It’s Not All About Tech City

Why startups should consider looking outside of London?

It may be the financial capital of Europe but London’s Tech City isn’t the only startup hub in the UK. There are other cities in the country that are more than capable of providing an open road to potential business success.  Maybe it’s time to take a wider look.

For as long as we can remember, London has been at the forefront of Google’s European headquarters hosting an entire ecosystem of tech companies, of all sizes, including numerous tech startups. But head out of London and you will discover other new and dynamic areas with huge investment and business startup potential, and often at lower living costs in terms of commercial property and day-to-day living.

 

The number of startups is increasing.  

In 2017, the tech sector received record investment despite all the uncertainty over Brexit; four times more than Germany and raising more venture capital than any other European city.  The majority of the investment was driven by venture capitalists investing in London startups tech firms attracting nearly £3 billion in venture capital over the year, according to data from the Mayor of London’s agency, London & Partners.  

This figure is almost double 2016’s investment levels and marks an all-time record.  London itself accounted for approximately 80% of the investment – the game development platform, Improbable, Deliveroo, the food delivery service and mobile network, Truphone, receiving the biggest rounds of funding. 

 

 

Sadiq Khan, Mayor of London, said of the figures: “Technology entrepreneurs and businesses are attracted to London for its diverse talent pool and unique business ecosystem,” adding that he wanted to keep London open to investment and the best tech talent worldwide.

But is London the only city to establish a startup?  Companies House said that there were fewer businesses launched in 2017 than in 2016, although their research did demonstrate that technology startups had risen significantly.  Whilst London still dominates the tech sector, when it comes to other industries, startups are beginning to steer away from the UK’s capital and seek other areas, such as the North West which was the UK’s third busiest region for startups ahead of London and the South East; a 29% increase on 2016.

With all of the interest and attention around ‘Tech City’, could entrepreneurs be better off launching elsewhere?

Colin Jones, a partner at accountancy firm UHY Hacker Young, explains: “Silicon Roundabout has fallen off the top spot in terms of new business creation, it is a victim of its own success. The Silicon Roundabout area gained popularity with internet companies originally due to historically low rents. Now that rents have soared, the area has lost its competitive advantage.”

Gerard Grech, CEO of Tech City UK, says it’s only a good thing tech is spreading out across London and the rest of the UK.

 

“Anybody trying to build a negative argument about the relative performance of a single postcode in East London is seriously missing the point and in danger of talking down one of this country’s great global strengths.”

 

Where else could startups nest?

In compiling the list of top UK startup cities, the Startup Cities Index 2017 collated data based around the following;

  • Business activity – business population, business survival rates over 5 years, startup ‘births’ and business closures.
  • Geographical factors – population, airports, motorways, large-scale infrastructure projects and ethnic diversity.
  • Talent – universities, skilled workforce, graduates, average full-time earnings.
  • Business support – local enterprise partnerships, enterprise zones, catapult centres, science parks, business services, accelerators and incubators, Smart City status.
  • Commercial premises – commercial rents, availability of office stock and quality, co-work spaces, broadband average and high-speed.
  • Finance – recognised grants in the region, local angel investment networks, regional government funding.
  • Quality of life – average house prices, local visitor sites and attractions, crime rates per 1,000 of the city’s population.

 

The Northern Powerhouse

Manchester has long been considered a startups paradise outside of London and made it into the Top 25 regional startup cities according to the Startup Cities Index 2017.   Centred in the UK’s Northern Powerhouse, Manchester checked in at number 13 in the list, the city continues to grow at great pace with plans to turn it into the “Shoreditch of the North”. The cheaper property, immense investment and good living standards all contribute to its appeal.

The city boasts unrivalled access to talent, the biggest university campus in Europe (a total of five universities), the largest economy outside of London, a wide variety of investment in the region, and strong business support.  On the downside, Manchester records the third highest rate of business closures – after Birmingham and Leeds – against the largest startup rate of any city in the North West.

An article from The Guardian highlighted the advantages of Manchester in having a good chance of becoming a tech capital.  It is home to one of the largest tech clusters outside London. Manchester City Council provides advice and practical help for new businesses. And the second largest Manchester University, Manchester Metropolitan University has Innospace, a business incubator offering office space and business support.

 

Why move to Manchester?

  • Crowdfunder Crowdcube has a base in the city
  • Manchester International Airport is expanding
  • The general transport infrastructure is world class
  • Property and homes are cheaper than in London
  • The Northern Powerhouse is a hot investment hub

 

The North East

North East England may be over 250 miles from London but its reputation as a startup hub is rapidly expanding.

Stepping into the Startup Cities Index 2017 at number 10 is Newcastle Upon Tyne which is building a reputation as a city that is producing companies with significant staying power. Last year, True Potential became the only UK FinTech firm to make it into the Deloitte Technology Fast 50 three years in a row, while Performance Horizon raised US$15.4 million in Series C funding.

The city is known as the financial and cultural centre of the North East with renewable energy and manufacturing businesses being prevalent.  Indeed, the Newcastle Science City project promotes this reputation with its claim that Newcastle is the key UK city for science businesses.

Gilbert Corrales is the co-founder, Leaf Music. He says: “This is a thriving community which creates a highly valuable digital tech talent pool and strongly contributes to the nation’s digital tech sector.”

The International Advanced Manufacturing Park in Sunderland provides a world-class environment for high tech industries and advanced manufacturing businesses. Digital Catapult NETV is also helping implement initiatives supporting manufacturing companies to explore and implement new technologies.

