Opportunity favours northern tech innovators
By James Fitzgibbon, corporate partner at Squire Patton Boggs.
The North has a long tradition of innovation and disruption, and nowhere is this more obvious than in our technology sector.
Looking at the diverse spread of the North’s tech businesses, whether they are early stage growth companies looking to secure investment and grow to the next level, or some of the region’s biggest tech businesses, they face similar challenges and opportunities.
Most businesses will eventually need capital to scale up, and striking the right balance between attracting the right investor and incentivising the team to grow value is critical. Access to different types of funding is available and plentiful from both domestic and international investors, for the right opportunities. Often, the difference between securing the right investment opportunity, or not, is being able to tell the story.
What is it that makes a technology business different? How does its innovation make things better for the customer, or end user or the world at large? What investment is needed and why, and how will it increase revenue or grow value? When these questions are answered, other things that are important to a sustainable business need to be addressed: Who owns the intellectual property? Does the business need to bring in other skills? Does it have a business plan for one, two or three years?
The most successful tech companies of recent years have been able to articulate what it is about their product or service that is disruptive, different or augments what is already out there. They believe it will be a success and have the expertise and confidence to deliver it.
One of the big issues for technology businesses is talent – how can they attract and retain the best people? Some of the most successful businesses recognise where skills need to be brought into their team, at both senior and junior levels. Our Northern cities are attractive places to be, with world-leading higher education institutions and vibrant communities that attract people who want to live and work in our cities. So the talent pool is there, and it is increasing.
There is no ignoring the fact that the tech workforce is, in the main, millennials, who are more connected than previous generations, aware of their choices, and are driven by more than money. All this means that some of the most exciting technology businesses in the region have introduced innovative ways to engage with and motivate their people. For example, we see more and more companies adopting an “unlimited holiday” entitlement in their employment contracts. An approach like this helps young businesses capture talent by being in tune with what employees care about and, most importantly, empowering their people to make their own decisions, take responsibility and engage with the direction of the business.
Gender diversity is also a well-known issue in the tech world. A key focus for the sector as it grows will undoubtedly be on addressing the relative lack of diversity in tech, with significant investment perhaps needed to do so. The businesses that address this properly will benefit enormously.
Technology is making the world a smaller place, and this makes it easier for companies of all sizes to operate internationally. This presents a fantastic opportunity and businesses, particularly in the tech sector, are looking to take advantage of international growth and partnerships, sometimes in spite of wider economic and political uncertainty but more often because of it, to get ahead of the competition.
Of course, this means complying with international law, and early stage or fast-growth companies can find balancing the competing costs to their growing business a challenge.
However, make no mistake: compliance is a badge of trust and authority, and can be the difference between winning a client or not, or the difference between achieving the best value for a tech business or not. Making sure that the business-critical intellectual property is, in fact, owned by the business, that the business is GDPR compliant and that the key contracts are as robust as possible is at the very heart of every successful tech business.
Tech is thriving in the North. Investment in infrastructure will keep us competitive internationally, there is an enviable talent pool of ideas and innovation and, importantly, there is a historic tradition of the North competing on a global scale to uphold.