How local government can encourage digital regional growth

Romilly Dennys takes a look at what local governments should do to stimulate the UK’s tech startup community.

When I joined Coadec as the new executive director, my main priority was to build our UK-wide community of tech startups, and the investors and organisations who back them.

Just as I meet startups face-to-face in London, I strongly believe there’s only one way to understand regional tech communities; their local startup culture, government framework and distinct challenges – and that’s to jump on a train and hear their views in person.

Notwithstanding the often eye-watering expense of travel – itself a barrier for startups – I’ve visited Brighton, Cardiff and Newcastle, with future trips to Edinburgh, Liverpool and Birmingham planned. Three trips alone have created streams of policy content, case studies, new ideas and inspiration, but I’d like to focus on the role of local government. Against a backdrop of devolution, Brexit and a new Industrial Strategy, local government will play an integral role in ensuring digital economic growth continues across all sectors and reaches new corners of the UK.

When working in public policy, it’s all too easy to focus within the walls of Whitehall, but to truly understand the growth potential of our regions, we need to start from the bottom-up: hear from the people that generate growth, understand the local government structure – and areas for improvement – and then integrate knowledge with top-down ministerial policy discussions.

And while it’s not a perfect coupling: the lean, fast-growth dynamism of startups who work minute to minute, against the more complex, bureaucratic makeup of local government, when it works well – innovative private and public sector partnerships, supportive business rates for startups and accelerators, vocal local champions – it’s a catalyst for growth that can be replicated in areas yet to feel the effect of digital growth. But when it doesn’t work  – restrictive planning laws, cumbersome funding models, and local apathy to entrepreneurship – the obstacles are felt acutely by the startup community, and threaten the future growth of a region.

In addition, without a public discourse on the specific local challenges facing founders, we allow the tendency to discuss startup challenges in general terms, and herald cities as success stories, without also considering the complex and geopolitical sensitive barriers to growth that exist, especially in areas of high deprivation.

Brighton

Take Brighton for example. No one would argue that Brighton hasn’t seen fast growth in recent years, a large digital creative industry and one of the densest populations of digital tech business in the UK, including the largest digital workforce within non-digital businesses. But local founders still believe they are held back by the structure of the local growth deal grants that seem intent on making the process as difficult as possible. One anecdote is the tight remit for expenditure that asks founders to spend their money on specific areas, such as 3D printers and the requirement for the startup to create jobs. This is a sensible proposal, except when the startup has no need for 3D printers, and actually, what will help them create jobs is a flexible funding model to hire staff. And while the Brighton i360 tower has a lovely view, one can’t help but feel that there are other ways for council investment to ‘spur the wider renewal and regeneration’ of the city.

Simon Riley, founder of EdTech startup MakerClub, is one of Brighton’s brightest entrepreneurs, helping reimagine education and the world for young inventors. But he is no stranger to the perils of securing local investment, and told me of his frequent trips to London in order to attract further funding.

Some 260 miles away in Cardiff, the ease of meeting investors and the London-based community becomes a more timely and expensive journey, but you hear exactly the same issue of a lack of investment on the ground.

Tech in Wales

Finance Wales has a specific £3m seed fund, but founders raised concern at its crippling expectations, similar to a lead investor. The high-level of administration was also cited as a serious barrier, in contrast to the private sector, as was an aversion to risk or any bad press. Despite this, founders spoke supportively of government engagement with startups and their open door policy.

The growth potential of Cardiff is everywhere you look, with significant building infrastructure taking place, including the new BBC Media Centre. And I felt ignorant not knowing that GoCompare is a Cardiff-born startup, in comparison to the well-documented example of Skyscanner as an Edinburgh success story. And while Wales – relatively speaking – is the fastest-growing digital economy outside London, it’s easy to forget that it was only five years ago when my host, Neil Cocker, wrote the infamous blog post ‘Cardiff’s Startup Culture – what can we do about it’.

Born out of a frustration at the lack of tech startups and available support for growth, his hard work has paid off, but Cardiff still waits for its first high-profile exited founder to champion its homegrown success stories on a national scale, and also put back into the tech community. And as Cocker wrote: “Government backing is usually too outdated and inflexible for our types of companies.”

Newcastle

In Newcastle, the outcome of the devolution deal plays heavy on the minds of people passionate about its future as digital leader. There’s a concern that if Newcastle doesn’t agree on a deal, then the wider North East will be left behind as part of the Industrial Strategy and Brexit negotiations. Touching on the industrial strategy, there’s a real role for Newcastle and the wider region, to grab hold of the potential for digital to support traditional industries as part of the Industrial Strategy – backed by a supportive local government. The accelerator Ignite is looking at creating an industrial-style programme, working with engineers to embed tech in their business.

As part of the council’s local regeneration plan, there’s great potential for disused spaces and deprived areas to become new homes for these programmes, as well as new industrial digital partnerships and startups. A rival to startup ecosystem B. Amsterdam could be created in the North of England, but focused on integrating the fastest-growing sectors, digital innovations and traditional industry, such as smart data and the automotive industry.

In short, local governments need to identify and then fast-expand the opportunities of the new digital economy across every sector and help shape a bold model of digital enterprise to fuel regional growth. In five years from now, our cities will once again have evolved in ways we probably can’t even imagine. So let’s look ahead now, and build on the achievements of the past.

This article originally appeared in Issue 12 of Tech City News magazine – The PropTech Issue. Subscribe here to receive future issues of our magazine.