Tech Track 100

22-Sep-2010
2010 Tech Track 100 full article
Tech Track 100 research report 2010

It is 10 years since the first Sunday Times Tech Track 100 revealed Britain’s fastest-growing private technology, telecoms and digital media companies. Since then, successive annual league tables have uncovered several firms that have gone on to become well-known brands and stock-market stars. The tables have also charted changing trends in the knowledge economy as broadband and 3G transform the way companies operate and consumers spend their time and money.

The financial website Moneysuper-market.com, semiconductor business Wolfson Microelectronics and online grocer Ocado are among 23 firms that have floated since appearing in the Tech Track 100. A further 139 have released wealth for their founders and backers through trade sales. For example, the online map provider Multimap was acquired by Microsoft for £24m in 2007; the anti-virus software group MessageLabs was snapped up by Symantec for £400m the following year; and the fashion retailer Net-a-Porter.com was acquired by the Swiss luxury-goods company Richemont for £350m in April.

Over the years, several sectors have stepped into the limelight thanks to technological breakthroughs and market trends. The inaugural Tech Track 100, originally slated for 2000, was postponed for 12 months after the dotcom bubble burst, wiping out thousands of start-ups. But in the following year, dotcoms were eclipsed by telecoms companies, thanks to the effects of deregulation in the 1990s. Since then, the emergence of internet shopping, online gaming, price-comparison websites and, this year, cloud computing, have all been reflected in the rankings.

Many of these companies have become household names. Bet365, at No31 in the league table, is appearing for the fourth time, as is the DVD rental service Lovefilm (No51). Charity fundraising website Just Giving (No 82) is listed for the second year running, while the price comparison web- site Cheapflights Media (No100) is listed for a record seventh consecutive year.

Many more on the tenth anniversary rankings are emerging brands that are transforming our everyday consumer experience. Shazam (No 36) allows people to identify tunes by using their mobile phone to capture the sound. The business is also driving traffic to online music stores, such as iTunes and Amazon, where it claims 8% of users go to download the song that has been identified.

Meanwhile, Skyscanner.net (No 21), one of several price-comparison websites in this year’s league table, is helping cost-conscious holidaymakers find flights, hotels and car hire. Opta Sports Data (No 85) collates and distributes results and other statistics from 30 sports in 70 countries for media outlets, including the BBC and News International, owner of The Sunday Times.

Entrepreneurs at the helm of this year’s Tech Track 100 companies are creating greater wealth and more jobs in the know- ledge economy than at almost any other time in the past decade. Their success is a testament, perhaps, to Britain’s world leading technology and design skills. Together, the 100 companies have combined sales of £2.8 billion, against £429m in 2001, although the league table criteria have changed slightly. As many larger businesses continue to shed jobs, the 2010 league table firms have added 10,564 in the past three years — some the result of acquisitions — bringing their combined workforce to 17,265 staff, compared with 5,270 ten years ago.
Tech Track 100 firms are not required to be in profit as many are backed by venture capital and business angels, but a full four- fifths of this year’s ventures have reported pre-tax profits in their latest accounts. Of the 10 most profitable firms, three are in the online gaming sector, including Bet 365, which recorded the largest profits, at £101m. The healthcare software business Datix (No 86) had the biggest profit margins, at 54%.

This year’s No 1 company, PKR, is another web-based betting business, reflecting consumers’ growing appetite for home entertainment. The company, which operates a 3D poker table allowing players to create their own avatars, was launched six years ago by Jez San, who also founded the games developer Argonaut at the age of 16. Some 100,000 people a month in Europe, Canada and Australia are said to be signing up to the site, powering sales growth of 356% a year from £347,000 in 2006 to £33m in 2009, with good profits.

But perhaps the most notable trend to emerge this year is a sharp rise in the number of companies that provide out- sourced computer services, including cloud computing and managed hosting. Sixteen firms cite this as their main activity, with a further five offering it alongside their main products and services. After businesses slashed their IT budgets during the downturn, many are now opting to outsource server capacity and share IT infrastructure. For example, DediPower (No 41) provides Virgin and Sony with hosting services, while 850 firms have turned to Adapt (No 42) for computer services. Microsoft’s Scott Dodds assesses the rise of cloud computing on page 3. Internet and network service providers account for a further 15 firms.

A broad category of digital media and entertainment companies — including online gaming firms — have also performed strongly this year, with 14 slots on the league table. For example, Monu- mental Games (No 6) develops games that can be played online by thousands of partic- ipants at the same time. BDO’s Julian Frost looks at how technology is shaping con- sumer behaviour on page 6.
Venture-capital, business-angel or private-equity investors have backed 37 of this year’s companies. Encouragingly, six firms raised funding in the 12 months to July, double the number that secured backing in last year’s table. These include Cybit (No 94), a GPS tracking business that was taken private by the American private equity house Francisco Partners in January. On page 4, Sean Duffy of Barclays Corporate evaluates the prospects of bank funding for high-growth firms.

Over the past decade, the Tech Track 100 has showcased the strength and depth of Britain’s knowledge economy. The quality of this year’s fast-growing technology, telecoms and media firms bodes well for Britain’s future.