With many smaller growth tech firms branding themselves as ‘disruptors’, it can be challenging to differentiate those that are genuinely gaining ground in their respective markets. The Emerging Stars programme leverages the Megabuyte scorecard's rigorous analysis to identify the UK's 25 best-performing smaller software and ICT companies. The dynamic nature of the Emerging Stars universe is reflected in the number of new entrants in the top 25 – a total of 20 made their debuts this year.
Now in its sixth year, the Emerging Stars programme, sponsored by Grant Thornton and NatWest, illustrates the rising bar for top performers in the UK tech market. It also provides fertile ground for M&A and growth capital investment.
Looking back at the 2022 Emerging Stars cohort, a quarter of the top 25 either sold to trade or took significant external financial investment during the year. Two further companies completed meaningful acquisitions. While the M&A market may have softened and venture capital (VC) investment in the sector has undoubtedly slowed materially – with just £3.4 billion raised since July 2022 compared to £13 billion in the first half of the year – the Emerging Stars population is still an active and dynamic part of the UK tech ecosystem that's always in the M&A spotlight.
Attributes of the fastest-growing UK tech companies
What does it take to be among the top performers? The Megabuyte Emerging Stars report uses rigorous qualification criteria to assess the performance of UK tech companies, both public and privately owned, with reported revenues between £3 million and £10 million in their latest financial year. The scorecard focuses on crucial metrics such as growth (especially organic growth), profitability and scale.
To make it into the upper quartile of performance, companies needed to deliver:
- at least £8.1 million in revenues
- organic revenue growth of 23% (average organic revenue growth across the Emerging Stars cohort hit 47.4%)
- medium-term revenue compound annual growth rate (CAGR) of 21.4%
- earnings before interest, taxes, depreciation and amortisation (EBITDA) margin of 10.5%
- EBITDA margin expansion of 5.2 percentage points.
Who's leading the way?
This year's list of 25 Emerging Stars showcases a strong presence across both software and digital platforms, and ICT and digital services.
From an investment perspective, for the second consecutive year the majority of those making the grade have received external investment, with the other 44% remaining owner-managed. For the second time in six years no public companies made the top 25, reflective of the challenging IPO market conditions and the increasing scale bar for businesses looking to access capital market funding. Most UK scale-up tech businesses continue to look to private equity and growth capital funds as the route to accelerate their growth plans and create liquidity for founders, rather than looking to capital markets.
2023 Megabuyte Emerging Stars – Winning companies
Overall best performing company: Lightfoot
Overall fastest-growing company: Unmind
Best performing company – financial services: MNI
Best performing company – human capital management: Elucidat
Best performing company – supply chain management: Lightfoot
Best performing company – business process outsourcing: Avensure
Best performing company – IT consulting: BCS
Best performing company – government and healthcare: Bromcom
Best performing company – IT managed services: Datum
For more information on the Megabuyte Emerging Stars programme and the UK tech market get in touch with Andy Morgan.
