A tech revolution up North
By Renato Peral, Intellectual Property & Technology Lawyer at Squire Patton Boggs
The technology sector is storming ahead of the UK’s traditional industries, with the Yorkshire and North West regions gaining increased recognition as two of Europe’s foremost hubs for digital technology. It remains important, however, that industry leaders confront inherent challenges to continue this upwards trajectory.
Northern Power
According to Tech Nation’s 2019 report, the tech industry in the North West turned over £4.98 billion in 2018 and Manchester has the largest amount of digital tech workers in the UK, outside of London, with 88,000 people working in tech. The same report confirmed Yorkshire’s prominence as another tech powerhouse, turning over £3.67 billion in the same year, with 53,000 employees in the sector.
The success of the two regions is exemplified by the emergence of “unicorn” businesses (a tech start-up valued at more than US$1 billion) that have northern roots. Examples include Leeds-based Callcredit Information Group, which was acquired by TransUnion for circa £1 billion, and the HQ of Sky Betting and Gaming, recently acquired by the Stars Group for £3.4 billion. The North West, in particular, is also home to some of the key players in the northern tech/data space, including GB Group plc and On the Beach Group plc.
Supporting a Technology Greenhouse in the North
Start-up ecosystems are fundamental in harbouring an innovative environment for tech companies to flourish. Such networks often facilitate a collaborative atmosphere between universities, funding organisations, incubators, support organisations and larger corporates to stimulate growth and opportunities. FinTech North continues to flourish, hosting sold-out conferences in both cities with more than 300 attendees at each.
Maintaining the distinctive character of northern hubs is of fundamental importance, and their collaborative nature is evidenced by the emergence of numerous co-working spaces, with Platform, Avenue HQ and the NatWest-sponsored Entrepreneurial-Spark being prominent in Leeds.
Another central factor in sustaining tech growth in Yorkshire and the North West is retaining the elite talent pool that is produced here, with our world-leading educational institutions in the North remaining popular places to study. Businesses are recognising retaining tech talent is not solely the result of remunerative incentive. Elements such as career progression, innovative benefits, flexible holidays, freedom for development and training, cost and standard of living, access to housing and the general work and living environment are also crucial in enticing and retaining millennial talent, who overwhelmingly form the make-up of the tech employee market. Nevertheless, early stage tech businesses still find themselves at the mercy of larger rivals with deeper pockets.
It is encouraging to see the regions’ institutions acknowledging the development of talent: the Manchester Science Partnership provides campus facilities in Manchester and Cheshire; Manchester Metropolitan University (MMU) is offering the UK’s first FinTech Masters course; and Bruntwood SciTech is continuing with the multimillion-pound Circle Square development, located within walking distance of MMU and the University of Manchester. Such offerings help Manchester to boast a 51% retention rate of students from these universities after graduation, second only to London.
Similar efforts can be seen in Leeds with the recent launch of NEXUS, an innovation hub based at the University of Leeds, which is bringing corporates and academics together to drive innovation with shared technology goals. By delivering impactful development of products and technologies, Nexus provides an opportunity to realise the full potential of Leeds’ research capabilities. Leeds University is due to launch its MSc in FinTech imminently and was recently successful in its bid for a place on the Massachusetts Institute of Technology’s two-year Regional Entrepreneur Acceleration Programme, further illustrating the importance of universities to any successful tech ecosystem.
Need for Investment
The success of tech companies, especially start-ups, cannot be realised without the appropriate investment to allow a pioneering idea to evolve into a credible business. Sizeable increases in northern tech businesses’ investment have been welcomed, with both the North West and Leeds City Region Enterprise Partnerships providing access to funding to enable local businesses to prosper. In figures published by KPMG, £226.5 million of venture capital investment was injected into northern businesses in 2018 across 100 deals. Such findings demonstrate that Yorkshire and the North West are increasingly cementing themselves as some of the most active and lucrative private equity and venture capital spots outside of London, which is encouraging for investors and tech companies alike. The growth in professional services and investment firms across the regions also means that a variety of strategic debt and equity solutions are becoming ever more accessible to growing businesses.
Investment in airports and links to South East Asia and west coast USA are welcomed. From a state perspective, projects such as the Northern Powerhouse have also been encouraging in identifying and targeting factors that could fuel economic growth in the North, such as modern transport links and investment in science and innovation. Since its inception, the Northern Powerhouse has made some notable progress, but it is still very much in its infancy. It will be interesting to see how such initiatives continue to affect the North’s tech sector, particularly in the current political climate.
Architects of the Digital Revolution
Yorkshire and the North West were, of course, trailblazers for the industrial revolution and current developments will ensure that they are at the forefront of the tech revolution. The 2019 Leeds Digital Festival built on the significant success of the previous festival, which famously attracted 20,000 people across 68 venues and boasted more tech events than San Francisco. Leeds has been further emboldened by winning the bid for Channel 4’s much anticipated 2020 relocation.
The enthusiasm that was clear from everyone at these events means the future looks exciting as Yorkshire and the North West continue to prove themselves as aspiring global tech pioneers for the coming years.
