Plugdin Insights: Focus on the Thames Valley Region

Read time: 8 minutes

The Thames Valley area has been at the forefront of UK economic growth and development over the last 10 years, across a number of tech sub-sectors. But what makes it a particular draw for tech businesses? Our experts explore the landscape of this exciting fast growth tech hub.

Which areas are included in the Thames Valley region?

Berkshire, Oxfordshire, Buckinghamshire, North Hampshire, and an area of Hampshire and Middlesex.

Why is this region particularly advantageous for business?

There are a number of valuable assets in the area, and the ability to attract and retain top talent in existing businesses, has encouraged further movement into the area to support innovation and the growth of smaller and larger companies. The connectivity with the US, Europe and other international locations, and the continued investments to support this framework is a competitive advantage. Heathrow, Crossrail, M4/M40/M3 corridors and more connect the Thames Valley to the wider area.

What are the key stats on the Thames Valley region?

According to BDO’s latest market research:

240,000+ companies present
1 million+ people employed
£330 billion in turnover across all sectors
£14 billion in turnover for the tech sector
27% of the region’s mid-market* PE backed businesses are tech
23% of the region’s mid-market* listed are tech
29 FTSE 350 companies present
56 AIM All Share companies present
1.9% predicted Gross Value Added (GVA) growth to 2021
mid-market is defined as turnover of between £10m to £300m

What tech businesses are already there?

The Thames Valley has long been considered a hub for the UK tech market, attracting investment from leading technology businesses. Microsoft, Oracle, Vodafone, Télefonica and more are present, as are Symantec and McAfee. These companies have enabled the mid-market to develop in the region, attracting skills, infrastructure investment, and nurturing an innovative culture.

It’s important to note that it’s not just the technology and tech sub-sectors that benefit from being in the area. The emergence of technology touches manufacturing, consumer markets, logistics and more, both in terms of technological advancements, but also how companies store, move and produce products. Innovation is also present in the healthcare and media sectors; Bayer, Ipsen, and Vertex lead the pharmaceutical side, whilst UCB is known for its media sector presence.

There’s a particular recent growth in Life Sciences, encompassing businesses that work across healthcare, specialist services, manufacturing and medical technology. The European Space Agency is based in the Thames Valley area; Diamond Light Source, which is the UK's equivalent of Cern, is also based here. Fantastic businesses, such as Oxford Nanopore, which is challenging the traditional DNA sequencing giants by producing affordable DNA sequencing on a desktop device, have emerged here. All these are located at Harwell Campus and will soon be joined by the new Rosalind Franklin Institute and the expanded National Satellite Testing Facility.

There are lots of other disruptive businesses also, with satellite technology, earth imaging and analytics businesses that leverage space exploration being some standout examples. How is this relevant to Life Sciences? Well, the intersection of digital and space technology to enable better healthcare, is gathering pace, and Harwell Campus is home to both types of business, with the opportunity of collaboration.

Probably the hottest area in Life Sciences is still immuno-oncology, or the provision of personalised medicine to treat cancer. Three of the promising UK names in this sector, Adaptimmune, Karus, Immunocore and PsiOxus, are based in the Abingdon region of Oxfordshire. Based in the R&D facilities in Milton Park, they are joined by established US in-bound businesses. One such business is Vertex Pharmaceuticals, a company which has grown rapidly since the approval of its Cystic Fibrosis drugs in many territories, including the US and Europe.

Why are Life Sciences so successful in the Thames Valley?

The minimum requirements for a successful Life Sciences business are great people, great science, and the funding to take the idea forward to commercialisation. Within the Thames Valley, businesses have access to all of those. Oxford and Reading Universities offer academic excellence, and the recent building of the Thames Valley Science Park has encouraged the continued growth of a commercial science infrastructure near to Reading academia. Oxford University recently ranked number one for the study of clinical sciences and life sciences, along with Harvard.

The access to funding comes from the reputation of the area and in particular the draw of Oxford University and its spin-outs. Individual investors and fund managers have focused on funding life science businesses at the start-up and private end of the spectrum here. The IP Group, an Oxford University spin-out technology and Life Sciences investment portfolio business, listed and acquired the Touchstone, a University College London and Imperial College London funding vehicle, in 2017 to expand its remit and gain critical mass.

Oxford Sciences Innovation (OSI), the world’s largest university spin-out fund which has raised over £600 million to date, jointly funds many of the start-ups coming out of Oxford University, and has significantly accelerated the number of start-ups generated since its inception in 2015. For example, 2018 was a record year for OSI and for Oxford University; 21 companies were set up in just one year. These spin-outs encompasses a range of disciplines, from all aspects of digital technology through Life Sciences, but also key sectors such as chemical, industrial, energy and transportation.

Aside from Life Sciences, what tech sectors are most prominent in the Thames Valley?

Aside from the older, more established tech businesses that focus on hardware and software, there has been a real drive to focus on the Cloud. This is in part because the largest data centre in Europe is based in Slough, offering around two million square feet of data centre space close to Reading.

