This week Tech North launched the Digital Powerhouse Report, detailing how collaboration can help boost the Northern tech sector. One city that exemplifies organic collaboration between different parts of the ecosystem is Newcastle. Here we take a closer look at the city’s story.

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These days it seems that every city wants to foster a successful tech ecosystem. For inspiration, they should look to Newcastle which has been ahead of the game in the North of England for some time.

The North East’s de facto capital city has a thriving ecosystem, bolstered by a close-knit community of supporting organisations.

There’s the Ignite accelerator to support young companies, the Campus North shared work and events space acting as a hub for the community, Dynamo to support the wider IT industry, and a particularly supportive group of local investors. That’s not to mention activity across the wider North East region such as Sunderland Software City, which offers business support to emerging technology companies.

Beginnings

It’s hard to miss the significance of Sage in the Newcastle area. The eyecatching Sage Gateshead music venue dominates the city’s view of the south side of the River Tyne and is supported by the the hugely successful, FTSE 100-listed accounting software firm that shares its name.

Sage was founded in the city in 1981 and continues to be based there, serving as inspiration to a new generation of firms leading the charge of a thriving technology community.

But while Sage is an ever-present reminder of the heights that can be achieved, today’s tech scene in the Newcastle area has its more direct roots in activity that started 12 years ago.

“If you want to build a digital economy it takes some time,” says Alex Buchan, Investment Manager at Northstar Ventures, a venture capital firm that currently manages three technology funds focused on the North East region.

Buchan attributes a lot of the credit for the early stages of Newcastle’s development to Codeworks, a publicly-funded body that existed between 2004 and 2012. Led by Herb Kim (who is now acting head of Tech North) and backed by public money, Codeworks helped connect a disparate group of small technology companies in the area through a programme of events. The most notable of these, Thinking Digital, lives on to this day.

London-born Tristan Watson moved to Newcastle in 2008, just in time to see the technology scene there begin to flourish. Now the Managing Director of the Ignite startup accelerator which is based in the city, back then he was an e-commerce entrepreneur with an interest in building online marketplaces.

Watson started getting into conversations with likeminded tech enthusiasts on Twitter, through which he met people like Paul Smith, a formidable figure on the local scene, and Paul Lancaster, perhaps one of the most enthusiastic cheerleaders for tech in the North East.

It was around this time that things really started to take off. The UK’s first US-style startup accelerator, the Difference Engine launched in nearby Middlesbrough in 2010, funded by public money and giving an early boost to nine companies, some of which have a presence in Newcastle to this day.

Watson joined the Difference Engine’s second cohort in Sunderland with a startup called Love Your Larder. Following this, he ended up working out of a loft alongside a group of other startups and the nascent Ignite, which had been founded as a successor to the Difference Engine, with Paul Smith at the helm.

The loft space had been recommended by Paul Lancaster, who at the time was working for a public body called Project North East but was spending his spare time helping tech startups. His volunteer work included acquiring access to a disused Post Office building, which he opened up for use by tech community meetups.

Lancaster’s suggestion of the loft, situated close the Post Office building, grew out of the idea of having a cluster of technology activity in close proximity, similar to London’s Old Street roundabout area. Nowadays, Campus North fills the roles of event space, startup work hub and community centre for the tech community. Its most recent addition, a coffee shop next door, boasts an additional auditorium to allow for more events.

Campus North is a not-for-profit venture, and Lyndsey Britton, the centre’s Co-founder and Head, says that its remit has expanded in the two years since it was opened. Free coding classes for adults, CoderDojo classes and maker parties for children, careers events… they’ve all been added to cater to needs in the community. And like much of the rest of Newcastle’s scene, it’s evolved organically.

Lancaster is enthusiastic about the expanding footprint of technology companies in Newcastle city centre. He highlights The Core – a new seven-storey building dedicated to housing companies in the fields of cloud computing, big data and ‘future city challenges’ – as an example.

A special sense of community

James Rutherford is another Difference Engine graduate and now spends his time as a ‘CTO for hire.’ He has lived in Newcastle since 1999. Originally from Manchester, he was attracted to the city by the games industry at the time. He says that he thought he would only spend a couple of years in the city before moving on, but he fell in love with it.

Graham Parker, CEO and co-founder of Kontainers, a shipping tech company based in Campus North, has remained in the city more than a year after completing the Ignite accelerator programme. Although he has to spend a lot of time in London at meetings, Newcastle is home because the sense of community in the city, and Campus North in particular, is “special. It’s so friendly and supportive.”

Rutherford and Lancaster both say that a key part of Newcastle’s appeal is its size – large enough to keep things interesting, but small enough that it’s possible to make an impact if you want to.

Destination Newcastle

Not everything in the city’s tech sector is homegrown. Inward investment work by Invest Newcastle is paying off, with tech companies from elsewhere opening up local presences.

A headline name is French gaming giant Ubisoft, which employs 130 people in a Customer Relationship Centre in Newcastle in addition to a games development studio that employs more than 250 people. Mobile engagement specialist Mkodo opened its first office outside London in the city, while Panalitix, Spotlight Reporting, Logicnow, Gavurin and TidyWork all employ teams in the area.

“Digital, tech and innovation is becoming an integral part of Newcastle’s economy and future aspirations, driving growth and making a significant contribution to the Northern Powerhouse,” says Catherine Walker, Inward Investment Director for Invest Newcastle.

Into the future

Tristan Watson is upbeat about Newcastle’s future. “It feels more joined up now. People don’t talk about a specific tech sector, it’s more a case of tech underpinning wider industry. Manufacturing counts itself as part of the tech community, for example.”

Lyndsey Britton agrees that the city feels more ‘joined up’ than it used to. She says that while in the past different groups would push forward with plans to host overlapping initiatives or events without talking to each other, there’s more of a collaborative, networked approach now. This is better for the city as it prevents duplication of effort, she says.

Paul Lancaster, who since leaving his community engagement role here at Tech North has started a business to help support the North East’s technology ecosystem, notes that areas like Manchester are rising fast and this has taken some of the hype away from Newcastle.

James Rutherford doesn’t think Newcastle should be worried about other cities’ successes, but notes that the city’s role as a key part of a wider tech community across the North East in places like Sunderland and Middlesborough, shouldn’t be ignored. Sunderland Software City supports businesses across the region, for example.

Should Newcastle aim to become the number one UK city for tech? Watson doesn’t think it needs to compete with other regions of the country – he’d rather it be possible for people to find work with successful technology companies wherever in the country they are. “I don’t want my daughter to have to move to find the job she wants.”

There’s just one major thing that needs to be achieved by Newcastle’s 12-years-in-the-making ecosystem – a new success story to match that of Sage. Watson hopes that some of the current rising stars of Newcastle tech reach that level – global firms with a local home, helping to bring more good quality jobs to the region.

Some Newcastle startups to watch

Moltin: This simple to use but powerful e-commerce development platform came out of an agency background and is backed by both Ignite and Y Combinator.

Kontainers: Transforming the freight shipping industry by making the process of booking a container as simple as ordering a courier.

SoPost: Working with beauty brands, SoPost gets product samples into the hands of the right consumers via online marketing campaigns.

Leaf.fm: A team from Costa Rica settled in Newcastle to launch this music discovery app. One of Tech North’s 2015 Northern Stars.

Fit Gurus: Training routines from top fitness trainers and athletes, delivered to your iOS or Android device.

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Email James Bedford, Head of Investment Strategy at Tech North: james@techcityuk.com to share your comments and suggestions.