If CreaTech is the investor hotspot you’ve never heard of, it is most likely because it is emerging from two industries already known for their dynamism.
The UK’s creative and digital industries contributed £115.9bn and £150.9bn, respectively, to the UK economy in 2019, according to the Department for Digital, Culture, Media and Sport. Before Covid struck, they had both long been among the fastest-growing areas of Britain’s economy.
Thanks to the rise of digital media and developments such as artificial intelligence, parts of these two industries have become so closely intertwined in recent years that the DCMS figures cannot even separate them completely, with some occupations and businesses counted in the data for both industries.
Tech Nation’s CreaTech 2021 report, however, is one of the first attempts to define and profile this burgeoning intersection, and explain why it deserves to be as well known as other hybrids such as FinTech and EdTech.
The report found that the space where the UK’s creative and tech industries overlap attracted a record £981.8m of venture capital investment in 2020, despite the global pandemic and the UK recession.
Building on the existing business and talent base in creative and tech industries, CreaTech is where innovations in artificial intelligence, algorithms, virtual reality, specialised software and other areas are transforming creative services, outputs, and processes. The term encompasses both the transformation of the creative industries by technology, and the co-creation of tech products and services.
The Tech Nation report estimates that the UK is the third biggest destination for CreaTech VC investment globally after only the USA and China. UK CreaTech last year took a larger share of all VC investment in UK tech (9%), than the equivalent figures for the USA or China (both about 6%). Last year the UK received twice as much CreaTech investment as the next biggest European market, France (£487m), and three times more than Germany (£266m). Download the full report release.
The good news if CreaTech is completely new to you is that you are learning about it in its early growth phase.
Since 2017, VC funding for UK-based CreaTech businesses has almost doubled. And the relatively small median size of funding details – across UK regions, the median varied between £290,000 and £1.65m in 2020 – suggests that these deals involved funding early stage businesses with prospects for growth and further capital raising ahead of them.
The new report, commissioned from Tech Nation by the Creative Industries Council (CIC), the forum of industry and UK government, in association with Digital Catapult, the leading authority on advanced digital technologies, and Moore Kingston Smith, the accountancy firm, is the first of a two stage process which will also look at CreaTech’s impact on UK jobs and skills.
The UK government has acknowledged the potential of this fast-developing area, with Culture Minister Caroline Dinenage promising to “continue to work hard to encourage and enable the growth of CreaTech”.
The CIC has supported CreaTech throughout its development as it highlights creative industries' ability to find innovative ways to engage audiences and generate business investment and jobs.
Bringing together parts of two industries to attract almost £1bn of new investment may not seem like an obvious sum to everyone.
But when VC investors, industry leaders and government ministers all agree that the claims of CreaTech’s growth potential add up, it is time for others to take note.
This week (March 15-20) puts UK CreaTech in the spotlight with, in addition to the new report, the following three events on Thursday March 18th:
As part of its annual ‘Ones to Watch’ platform for innovative CreaTech companies, the CIC is this week also opening invites to applications of businesses operating where creativity meets technology. Keep an eye out for details for applications in our CreaTech section from Thursday.
The CreaTech 2021 report is available from:
Report Press Release
See DCMS Statistics on creative and digital industries
Image source: BBC Home: A VR Spacewalk: Source: REWIND.