The transition to the Cloud has been vitally important and influential for the market, both local, national and international. Business has moved from working within the classic framework of more end-point type infrastructure to sophisticated data centres. These data centres continue to develop to support big data, creating the data agenda, and backing digitalisation and further innovation. BDO has seen a number of companies emerge in this nascent tech space in the Thames Valley area, which have focused on subjects such as augmented data. There has been a push in the market to ensure that there is quality and accuracy around data, and the Thames Valley data centre hub is able to support that.

There’s also been a focus on automation. Though automation has already become common in manufacturing and other sectors, for technology platforms themselves, this has been less of a focus. As businesses seek to maintain their leading edge and to drive efficiencies, there have been a number of start-ups and emerging tech companies that are creating supportive automation through robotics and machine learning.

Cyber is one of the other fast-growing areas of tech. This type of business has developed significantly in the past few years, reaching substantial multiples and indicating that it will continue to grow substantially in the next five years. BDO has witnessed entrepreneurial ventures going through primary private equity transactions, to then go on and be sold on to larger multi-nationals or through a secondary private equity transaction in a very short time span. This type of business and transaction is keeping the Thames Valley at the forefront of tech.

What kind of smaller businesses are common in the Thames Valley?

The area’s drive for constant innovation has seen the development of a number of smaller entrepreneurial, family owned businesses, and innovative companies that may only be the size of five or 10 employees. There are a number of tech companies that have received private equity investment from a range of different sized private equity and venture capitalist investors. There are also smaller listed businesses on the AIM (London Stock Exchange).

Are there opportunities to network in the area?

As the connectivity to Reading has increased, a number of co-working space providers have moved to the area. It’s a really good way to encourage technology start-ups and scale-ups to establish themselves in the region and to connect and innovate including across disciplines.

The establishment of campus areas, such as the Harwell Campus just outside of Oxford, has really helped to create a network of businesses across a range of sectors. The Harwell Campus has over 700 acres of space, with the expectation that high-tech manufacturing, life sciences, energy and space technology businesses will occupy nearly five million square feet of the space. The benefits of basing a business in such a space is that it joins the dots between traditional life sciences companies and new start-ups. The former are providers of drugs and medical devices to private and public healthcare systems, such as the NHS, private UK hospitals and US facilities, and the latter are newer tech and data rich companies.

There are already over 5,500 people across 220 organisations on campus, and the benefit of this is that employees working in those businesses are able to network and have conversations across different disciplines. The co-location of these businesses has accelerated the use of tech and data analytics, and is driving life sciences onward.

This is being replicated at the Thames Valley Science Park just south of Reading, near junction 11 of the M4.

What’s the local economy like?

Even though there were areas of the UK that saw fluctuations in their local economy after the most recent recession, the Thames Valley area has operated in somewhat of a bubble. However, we don't want to be complacent about this – encouraging the development of the tech environment is vital to keep the momentum going. The innovation in this sector helps enormously to keep levels of growth high.

What’s the infrastructure like?

There has been significant investment into the highways of the Thames Valley region and its connectivity. There’s the M4 development, which runs through the heart of the area, and the investment into the nearby M3 corridor. There’s also access to the M40 and the M25. High speed broadband infrastructure has been expanded in urban and rural areas. BDO often works with clients in the Basingstoke to Reading ‘triangle’, and throughout Oxfordshire. The area is incredibly accessible and well connected to many areas.

Heathrow has played a very important part in the development of the region, and in connecting the area and our talent to the wider world. Many businesses look west of Heathrow to form their base.

Crossrail, when complete, will connect Slough, Maidenhead and Reading to the wider London region, making it a premier commuter area that will attract new talent.

What’s the hiring pool like?

There's a culture to focus on research in the Thames Valley, due to the proximity of the Universities of Reading and Oxford. The Oxfordshire Local Enterprise Partnership finds that over 46% of the workforce in Oxfordshire is educated to degree standard. The science parks and innovation parks around both of those areas have opened the door for like-minded and deep experts to flock to the area.

"The number of millennials and younger people joining the workforce of Reading and the surrounding areas has risen significantly."

Our clients are investing in apprenticeships and also local community colleges to encourage talent to join, and with the breadth of business sectors on offer, there’s plenty of routes to work for younger people.

The international links from the area means businesses can excite and attract new talent, and offer movement for key people. Cities in the area are constantly transforming themselves to make their locations more attractive to talent.

What’s the property market like?

Higher property prices can initially be a challenge for enticing talent, but given the movement of the professional tech services and other business sectors in the area, there is obviously a strong attraction in the region for skilled workers. With the movement of house buyers into the nearby areas of Slough and Maidenhead, the Thames Valley’s position has only strengthened.

Are there any disadvantages to working in the Thames Valley?

Given the area’s connectivity and relative bubble in comparison to the rest of the UK, there are not many disadvantages to establishing a business in the area. However, for the continued growth and prominence of the area, new infrastructure in Heathrow needs to go ahead, and Crossrail needs to be completed on time to ensure that the region continues to attract the best people. There is always a significant need for more appropriately qualified people in the area, particularly for Life Sciences, but that’s always likely to be a challenge.

Have a question about starting out in the Thames Valley area? Get in touch by emailing plugdin@bdo.co.uk.