 

Why move to Newcastle?

  • The region is rapidly expanding as a tech hub
  • Quality of life is excellent
  • Transport links are first class
  • There’s lots of help for startups available
  • East Coast main lines run directly to London

If you prefer the South West, Cardiff is highly notable for its technology cluster. The local media have dubbed it  “Silicon Valley” and the city is supported by a UK government agreed £1.2 billion City Deal to invest in the physical and digital infrastructure of the city and deliver a range of programmes designed to improve connectivity and business governance, ensuring Cardiff becomes a booming FinTech and technology city suitable for any startup

A nonprofit organization Cardiff Start, has been set up to encourage techpreneurs and investors. Cardiff Start hosts a range of free workshops, hack days and investment showcase events for a community of 300 entrepreneurs, students, and investors. Apart from friendly media landscape, public financing is available for startups via Business Wales’ Digital Development Fund and Cardiff University’s FusionIP.

Ranking a high 5th in the Startups Cities Index 2017, Cardiff is considered the capital and commercial centre of Wales with the financial and professional services sector well-developed – banks, insurance brokers and pension providers dominate the successful businesses.  That said, the biotech and aerospace industries are doing well, with networks that would rival just about anywhere else in the country.

 

Why move to Cardiff?

  • Tech business is now transforming Wales
  • Motorway links are excellent
  • Digital business is booming here
  • Cardiff International Airport
  • Support of The Welsh Assembly is first class
  • Staff and office space much cheaper than in London

To summarize, whether you are in or out of London, recent studies show digital business is now worth £184 billion to the UK economy. The government’s focus and investment in cities other than London is a positive contribution to the tech industry as a whole. There is a wealth of viable and cost-effective areas outside of London to claim your piece of Tech City.

 

Why move to Liverpool?

  • The Baltic Triangle is the hub for digital technology companies
  • Liverpool is 9th in the country for jobs growth
  • Many startups say the city has the right components for a digital sector to rival London’s Tech City
  • Launch of the national Industrial Strategy at the city’s science and innovation campus, Sci-Tech Daresbury
  • The Binary Festival, an annual two-day event in which digital tech businesses open their doors to the public

Startups rate Liverpool highly with many saying the city has the components for a digital sector to rival London’s Tech City, according to The Guardian, although they do admit that the finance side may prove a little tricky.  The main business startup centre is The Baltic Triangle, old warehouse buildings that have been converted into offices and is the place for many of the city’s digital technology companies. Indeed, the Baltic Triangle was rated as the coolest place to live in the UK by The Times in 2017.  An average of 194 startups a year occur in Liverpool; the city is 9th in the country for jobs growth; key startups in the area include vTime, LivingLens and SwapBots

There are three main universities in Liverpool and alongside schools such as The Studio, they strengthen the thriving tech and digital sectors in Liverpool.  In addition, the Government has committed to a £556 million boost for the Northern Powerhouse, which focuses on positive progression for the digital tech sector.  Closer to the city centre, high profile businesses, such as Mando, operate alongside companies like Launch22 and the new Santander Incubator, and in the North Docks, the IoT and maker community is growing.

 

Why move to Leeds?

  • An established hub for digital technology
  • Employment growing by 7% from 2011 to 2015, and continuing to grow
  • Part of the Government’s ‘Northern Powerhouse’ investment plan
  • New businesses starting up are at approximately twice the national average, particularly in the retail and technology sectors
  • Leeds Dock – the technology hub of the city

Leeds is already established as a hub for digital technology with employment in this sector growing by 7% from 2011 to 2015, and it’s continuing to grow.  There are close to 3,500 tech businesses already in business and data science is another area of growth with companies such as Open Data Institute and Equifax being based in Leeds.  A recent study found that 168 digital tech companies were started in 2016 alone. Following the NHS Digital move to the city, HMRC is planning on moving 6,000 jobs to Leeds in 2020.

Leeds City Council is set to issue a £3.7 million grant for tech projects and there has also been substantial work being carried out by the city’s three universities, alongside technology companies and the council, to grow grassroots talent with degree-level apprenticeships and boot camps.  In addition, The Leeds City Region Enterprise Partnership provides support and funding to help businesses start up in the area, such as the Leeds Digital Hub, a co-working space run by Leeds Beckett University in cooperation with The Yorkshire Post (it is already being used by over 200 businesses).

 

Why move to Birmingham?

  • Second largest city in the UK with more startups than anywhere else outside of London
  • More active tech meetup groups than any other city outside of London
  • The highest number of startups outside of London for 5 years in a row
  • The GBSLEP Growth Hub – a single point of contact for growing companies

According to data released by the Centre of Entrepreneurs, Birmingham is home to more startups than anywhere else in the UK outside of London, registering 12,108 businesses started in 2017.  Add to these figures that as of January 2018, Birmingham has 70 tech meetup groups that are active, enabling entrepreneurs to network with like-minded people. There is a flourishing entrepreneurial spirit in the city; affordable office space, access to global markets and Birmingham’s world-class accelerator schemes gives a good reason as to why the city has topped the list for the highest number of new startups outside of London for five years in a row.

Birmingham’s GBSLEP Growth Hub provides a single point of contact for companies that are growing with advice and funding, allowing for expansion through innovation to fulfil their potential.  Since its launch in 2015, the Growth Hub has helped 500 startups across Birmingham and Solihull, creating more than 400 jobs and supporting the area.

When you combine all these key components with Birmingham’s good connectivity to other cities, the young and diverse population, and low cost of living, it makes for a good location to start a business.