I’ll start by saying this. London’s world-renowned status as a hotbed for tech talent is well earned. London is often seen as the gateway to the European tech scene; it’s ranked as the number one city in Europe for supporting new businesses (a new tech business is formed every hour), is considered the FinTech capital of the world, and is a serious player in both Artificial Intelligence and Big Data, rivalling both New York City and Silicon Valley. Over the next ten years the number of digital tech companies in London is expected to rise to 45,000, pumping more than £12 billion into the UK. Oh yes, London’s tech sector is very much alive and well.
But London isn’t the only flourishing tech centre in the UK. 74% of tech companies operate outside the Capital – with Bristol and Bath, Reading, Greater Manchester, Edinburgh and Leeds showing the highest rates of digital employment. And nearly 70% of total UK digital tech investment in 2016 was given to regional clusters outside London – including £78 million in Manchester and £61 million in Sheffield.
Heavy investment in the Northern Powerhouse – including my home town Manchester – has seen a new rival emerging on London’s doorstep. True, Manchester’s digital tech turnover of £2.9 billion looks tiny compared to London’s whopping £56 billion, but you have to take into consideration that 17% of Manchester’s businesses are considered ‘high growth’. Nearly 2,000 businesses were set up in just 12 months in the city – an increase of 10 per cent and well ahead of the national average (4.3 per cent). And just last year, Manchester featured in the top 20 in the European Digital City Index for starting and scaling a business. Of local start-ups, 69% rate the strength of the digital economy and 85% believe that the tech sector in the city has enormous growth potential. If London is an established tech centre, the Northern Powerhouse is a disruptive force, and SMEs and start-ups are paying attention. So what’s inspiring them to turn from the Big Smoke to the Northern Powerhouse to launch their business?
1. Talent shortages aren’t so short any more
For decades the North has lost its home-grown talent to southern prospects. And while there might still be only one digital job in Manchester for almost every five in London, the gap isn’t quite as pronounced as it once was. Estimates put the number of people employed in the digital and creative sector in Greater Manchester at 63,000.
With three leading universities generating fresh talent every year, a growing reputation in the industry and large household names like the BBC and ITV Granada moving in, talent has also migrated northwards. That’s not to mention that the North has started carving out new market sectors to specialise in, for instance within energy and future technologies. The city recently won £10m in government funding for its CityVerve project, which focuses on using IoT to transform healthcare, transport and energy use to become a pioneer in developing a Smart City at scale. This will encourage some of the smartest and most innovative minds into the city doors while ensuring that Manchester’s economy is developing for the future.
Lorien’s first Tech Meets Talent event – a networking event that connects cutting-edge organisations with high calibre, niche talent – served to highlight the depth of experience within the city. It proved that with the right knowledge and understanding of the market, high quality candidates can easily be found north of the M25.
2. Investment opportunities
It’s certainly true that access to funding up North isn’t as mature a market as in London, which can provide problems for start-ups. Many venture capitalists (VC) and business angels (BA) are still London-based, while business accelerators and incubators are significantly more immature. In 2016, there were 471 angel and VC deals for London-based tech businesses and only 27 in the North. However, as trade grows up North, so is investment and a savvy start-up can easily find the funding they need.
Investment is coming in from all angles, including the £400m Northern Powerhouse Investment Fund (NPIF), the North West Fund (a £155m evergreen investment fund and one of the most prolific VC investors in the UK, having supported 440 businesses already), and the Greater Manchester Investment Fund (GMIF). The Manchester Growth Company meanwhile, acts as an Avenger-style unit, with specialists brought together to grow Manchester’s economy. This includes award-winning investment agency MIDAS, Business Growth Hub, Department for International Trade (DIT) and Business Finance Solution (BFS). There are two main angel networks in the region – Northwest Business Angels and Angels Den – and a number of accelerators including Idea Alive, Ignite and Dotforge. Crowdfunding has also become a popular alternative for start-ups looking to make it big in the city, with platforms including Crowdcube opening Manchester-based offices to increase their portfolio.
Of course, investment isn’t purely financial and 77% of tech companies say they benefit from access to entrepreneurs. Manchester has a thriving community for start-ups; with networking, meet-up events and collaboration services laying testament to the mentality that the north is friendlier than the south (I couldn’t write a blog without slipping that in. Next up: music). From one-to-one mentorships, professional training or just the opportunity to swap ideas, Manchester covers all bases with events including Northern Soho, HackerNest, SheSaysMCR, The Pulse, Silicon Drinkabout Manchester, Venturefest Manchester and Business Rocks.
An international airport, modernised tram system, bus network and a train that can get you to London, Birmingham, Leeds and Sheffield in just over two hours all help to make Manchester as accessible as possible to the rest of the world. And with HS2 currently in the pipeline, Manchester is set to become one of the most well-connected locations in the UK.
Investment from the Urban Broadband Fund project is also set to launch Manchester as a “supercity” with ultrafast broadband enabling businesses to move traffic faster, cut costs, and remain competitive in the global market.
Now let’s talk about workspaces. From the gritty Northern Quarter to the futuristic city vibes of the £950 million MediaCityUK development in Salford, the city is thriving with new environments to launch your business. In recognition of the volume of smart-ups a number of flexible, co-working spaces are popping up, including TechHub, the Sharp Project, The Greenhouse, Innospace, The Landing and Manchester Science Park – which is home to more than 120 innovative science and tech businesses. Outside of digital, Rise Manchester – a Barclays’ open innovation programme – had become the home for local FinTech companies. Irrespective of the maturity of your business journey, Manchester has the capacity and the culture to accommodate.
Of course, it’s not all plain sailing for the Northern Powerhouse. Brexit, a new prime minister and a high-profile general election have side-lined the project from discussion. With three MPs taking the title of Northern Powerhouse ministers in just two years (including Andy Percy stepping down last year after less than a year in the role), its future could look unstable to an outsider. But I’m an optimist. I believe the Northern Powerhouse is the product of a much-needed conversation to rebalance wealth and opportunity in the country and something that – even without the government’s visible backing temporarily – will thrive and grow. As businesses, we need to recognise the enormous potential there and take action; our investment has already created change and if we can continue to invest, to start-up and scale-up outside of London, I am very excited about what we can create. With organic and strategic business growth, investor backing, robust infrastructure and both grassroots and evergreen talent communities being nurtured, this region has a lot of promise. That’s why, for me, building your business empire in the North is a no-brainer – and if I were a start-up or an SME, I’d be doing the same.