Manchester: a tech city on the rise

Angela Jameson, November 15, 2016 7 min read

This article was originally posted on the Tech North website.

BGF Ventures worked with journalist Angela Jameson to create this feature on the Manchester tech scene, following their event with Tech North in October. We feel it’s a really good look at Manchester’s progress, so we’re sharing it with you here.

Manchester has always had a certain swagger about it.

The Northern city is home to two internationally successful football clubs, a world class orchestra, a film and TV production industry and a rich pop and dance music heritage.

To this list of attributes you can increasingly add: a thriving tech community that is competing with the best tech cities in Europe.

Three unicorns (companies with a valuation of $1 billion or higher) come from within or close to the city (AutoTrader, Moneysupermarket.com and The Hut Group) and some of the most successful tech IPOs of recent years are also from the city region: Moneysupermarket.com, AO.com, Boohoo.com.

Figures released last month from the Office for National Statistics also help explain the massive buzz around the city’s tech community: nearly 2,000 business were set up in just 12 months in the city – an increase of 10 percent and well ahead of the average startup rate around the rest of the country (4.3 percent). A good many of them are likely to be in the tech sector.

Direct employment in tech in Manchester is now at 52,000, making it the second city for tech industry after London. If you add in people working in the wider digital industry that figure is closer to 85,000.

You make me want to shout

Martin Bryant, is a tech journalist, who used to travel the world as editor at large of The Next Web and thought that people needed to shout a lot more about the tech sector in the North.

Several years ago he was frustrated by the difficulty in finding a tech scene in Manchester, his adopted home town. “Manchester is the birthplace of the modern computer. Its television studios and music scene have had a huge impact on the country. It also has great computer science courses at the universities here, but people weren’t sticking around.”

Bryant gave a TEDx talk four years ago where he bemoaned the fact that there wasn’t a cohesive startup scene. “People were working in startups, but they were isolated and not sharing their experiences. Also there wasn’t much seed-stage investment from knowledgeable angel investors,” he says.

Maturing

This year Bryant made the leap from tech journalism to working as Tech North’s Community Editor. Since he gave his talk, things have changed dramatically for Manchester which, he argues, is maturing as a tech community.

The ecosystem sprouted organically but as with Tech City in London, it is now receiving nurturing attention from Government. Tech North has been set up to encourage tech businesses in the Northern cities of Manchester, Newcastle, Sheffield, Liverpool and Leeds.

Richard Gregory runs that organisation from Manchester. The building blocks are in place in Manchester, he says, particularly in terms of shared co-working spaces for entrepreneurs and support groups, like Manchester Digital. North-East based accelerator, Ignite, set up in the city this year.

Tech North's Richard Gregory

Tech North’s Richard Gregory

For many reasons, founders are beginning to realise that Manchester can be a great place to scale up a business, Gregory says.

“Rent rises here are not as bad as in Shoreditch and the ecosystem is well-connected.There’s also a booming meet-up scene and there is a great networking dynamic between the existing entrepreneurs and founders. Because the community is much smaller than London, there is much more willingness to help,” he says.

Incoming talent

Claire Braithwaite was recently tech advisor to the Manchester Growth Company, the economic development arm of Manchester City Council, and has now joined the Co-op to help build up that company’s digital business.

“The momentum around the community is certainly building and talent is growing in the city. We are also now attracting talent from the South East,” Braithwaite says.

Five years ago the BBC, the state-owned national broadcaster moved 2000 programme makers and news journalists to new offices in a regenerated area of Salford. The move, not always popular, injected new dynamism and creativity into the city.

The BBC has been hiring techies in Salford and other big companies have been basing their software development work in the city. Laterooms.com was founded in Salford in 1999; Autotrader, Bet365.com, moneysupermarket.com and fashion retailer Missguided are all based here. In April, Sainsbury’s wrapped a whole tram in marketing material advertising its hunt for 300 software developers.

The region also has an incredible gaming legacy. TT Games, the Lego games maker now owned by Time Warner, is also just outside the city in Cheshire, while Playdemic, the mobile games maker, employs 65 people in the city. Sony recently beefed up its presence, with a new Salford based studio. The Japanese giant had until recently been a big presence in nearby Liverpool.

Braithwaite says that all these factors lie behind the resurgent Mancunian tech scene.

