The North West is home to a thriving and rapidly expanding tech ecosystem. For centuries the region was renowned for connectivity and industry, best exemplified by its trademark canals, railways and factories. In the 21st century, though, it has been transformed into one of the UK’s leading technology hubs.
According to data from Tech Nation, nine of the UK’s tech unicorns reside in the North West. The region received $975m in venture capital investment funding last year – a 43.7% increase on the $549m received in 2020 – while there are now more than 222,000 people employed by tech startups and scaleups in the region.
Its status today as a hotspot for digital innovation should not be understated. And while Manchester attracts much of the attention – in 2019 it was named Europe’s fastest-growing tech hub – Liverpool, Salford, Lancaster and Cumbria all contribute significantly to the region’s success.
But what factors have helped to shape the growth of the North West’s tech sector? And what’s next for the region’s tech ecosystem?
Once at the heart of the Industrial Revolution, the North West is now embracing the disruptive potential of Industry 4.0.
There is no single tech sector that is driving the overall growth of this tech hub. Rather, the North West has established its credentials and success stories across multiple innovative industries.
Digital, creative and media is an obvious example, with this sector giving birth to many innovative tech startups. MediaCityUK at Salford Quays, now home to the BBC, has put Greater Manchester and the North West firmly on the map, attracting swathes of talented creatives, entrepreneurs and skilled workers to the region. In 2010, the year before the BBC’s relocation, the total number of those employed in the region’s digital creative sector was 6,310 – ten years later this figure had more than doubled to over 15,000.
Indeed, since MediaCityUK’s creation around 13 years ago, tangential tech sectors have flourished, including digital advertising and marketing, gaming and virtual reality. For instance, a new state-of-the-art gametech campus recently launched at the Home of Skills & Technology (HOST) in the 200-acre complex.
Online fashion and ecommerce
But it is not just the booming media and creative scene that is contributing to the North West’s growth as a tech hub.
Given its rich history of mills and cotton works, the North West had previously been dubbed ‘Cottonopolis’. In the past two decades, it has embraced digital transformation to turn those old strengths into new ones – online fashion and ecommerce are the jewels in the region’s tech crown.
Major names like Boohoo.com and its sister-brand Pretty Little Thing are based in the region. Both have become household brands.
Yet one of the highest-profile tech case studies to emerge from the North West in recent years is THG (formerly known as The Hut Group), another ecommerce powerhouse. The tech firm, based out of Manchester airport, grew rapidly throughout the 2010s before floating on the London Stock Exchange in 2020 – at £1.8bn, it was the largest IPO on the LSE since 2013.
Success begets success. The strength of the online fashion and ecommerce scene in the North West in turn creates a high volume of tech roles for web and app developers, digital marketers, UI and UX experts, and payment specialists. Again, as with the thriving media sector, it also allows complementary industries to flourish.
Manchester-based customer engagement platform Connex One is one of the bright lights in the North West tech scene. Used by the likes of O2 and Gousto, the company recently secured £93m in a Series C funding round.
A mix of old and new
But the rapidly expanding tech ecosystem still gives a telling nod to the region’s past, too. Manufacturing has long been at the heart of the North West economy, and this sector is modernising at pace.
“The North West is taking advantage of the technological advancements that have occurred in the region over the centuries to create an exciting future for itself,” says Naomi Timperley, co-founder of Tech North Advocates.
“Traditional sectors such as manufacturing are also starting to embrace new technologies such as IoT, AI and robotic systems to remain competitive in today’s fast-moving digital economy.”
Made Smarter, for instance, an initiative that helps manufacturing SMEs start their digital journey, received £6.1m funding from the government earlier this year. With the organisation’s help, the North West’s manufacturers are set to create 1,250 new jobs, upskill almost 2,300 existing roles with digital capabilities, and deliver an additional £176m in gross value added to the region.
Head west towards the coast, Liverpool is establishing itself as a leading city for medtech, healthtech and pharmatech.
ChiroChem, based in Liverpool, creates and distributes specialty building blocks for pharmaceutical research and biotechnology. Also from the city, Bluecrest Health Screening is now ten years old – it has secured more than £17m in funding to date. While Sky Medical Technology, based in the Liverpool City Region, has garnered attention for the geko™, a wearable medical device that increases blood flow in the leg to transport oxygenated blood to a wound.
Liverpool is, of course, famous for being home to The Beatles. In their song Revolution 1, the city’s prodigal sons once sang “We all wanna change the world”. Its tech startups have taken up that mantle.
