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January 2024

Regional tech report: North East

Sponsored by

January 2024

Regional tech report: North East

Sponsored by

Contents

JUMP TO A SECTION THAT INTERESTS YOU

Introduction 1

Regional tech overview 1

Insider perspectives 2

Key players 3

Looking ahead 4

Chi Onwurah

Chi Onwurah

MP for Newcastle upon Tyne Central and shadow minister (science, research and innovation)

Foreword

Growing up in Newcastle, in the shadow of industrial greats such as Armstrong, Stephenson, and Rachel Parsons helped inspire me to become an engineer.

Today, Newcastle is the most active tech hub in the North East and the North East’s tech sector continues to build on our region’s history of innovation. This timely report by UKTN highlights the growing vitality of the North East tech ecosystem.

Our five universities are a source of great strength, producing skilled STEM graduates, developing cutting-edge technologies, and supporting high-impact spinouts – including Low Carbon Materials, a Durham University spinout which received the prestigious Earthshot prize, or AMLo Biosciences, a Newcastle University spinout working to save lives by improving cancer diagnostics. I mentioned both in Parliament last year.

From May 2024, the North East Mayoral Combined Authority (MCA) will enable new opportunities to support our tech sector. The MCA should further enhance public-private collaboration, making our region yet more attractive to tech investors.

As Labour’s shadow minister for science, research, and innovation, I know all too well the challenges around skills, capital, and infrastructure facing tech businesses. Through listening to businesses, we are developing plans to address these.

We want everyone in the North East, and indeed across the country, to benefit from being home to a thriving tech sector: economic growth; better health; and cheaper, greener energy.

Introduction from our sponsors

Caroline Churchill

Partner,
Womble Bond Dickinson

With roots dating back over 230 years in the North East, Womble Bond Dickinson (WBD) understands the region’s potential for business. The North East’s digital (technology and data) sector is among the fastest growing clusters in the UK, with specialisms in AI, fintech, cybersecurity and gaming rapidly expanding. This growth is bringing job opportunities and prosperity to the region, and we are committed to supporting it.

This report helps us to highlight the region’s expanding strengths and areas of future reward, for example in Northumberland and Teesside (which are experiencing renewed levels of investment). It provides us with the ability to identify areas of potential and maximise the North East digital sector’s development by attracting innovation, investment and talent.

We are excited to work with businesses locally, nationally, and internationally to expand our region’s capabilities, drive further investment, and continue the North East’s recognition as a tech and data hub.

Dawn Dunn

Digital and tech sector lead,
Invest Newcastle
The North East continues to be an attractive proposition for digital companies who are looking to exploit the region’s strengths in research and development around data science, AI and immersive tech.

Over the past 12 months, we have seen a number of global businesses establish research sites in the region. Global defence and security company Leonardo, for example, has signed a partnership with the National Innovation Centre for Data to explore federated machine learning and smart data streaming.

We have also observed a material uplift in enquiries from domestic and international companies who are looking to locate in the North East and we expect this pipeline to continue to grow as economic conditions improve in 2024.

Our expectation is that 2024 will be a year of change for the North East as the new mayoral combined authority knits together seven local authorities to unlock a £4.2bn trailblazer devolution deal.

Devolution has the potential to transform the economy of the North East and we hope that the prospect of new fiscal incentives and streamlined decision-making will be appealing to digital companies who can invest and employ at scale.

As always, the decisive factor will be the availability of talent and skills to drive technology innovation.

The UKTN report offers a valuable lens through which we can gauge the current state of the North East’s digital landscape and what needs to be done to cultivate the talent essential for sustained growth.

Sam Baldwin

Technology sector director,
Lloyds Bank Business & Commercial Banking

Whether it be in Newcastle, Durham, Teesside, Sunderland or across Northumberland, the North East Tech ecosystem is continuing to grow at pace and attract deserved recognition as a high-value destination to start and scale innovative enterprises.

