Why the Thames Valley is a leading cyber security cluster

The South East and Thames Valley corridors are the most popular options outside of London for cyber security companies looking to set up or relocate their operations.

Cybercrime is growing reaching a record high of nearly five trillion pounds in 2021, more than twice the UK annual GDP and with Russia's invasion of Ukraine reports of an increase in cyber crime both around the globe are rife.

Increasing numbers of cyber businesses are choosing to base their activities regionally, rather than in London.

The South East and Thames Valley corridors are the most popular options forming the biggest cluster outside London.

According to UK Cyber Security Sector Analysis 2022 issued by the Department for Digital Culture, Media and Sport there are currently 676 companies within the area, with the major cluster being in the Thames Valley, and emerging clusters along the South Coast, Southampton, Portsmouth, Swindon and Wiltshire. The opportunity to work with allied businesses via Cyber Security Clusters or local business organisations such as Enterprise Partnerships and informal IT/AI networks were important reasons for choosing a locality.

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The majority of cyber security jobs are found within dedicated, specialist providers rather than in large, diversified companies providing cyber security as just one of their functions. Within the South East, the DCMS estimate that cyber security accounts for 35% of registered employment, the biggest grouping in the UK outside London, while cyber security firms take up 18% of office space in the area compared to 29% in London.

Kent Business School’s Hirbod Assa comments “The most concentrated industry in the south east is in the Thames Valley, also known as the UK’s Silicon Valley.  Other southeast areas such as Kent have not yet reached their capacity. This provides a good prospect for future development, particularly from an international perspective. Kent, as the UK’s European gateway, has very strong ties with the EU countries, investment  and government support are two major driving forces of industry development.  As the industry is heavily knowledge-based, the development can be facilitated by investing in the local universities, and particularly their science and innovation parks.” 

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UK growth position

Almost 50% of UK businesses and charities have experienced some form of cyber crime within the past 12 months according to the Department for Digital Culture, Media and Sport. Not surprisingly, demand for cyber skills and cyber businesses is equally high – and growing.

The UK Cyber Security Sector Analysis 2022 issued in February by the Department for Digital Culture, Media and Sport stresses the sector’s growth potential. “Cyber security firms are major contributors to the UK’s tech success story. We are investing in skills training and business initiatives to help the UK go from strength to strength as a global cyber power and open up the sector to people from all walks of life,” commented Digital Secretary Nadine Dorries.

Almost 300 UK headquartered cyber security firms have offices within international markets, of which 56% provide services in the US and 46% to the EU. Investment by US firms is high; with US-headquartered firms representing one in ten of UK based cyber companies, highlighting the importance of US-UK collaboration.

Hirbod Assa, Course Leader for Financial Technology Kent Business School points out, “The UK has been established as a cyber-power and is one of the most important world players in the industry. According to the UK Cyber Security Sector Analysis 2022, there are 1,838 firms active within the UK with approximately 52,700 full time employees and £10.1 billion of income. Cybercrime shines as a lucrative business in the software engineering world with a high degree of security compared to other crimes, even for the smallest players in the market. These figures also show an inevitable opportunity for the cyber security industry to help other industries and generate a decent income.”

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Investment

Investment in developing cyber security businesses is high. 2021 proved to be a record year for cyber security investment, raising over £1.4 billion across 108 deals with investors keen to provide funding for early stage UK cyber security businesses. Typical of these early stage companies is Kent based Hack the Box which raised £7. 7m in 2021.  

The majority of participating investment companies are based in London, although Amadeus Capital Partners also operates from Oxford. Clear growth prospects, possession of Intellectual property rights and market opportunity were key factors when it came to deciding on investment choices. Investors stressed the importance of technical and sales talent within cyber businesses. One unnamed Cyber security investor commented “Access to talent is a huge issue. There is lots of talent, but start-ups are finding it hard to complete on compensation, stability and risk. Software engineering, ÅI and machine learning are in hot demand from Big Tech, FinTech etc.”

“Cyber security is a real priority for the Government, with more initiatives being launched regularly. Current geopolitical events are likely to increase Government focus and investment in this area, for example through the Regional Cyber Resilience Centres,” said Mark Brown, founder of Psybersafe.