Above Manchester and Liverpool is the historic county of Lancashire. While its tech sector is smaller than its cosmopolitan neighbours, the slower pace comes with its own advantages, says Craig Parsons, CEO and founder of Chorley, Lancashire-based B2B TradeCard.
“Lancashire has an energetic technology sector, not wanting to be seen as Manchester’s smaller brother; which means we have a rich pool of brilliant people we can call on in technology and customer service-focused roles,” explains Parsons. “Whilst recruitment is definitely not easy at the moment, the attraction of a less bustling environment has helped us attract people from the larger cities – commuting the opposite way to most is a huge bonus.”
Access to skills
The remarkable performance of key sectors is an important part of North West’s tech success. But there are other factors at play, including access to skills.
The UK’s digital skills gap is well documented. Positively, the North West is well placed to bridge this gap thanks to its vast student population.
There are more than a dozen universities spread across North West England. These include the Universities of Liverpool, Manchester, Bolton, Cumbria, Central Lancashire, Chester and Salford; Liverpool’s Hope University and John Moores University; Manchester Metropolitan University; and Lancaster University.
The University of Manchester alone boasts a student population exceeding 44,000, placing it behind only The Open University and University College London in size. Combined, there are more than 200,000 students studying across all aforementioned institutions.
The strength of its higher education network helps ensure access to talent for the region’s growing collective of tech startups and scaleups. This is bolstered by additional initiatives that are more specifically designed to improve digital skills in the North West. Many of these initiatives, though nascent, are gaining traction.
In August, Gary Neville’s University Academy 92 (UA92) secured a £1.25m investment to support its attempts to address the digital skills gap in the region.
A month later, North West-based digital training programme The Fearless Academy received £500,000 in funding to support its goal of closing the digital skills gap.
Infrastructure and networks
The North West also boasts an ever-growing number of accelerators, incubators, networking groups and specialist workspaces designed to supercharge tech in the region.
A year ago, Sci-Tech Daresbury, a campus located in the Liverpool City Region, announced that it was creating a new Digital Tech Cluster that stands to bring 1,000 tech jobs to North West England. The cluster aims to give small businesses access to the power of supercomputing, data analytics and artificial intelligence.
Similarly, in October last year, PwC stated that it will create up to 1,000 jobs over three years at its new technology hub in the North West. Meanwhile, in June 2022, commercial property company Bruntwood SciTech revealed it would be opening £21m tech hub at Manchester Science Park.
Bruntwood also joined forces with investment bank GP Bullhound recently to launch investment network Manchester Angels. The network will invest in technology and life sciences in Greater Manchester.
The proliferation of specialist digital centres and initiatives across the North West illustrates the region’s standing as one of the UK’s leading tech hubs. They also play a critical role in ensuring tech startups and scaleups based in the area are able to fulfil their potential.
What next for the North West?
The growth of the tech sector in the North West over recent years has been remarkable. With deep roots in traditional industries, the region has been digitally transformed and is now a hotbed of innovation, talent, opportunities and success stories.
However, challenges undoubtedly lie ahead. Many of these challenges mirror those experienced by the tech ecosystems in other regions.
For one, access to investment remains a critical barrier to address. Data from KPMG shows that while London-based businesses attracted £5.8bn of VC investments between April and June, companies from across the rest of the UK received less than a quarter of this amount combined (£1.4bn).
Different areas within the North West also face their own unique challenges. Lancashire, for example, does not have the benefits that come with a densely populated urban area.
“As a largely rural county, we have a much smaller technology sector which can make the natural support networks harder to find and to nurture,” says B2B TradeCard’s Parsons. “But out resilient nature and the support we do get from local authorities helps counter that.”
The North West, though better equipped to tackle the issue than many, still suffers from the digital skills crisis afflicting all UK regions. Adding to this are the macroeconomic factors of rising interest rates and double-digit inflation, which impact tech businesses’ cost of borrowing and overheads.
“While there is so much to celebrate when it comes to tech in the North West, there’s also no room for complacency,” says Garry Birchall, relationship director, Greater Manchester, Lloyds Bank.
“We have to ensure scaling tech companies across the region have access to the support they need to flourish. Whether it’s access to finance, skills or commercial guidance, now is the time to double down on the great talent on show in the North West and ensure the brightest businesses can achieve their potential.”
Lloyds Bank’s relationship managers are experienced in the tech sector and are keen to support further growth of this vibrant industry. Please get in touch today to discuss how we might help your business.
Steve Harris is the UK head of technology for SME & mid corporates at Lloyds Bank.
For more information about how Lloyds Bank supports UK tech businesses, click here.
In partnership with Lloyds Bank.