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4. The most valuable digital economies

We then looked at where in the world the most attractive digital/tech assets are found. It is little surprise that US businesses – given the concentration effect of Silicon Valley outlined in Part 3 – were the most sought-after by the S&P Global 1200, (accounting for 46 per cent of their digital/tech M&A activity by volume and 71 per cent by value). What was more unexpected, however, was that the UK ranked third in the volume list behind Japan and was way out in front of any other country bar the US in the value stakes (UK digital/tech businesses totalling $83.6bn were bought by the S&P Global 1200 between 2009 and 2017). The average UK digital/tech asset was acquired for more than $1bn, making it the only country other than the US to exceed this milestone.

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There are a multitude of possible explanations for this finding. Both the US and UK have outstanding universities that attract large numbers of international students, enabling ideas to be exchanged and global networks to be built. Figures from the UN reveal that the US and UK have the broadest university demographics in the world, welcoming more than 1.4 million international students between them in 2016 (the most recent year for which full data is available).

The leading US and UK universities also generate and support a large number of innovative startups. According to a study by the investment site PitchBook, between 2006 and 2018 Stanford, University of California, Berkeley and the Massachusetts Institute of Technology together spawned 2,846 companies that have attracted more than $70bn in funding. In the UK, tech startups that emerged from the University of Cambridge between 2011 and 2016 were backed to the tune of $1.3bn. While Oxford last year invited Apple CEO Tim Cook to open the Foundry, a space for its entrepreneurs to work on their ideas and meet financial backers.

Then there is investment in research. Israel (whose digital/tech assets are the fourth-most valuable in our study) spends 4.2 per cent of its GDP on R&D every year (second only to Korea) and has the highest number of researchers per capita of any country in the world (8,250 per million inhabitants). And as we have already touched upon, the Netherlands (third in our digital/tech value table at $0.99bn) and Ireland (fifth, $0.78bn) have an international outlook and favourable regulatory regimes that have proved attractive to multinationals.

Our data also reveals another factor that appears to play a role in the value of a country’s digital/tech businesses – the degree to which they are targeted by US buyers. Comparing the countries that have the highest average digital/tech asset values with the most popular destinations for US digital/tech investment suggests a link between the two. With US companies so big and so active in the digital space, the countries that attract their attention seem to reap the rewards.