The North East’s digital technology sector is growing four times faster than the wider regional economy, driven by a diverse mix of both a buzzing startup community and a collection of more established and well-known digital and tech firms. The region also benefits from an abundance of talent, both from leading universities which carry one of the highest proportions of STEM students in the UK, and the growing number of people taking a career change into tech roles from other industries.

Moving forward there is a real opportunity for the North East to establish itself as a go-to destination for tech investment and startups in the UK, supported by infrastructure build and seizing emerging tech trends.

As part of our ongoing support for British businesses, we have dedicated relationship managers across the North East to support businesses along their growth journey. Collaborative leadership and cohesion across the business and technology community in our cities will be crucial to realising this exciting potential.

Regional tech overview

Ecosystem overview

Specialisms
Academia
Investors
Cross-regional business support
North East-wide networks & events
*Organisations and networks which predominantly work in specific places feature in the relevant regional hub below.

North East tech hubs

Newcastle and Gateshead ​

Newcastle is the most active tech hub in the North East, with the highest number of tech companies, innovation centres, coworking spaces and networks based in and around the city.

A number of established tech companies have a base in Newcastle, including fintech pioneer and global enterprise software company Sage, which launched in the city in 1981, French games studio Ubisoft and SEGA-backed Creative Assembly.

Both Newcastle University and Northumbria University play a central role in driving tech growth, through support for university spinouts, specialised STEM degrees which feed the talent pool, and initiatives like Arrow which connects regional businesses with academic partners for short-term innovation projects.

Spinouts from Newcastle University raised £40m investment in 2023, and the university’s total 37 spinouts now employ 300 people, according to the university.

Newcastle’s Ignite accelerator is one of the longest-running in Europe and is now one of a number of incubation and support programmes in the region.

In 2021, the Kalifa Review recognised Newcastle for its significant growth potential in the fintech sector. Alongside Sage, other fintechs in the city and surrounding area include Newcastle Strategic Solutions, Pockit and Kani Payments.

Gateshead has harnessed its concentration of expertise and success in immersive and creative technology. The new Advanced Media Production facility is dedicated to driving innovation in media production, and is home to PROTO, a multi-use production studio, provides creative tech businesses with the resources they need across virtual production, 3D scanning, motion capture and sound recording. Both are among the first of their kind in the UK.

Accelerators & Incubators
Business & Innovation Support
Business centres & coworking
Events & networks

Sunderland

With industrial roots in coal, glass and shipbuilding, Sunderland is now becoming a leader in transforming manufacturing with digital and tech innovation.

Nissan’s manufacturing facility in Sunderland is the biggest car manufacturing hub in Europe and is now generating a wave of activity around electric vehicle research and production.

The city has particular strengths in smart city technology and IoT. The City of Sunderland runs comprehensive initiatives in this area, including a 5G IoT accelerator for startups, connectivity and digital inclusion projects, self-driving vehicle trials and an assisted living smart house – open to the public and used as a research testbed.

Gambling business Tombola is an oft-mentioned home-grown success story, but the city also hosts local bases for global companies, including EDF Energy, Just Eat and Ocado.

Accelerators & Incubators
Business Centre & Coworking

Teesside

The Tees Valley has a vibrant tech community across Middlesbrough, Darlington and Stockton-on-Tees, with a particular focus on gaming.

Middlesbrough’s tight-knit gaming sector has seen trickle-down effects from the bigger games studios – like Double Eleven – which have helped drive success for smaller and younger gaming companies through collaborations, including Sockmonkey and Radical Forge. The town hosts Animex – an international festival of gaming, immersive technology and animation.

The planning and development of Middlesbrough’s Boho zone has created an epicentre for tech companies to work and connect, giving rise to a high number of events and networks on offer for the startup community.