A natural place to start up

For Richard Potter, Manchester was the natural place to start his data analytics company in 2014, as two of the founders lived there. Peak hit the ground running by quickly winning a major project with Morrisons Supermarkets’ online division.

“The right business conditions exist in Manchester to help us succeed; talent, big businesses, access to capital, travel connections are all here.”

“Plus Manchester has a great challenger and can-do mentality as a city and there is a real energy about the place. It’s also a famous city globally, which helps us when recruiting and engaging businesses abroad (we have a development centre in Jaipur, India).  I’ve lived in both London and Edinburgh and believe Manchester beats both for setting up a tech startup.”

Potter may have started a business in his home town but he’s not just thinking local. He wants to see Peak as a global company and thinks Manchester can be just as much of a springboard as London.

He gives short shrift to London versus Manchester rivalry and thinks Mancunian founders should be willing to get on a train and go down to London to meet investors.

“I’d like to think that Europe can challenge California and New York as a global force in startups, with Manchester playing a key part.”

Other successful tech businesses include On the Beach and The Lad Bible, which was founded in 2011 in Manchester by 24 year old CEO Alexander Solomou. PushDoctor, the on-demand video GP consultation service, is another fast-growing business in the region which secured $8.2 million series A funding in January to help it scale up.

It’s all about the money

Danny Meaney is another entrepreneur who has worked in Manchester on and off for 20 years. He started UP, a tech accelerator based in Edinburgh and Manchester, two years ago. He says the culture of Manchester is changing and that there is no better place than the city for creativity and energy.

When it comes to investors and to what extent they are active in Manchester, he is hopeful. “I don’t think money as such is in short supply – but the visibility of it probably is. There needs to be a ladder of investment money, that can be accessed at different stages from angels, to super angels, to venture capital and private equity. We need all of those.”

Local entrepreneurs say that angel networks could be better developed and less secretive, to make the most out of the money that is already in the region.

GP Bullhound opened an office in Manchester in 2016

GP Bullhound opened an office in Manchester in 2013

The presence of eight unicorns has certainly increased investors’ appetites for what the city has to offer as well and it was a huge boost to the city when GP Bullhound, the specialist tech investment bank, opened an office in Manchester in 2013. Co-founder and managing partner Hugh Campbell was a Manchester Grammar School boy and Manchester is the fifth in a global network of offices for the tech boutique bank.

Crowdfunding platform Crowdcube also recently opened a Manchester office, giving even more options for entrepreneurs and startups.

It’s not like it used to be

Manoj Ranaweera, is a veteran Manchester-based tech entrepreneur with two exits under his belt. He has been bringing tech types – developers, founders, investors – together for almost 10 years and is credited by many with starting the ecosystem, with the help of fellow entrepreneurs. Ranaweera says: “The thriving scene we have now in Manchester was nothing like this, even four years ago.”

Herb Kim, who also works across the cities of the North and chairs the advisory board of Tech North, says there is one downside of Manchester’s huge growth in tech businesses.

“Finding the right people is becoming a problem. Across the North, there are 10,000 of unfilled tech related jobs. Companies are starting to pay London salaries to get the people that they need to service the business, and that’s not sustainable,” Kim says.

The availability of investment is also generally improving but he believes that many venture capital companies see no reason to open a Manchester office, so it is important to develop another layer of funding options.

There is plenty of wealth in the city, but not much of it has so far come from tech businesses.

“There is a lot of private money – much from property – but they are not going to do their own homework on tech. We need someone to bring that in,” Kim says.

Ready for the next stage

BGF Ventures, the UK’s biggest early stage venture fund which has £200 million to invest, recently held an event in the city which brought together founders, established entrepreneurs, and the BGF team.

Simon Calver, founding partner of BGF Ventures, said the BGF team were excited about Manchester and the whole North west. “There are some fascinating things going on here and it is clear that entrepreneurs are building businesses with international potential.

If you have a great team and a strong business idea then investors in London will find you. But as part of BGF we have the advantage of having an office in the city and we intend to use this to get even closer to this thriving tech scene.”

Next year, Manchester’s long-standing council chief executive Sir Howard Bernstein, steps down. Onlookers suggest this is a great opportunity for his successor and the city to really stamp Manchester’s tech credentials on the map. Flights from Manchester to San Francisco also start next year.

The city is ready to go global.

Featured image credit: tecmark.co.uk / Flickr

Opinion, Manchester, North West, Yorkshire