North-West England ‘perfect’ growth area for tech startups

North-West England is the “perfect breeding ground” for technology startups and scaleups because of its entrepreneurial climate, academic connections and growing investment activity, according to a new report from London Tech Week and the UK Tech Cluster Group.

The North-west UK tech report is part of the 12 Clusters of Tech initiative, which was started by the two industry groups to map the UK’s tech landscape and explore current trends.

It found the north-west region is home to six of the UK’s 14 digital unicorns (startups valued at over $1bn), and benefits substantially from connections to “feeder” universities that provide fledgling tech companies in the area with access to “high-quality” talent.

“The UK is home to 35% of Europe’s unicorns and, over the last four years, has created more unicorns than Germany, France, Sweden and the Netherlands,” said London Tech Week Festival director Suzy Pallett. “Of the 14 digital tech unicorns created in the UK, six of these (43%) are located in the North-West, including THG [The Hut Group], The Very Group, Radius Payment Solutions, AO.com, AutoTrader and Boohoo.

“The North-West has a long history of pioneering technologies, from being at the forefront of the Industrial Revolution, to its key role in the early days of computing. And in the 21st century, the region is forging new paths, with a focus on modern specialities – healthtech, e-commerce and fintech. Already home to six digital tech unicorns and attracting inward investment from far and wide, the North-West is unsurprisingly showing no signs of slowing down.”

The report said the North-West’s “tech talent and entrepreneurial spirit” is, especially in comparison to other areas of the UK, widely distributed across the region.

“While the region’s biggest cities are unsurprisingly the focus of much attention, it’s not unusual to find successful tech companies in small towns and villages,” it said. “One reason for this is the geographic spread of universities producing talented graduates and conducting relevant research. This means that companies in places like north Lancashire report the ability to attract high-quality staff within travelling distance.”

Simon Shaw, founder and CEO of Manchester-based digital recruitment firm Hiring Hub, who is quoted in the report, said access to talent is critical for businesses looking to scale, adding: “The North-West has a thriving, maturing IT and digital ecosystem that attracts world-class people, providing tech companies in the area with a rich supply of skilled people.”

These sentiments were echoed by other senior startup staff included in the report, such as Antony Chesworth, CEO of e-commerce platform EKM, who said: “A strong pipeline of talent from the region’s universities and excellent travel links mean that Preston is a great home for EKM.”

As well as connections to academia, the report said the region’s success has been helped by its proximity to a range of dedicated support services that are available to tech companies with particular specialisms.

Citylabs in Manchester or facilities such as Alderley Park near Macclesfield, for example, support startups in the healthcare technology space, while Sensor City in Liverpool and GCHQ’s Manchester office support those working in sensor technology and cyber security, respectively.

According to the report, the North-West’s success has also attracted international attention, with multinational technology firms such as Amazon, Microsoft and Booking Holdings building a presence for themselves in the region, and overseas investors taking more of an active interest.  

“According to Beauhurst, there were 389 announced and 502 unannounced tech investment deals in Greater Manchester alone between 2011 and 2020,” said Pallett, adding that this growing investment activity reflects the region’s increasing confidence as a tech hotspot.

“While a few regionally focused investors once dominated deal flow, an increasing number of venture capital firms and angels with relevant domain expertise are now active in the area,” she said. “And North-West companies seem increasingly successful at engaging with investors in London, the US and beyond.

“Raising awareness of the investment potential that exists across every region of the UK is one of the fundamental reasons why we have launched the 12 Clusters of Tech initiative.”

As the investment landscape currently stands, the majority of capital is still directed towards London-based tech startups, which received a quarter of all European tech funding in 2020. While London firms received $10.5bn of venture capital investment, the rest of the UK’s tech startups raised only $4.5bn.

The North-west UK tech report marks the fifth entry to the series by London Tech Week and the UK Tech Cluster Group, and will be followed by subsequent reports for Wales, the West Midlands, the East Midlands, the East of England, London, the South-East and the South-West.

London Tech Week, which is owned by Informa Tech Founders and London & Partners, and co-founded with Tech London Advocates, runs industry events that showcase new tech and create networking opportunities for the UK’s entrepreneurs.

The UK Tech Cluster Group is a self-assembled group of individuals and organisations that support geographical clusters of technology and digital businesses across the country. Working closely with the Department for Digital, Culture, Media and Sport  and other government departments, it aims to highlight opportunities for national policy changes and innovative pilot programmes.