Teesside University is engaged in tech and business support activities, and is home to the Centre for Digital Trade and Innovation, a national initiative to ‘future-proof’ UK and international trade through innovation and digitalisation. Tech and business leaders in the region are also working with ‘traditional’ industrial businesses and manufacturers to promote opportunities from digital and tech transformation.

Innovation support centre and programme Digital City has played a major role in the development of the digital and tech sector in Tees Valley, and is relaunching its activity following changes to its funding structure and sources.

Accelerators & Incubators
Business & innovation support
Business centres & coworking
Events & networks
Paul Armstrong,
managing associate,
Womble Bond Dickinson

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The ICC Centre for Digital Trade and Innovation in Teesside is one of the most exciting projects in the region. It has the potential to revolutionise the way businesses trade by focusing on the profitability, sustainability and security of supply chains.

The centre places importance on digitalisation and innovation, thereby supporting UK businesses in staying ahead of the curve and competing on a global scale. Recently, the Centre for Digital Trade and Innovation in collaboration with ICC United Kingdom, produced a report detailing the numerous opportunities brought about by the increased digitalisation of trade practices, stemming from the Electronic Trade Documents Act which came into force on 20 September 2023. This act confirms that electronic trade documents can be recognised as legally equivalent to paper documents. Utilising these developments can help businesses in the region unlock their potential through trade.

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Durham

As a university city, Durham’s startup community is largely centred around the student population. The university runs Venture Lab to support spinouts and has produced success stories like ocean agriculture startup Alora, Tred, and Charter, which became the first UK company accepted onto TechStars’ space accelerator programme.

Unlike other university-centred tech hubs in the UK, Durham does not specialise in particular subsectors or industry – in part due to the fact that its university is more ‘traditional’ than vocational in its academic offering.

Stakeholders note that some of Durham’s spinouts and locally founded startups relocate elsewhere as they grow, but Atom Bank stands out as a key player in the local tech and business community, working alongside the university and the city council to further grow the local tech sector.

Radiation detection technology provider Kromek has been based in Durham for twenty years after spinning out of the university in 2003. In 2004, the company was the first tenant at NETPark – a science and innovation hub – and has since grown from three employees to more than 100. NETPark itself is undergoing a £61m, 26-acre expansion project to meet the growing demand for innovation and lab space.

A new innovation campus – Durham Innovation District – is currently in development and will provide workspace, support and community for tech businesses, with a focus on fintech, data science, computing, low carbon energy and healthcare.

Business Durham leads a consortium of universities, public sector organisations and private companies focused on driving growth in the region’s space and satellite sector, through the North East Satellite Applications Centre of Excellence.

Accelerators & Incubators
Business & innovation support
Business centres & coworking

North East tech in numbers

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#1 UK region for density of postgraduate computing students in regional population

Source: Assessing the UK’s Regional Digital Ecosystems report 2021, Department for Digital, Culture, Media & Sport

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£604 median gross weekly wage for North East digital sector jobs, compared to £458 across all North East jobs

Source: Digital Technology Evidence Base, North East Evidence Hub

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402 active high-growth tech companies in the North East region

Source: Beauhurst

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£222m investment into North East tech companies across 111 deals in 2023

Source: Beauhurst

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9.6% year-on-year increase in profitability for North East small and mid-sized businesses, compared to 0.1% GDP increase

Source: Sage data in Local Digital Index 2023 , techUK

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More than 10 specialist support clusters for digital and tech businesses
Natalie Boswell,
regional development director,
Lloyds Bank Business & Commercial Banking

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The diverse range of talent across the North East has been a key driver of the region’s rise within the UK tech ecosystem – underpinned by the high number of quality universities with relative strengths in STEM subjects, including Newcastle, Northumbria, Durham, Sunderland and Teesside.

A number of high-quality university spinouts are prominent within the startup scene, which sits alongside large established digital and technology businesses based in the North East. This breadth of scale demonstrates how the region can be home to innovative businesses throughout their lifecycle, powered by factors such as the talent pool and lower overhead costs compared to other regions.

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