The UK tech startup scene has had the fastest growth in Europe over the last five years, according to new research.

Merchant service provider Paymentsense analysed the startup market in 30 European countries and ranked them based on how many new businesses in tech were registered between 2013 and 2017.

The research reveals that in the last five years, 392,627 new technology startups were launched in the UK. With 5.9% growth, the country had the largest startup growth in Europe across all sectors.

This growth has been driven by the success of startups such Deliveroo, Bloom & Wild and MoveGB. The sectors that saw the most growth were internet, fintech and software according to Deloitte Fast 50.

UK tech startup growth leads the way

According to Companies House, nearly two million startups were registered in the UK between 2013 and 2017, with 20% belonging to the ‘technology, scientific & professional activities’ sector. Within the five-year period, 2017 was the most successful year for the UK tech startup scene, with nearly 80,000 new companies registered within the tech sector.

In terms of the numbers of startups registered, the UK is third, behind Turkey and France.

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Paymentsense attributes the positive growth to the government’s focus on the technology sector, UK tax regimes, and “accessible and flexible finance options”.

Chief Marketing Officer at Paymentsense Guy Moreve believes that this has created an attractive environment for tech entrepreneurs and businesses:

“The UK ranks among the top five countries with the highest number of registered new businesses and has seen the biggest growth overall within the last five years. It shows that the country offers great foundations for entrepreneurs, especially within the tech sector.

However, he does not believe that this is a reflection of a lack of growth in the rest of Europe:

“Further afield, it’s fascinating to see how Europe has changed in recent times. A number of countries are now placing more emphasis on technology which has helped create a ‘golden era’ for tech startups.”

He also offered advice on how to encourage tech startups:

“Within your respective country, it’s important to ensure you fully analyse the market you’re addressing–what has worked well for recent start-ups and what hasn’t. It’s also worth looking at the legal and environmental conditions in order to make sure your business idea is a success.”

Brexit could threaten the UK tech startup scene

However, it remains to be seen how well the UK tech startup scene will fare amidst the uncertainty created by Brexit.  Despite the sector receiving record investment in 2017, the Tech Nation Report 2018, found that two out of the top three challenges facing UK tech startups are Brexit-related.

According to Wired, difficulties in attracting talent post-Brexit could lead to Germany overtaking the UK in the tech startup scene as it overtakes the UK as the country with the largest number of professional developers.

Senior Market Analyst at CityIndex Fiona Cincotta told Verdict that a lack of talent and funding are the two main problems the industry could face as a result of Brexit:

“With over half of London tech workers born outside of the UK, Brexit and its impact on UK immigration policy could hit the sector hard. Without the incredible level of talent pouring in, the future of the tech scene looks more uncertain.

“Funding is also an issue. Funding from the European Investment Fund has collapsed since the Brexit referendum with no domestic replacement in sight. The European Investment Bank is also slashing its involvement, with more cuts to follow.

“Without drying up talent pools and reduced funding Brexit will pose significant challenges to the tech scene, which need to be addressed in order to ensure that London retains its prime position.”