised £1.09bn in venture capital.
To encourage further growth in this area, the UK Department for Digital, Culture, Media and Sport has partnered with the Social Tech Trust on a fund of up to £30m to provide access to finance, and “position the UK as a global leader in socially transformative tech”. A further £1m will be available to help organisations use tech to help tackle areas such as loneliness and community projects.
Today the Digital Secretary Jeremy Wright will host firms in the sector at a roundtable at Downing Street, with a range of successful British start-ups due to attend.
Speaking ahead of the roundtable event, Jeremy Wright, said:
“I’m pleased to see the UK’s ‘tech for social good’ sector is not only having a positive societal impact but is also making a significant contribution to the economy.
“’We are working hard to support those in the field by improving charities’ digital skills, boosting access to finance for social tech ventures and backing an awards scheme to celebrate up-and-coming entrepreneurs. I look forward to meeting some of the sector’s leading minds today to discuss how we can make sure the UK is a global leader in this area.”
Support needed
However, the report also highlighted that startups in this area need support to grow into larger businesses, with the majority still at seeding stage and the incorporation rate for these firms dropping significantly since 2015. It urges policymakers and investors to support companies as they scale and grow – particularly social tech firms which struggle to match the high salaries offered by more established tech giants.
It also highlights the need to do more to promote diversity in tech for social good, and tech firms more broadly.
Moving forward. Tech Nation hopes that tech for social good will move into the mainstream until “social good will underpin the actions of every tech company”.
Gerard Grech, CEO at Tech Nation, said:
“This study provides a fascinating analysis of a fast-emerging sector within tech. These purpose and profit startups range from platforms such as fashion recycling platform Depop to surplus food distribution platform, Olio. We are witnessing a new driver in tech startups. “While the profit motive remains high, millennials are increasingly driven by the desire to make a meaningful impact on society. Harnessing the huge potential of tech allows us to really think big. We can have both economic growth as well as positively impacting society and the environment.”
