The UK is establishing a solid global reputation for nurturing technology businesses. A report published earlier this year for the government’s Digital Economy Council found that the UK accounted for 13 of Europe’s 34 unicorns — defined as companies with a valuation of $1bn or above.
The researchers also found that the pipeline for potential unicorns was also richer in the UK than elsewhere in Europe.
With such a strong background, it is unsurprising that technology companies feature strongly among the finalists for this year’s EY Entrepreneur of the Year in the UK.
Social Chain is a digital marketing agency and publisher based in Manchester. It relies on influencers, people who are followed on platforms such as Instagram, YouTube and Twitter, to market products and services for its clients.
The business has turnover of £9m and employs more than 200 people in its headquarters, and its offices in London, New York and Berlin.
That represents rapid growth for a company founded in 2014 by two university students: Steve Bartlett, who dropped out after one lecture, and Dominic McGregor.
Mr Bartlett sought out Mr McGregor, who was studying at Edinburgh University, because he had built a social media following. They soon recruited Hannah Anderson, another student, and set about attracting advertisers.
Within two years they had raised £1.4m from German investor NVC and moved to Manchester.
Social Chain was warned by the advertising regulator in 2016 after not making clear when influencers had been paid to endorse products.
Since then, the market has moved on. “There is a shift from celebrities and YouTube stars to micro influencers,” says Mr Bartlett.
Social Chain has also built a media division that creates videos and articles designed to spread across the internet.
Mr Bartlett now aims to tame the Wild West of internet marketing, with a tool that can detect fake followers generated by bots, which he says can rip off advertisers.
Synectics Solutions had its beginnings in the early internet. Husband and wife team Kevin and Carol Shanahan established the software developer 26 years ago to maintain a marketing database for carmaker Rover.
Then the Audit Commission in 1995 asked if they could investigate student grant fraud. Back when UK students got maintenance grants, some would claim from different addresses, for example their university hall and their home.
That grew into the National Fraud Initiative. Synectics Solutions checks government payouts and benefit entitlements on everything from whether someone is eligible for a single-person discount on council tax to whether National Health Service staff who are on long-term sick leave from one trust do shift work at another.
The business also works for lenders to check for mortgage fraud. In 2016 it won work policing defence contracts. Turnover is £20m and the Midlands-based company is expanding to the US and Canada.
ParentPay, based in the Midlands, is used by 4m people in the UK. Some 13,500 schools out of 30,000 in the UK have adopted the online system to take money from parents for everything from school dinners to school trips.
Chief executive Clint Wilson was working in the payments industry when he was introduced to Lynne Taylor, a teacher, who had come up with the idea of ParentPay because she thought there must be a better way for parents to send money into school than handing envelopes of cash to pupils.
Mr Wilson joined the business in 2005 and helped secure backing from Andrew Neubauer, a venture capitalist, which helped scale the business.
Earnings before interest, tax, depreciation and amortisation will be £15m to the end of November on turnover of £30m. “We have grown ebitda by 30 per cent each year for the last eight years,” says Mr Wilson.
In January 2017 ParentPay bought Schoolcomms, a company that enables schools to communicate with parents electronically. In December 2017 it acquired Cypad, a catering management tool for schools.
It has also launched Nimbl, a card-linked digital bank account for children that teaches financial management.
The next step is European expansion. In January 2018 it bought a Dutch school payments company. “There will be three or four ParentPay-sized businesses in the Europe in the next few years and we are well positioned to be among them,” Mr Wilson says.
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