Mention the UK technology startup scene to anyone outside the country and they’ll probably think of London’s vibrant scene around the Old Street roundabout, or maybe clusters in places like Cambridge, or at a push the northeast of England around Newcastle. One area that won’t get a look-in is the northwest.
Spanning from the Irish Sea to the Pennine mountain range, the northwest of England is a region brimming with creative talent. It punches above its weight in the music department – The Beatles, The Smiths, Joy Division and many more classic bands came from the region; its scientific record is outstanding – among them, Alan Turing did much important computer science work in Manchester, the same city that gave birth to The Baby – the first stored-program electronic digital computer. Games-wise, Sony’s base in Liverpool grew from the seeds sown by a vibrant independent developer scene in the northwest
All this world-class talent, and yet it’s difficult to name a single Internet startup from the region.
The problems
One northern venture capitalist, Ajaz Ahmed – founder of iconic dialup-era British ISP Freeserve, which helped bring the Internet to the masses – bemoaned the state of the UK startup scene this week. Speaking at the first ever Northern Tech Awards in Manchester, Ahmed criticised companies lack of attention to detail as a key factor behind no British businesses (aside from the publicly funded BBC) being in the top 100 Internet companies worldwide.
VCs also came under fire in Ahmed’s speech for acting more like bank managers giving out loans than as investors taking a risk. Ahmed later explained to me, “In order to be successful you need to have real empathy with customers, some of the best most successful digital companies and American VCs really understand what customers will like and not like, they don’t ask customers because they are typical customers themselves.”
“Most of our VCs come from a finance background and are more comfortable looking at the figures rather than ‘is this actually a good idea?’,” Ahmed continued.
These are common complaints in the UK, and they probably apply equally to London as they do further north. However, the north of England additionally suffers from not being part of a ‘world city’ environment. Instead of being concentrated in one small area, they are spread out across many cities and small towns.
The potential
There are many challenges , although things could be starting to change. The Northern Tech Awards, at which Ajaz Ahmed was speaking, was designed to celebrate the achievements of startups making the arduous “uphill journey” from bootstrapped idea to profitability and a lucrative exit.
The Awards have been founded by Manoj Ranaweera, who has been running networking events for startups in the northwest for five years, presently under the Techcelerate banner. “If you are an early stage tech company operating out of Manchester and the North, it is unlikely you will get to see more than 5 VCs on average, before continuing with bootstrapping and eventually giving up. That’s a bit dramatic, but true for many companies we’ve met since 2006,” he says.
Ranaweera wants to attract more VCs to the north of England. “Instead of tech companies having to travel to London and elsewhere, we will bring the VCs (and angel investors) to them. By doing this, tech companies will improve their pitches and propositions.”
There’s also a real need for a stronger community to support Internet startups in the north. While it’s possible to go to far too many networking events in London, it can be difficult to find many useful, relevant ones north. “The community needs to step in to help fill the gaps, increasing the chances of success for capital raising,” say Ranaweera. “The momentum should encourage more people to take risk by setting up their own tech companies – a ‘if he can do it, so can I’ attitude.”
Ranaweera has recently opened a shared office space for startups, called Tech Centre Manchester. Inspired by London’s TechHub, which has had a noticeable impact on the startup scene in the capital and beyond, he wants it to use it as the basis for a new ecosystem in the northwest. The plan is to cultivate links with other nearby centres aimed at tech companies, as well as universities in the region.
Ranaweera’s problem is that he’s trying to do this on his own, while also trying to run his own startup, Edocr. Tech Centre Manchester is currently unsubsidised too. Charging commercial, central Manchester rates could well make it too expensive for many startups. He hopes to bring large international Internet companies on board as founding partners but at present the initiative is still at an embryonic stage.
At a recent Techcelerate networking event in Manchester, a heated debate began about how to kickstart the region’s startup scene. Many people present argued that an accelerator scheme similar to The Difference Engine and Springboard, both spearheaded by Jon Bradford in other parts of England, would be beneficial for the region. The mood appeared to be “If only we had our own Jon Bradford here.” Until that happens, an ecosystem may have to evolve without the promise of any direct investment. Even if startups can help themselves by pooling resources where possible, it would be a start.
The people
While paid-for networking events like Techcelerate can help, there’s a definite need for more casual get-togethers of like-minded coders, designers and entrepreneurs. “Startups in the north of England will always struggle due to the lack of critical mass,” explains Jon Bradford. “This can only be addressed by encouraging startups to work and play in close proximity. Creativity comes from working alongside other bright and talented teams.”
Duncan Stockdill, whose company Capsule CRM won Best Enterprise Startup and Best Bootstrapped Startup at the Northern Tech Awards, agrees. “A strong local tech community would be great so that we can share ideas and experience with other startups and also meet potential future staff,” he says. “Manoj has done a good job with Techcelerate, but that tends to draw the business side of the tech community. There’s also some smaller groups such as geekup with a hardcore tech focus and it would be good to see these growing.”
Stockdill is also keen to point out that, really, location shouldn’t be a significant factor for a Web-based business. “The truth is that successful tech businesses spring up in cities all over the world. There’s absolutely no reason why a tech business in the North of England shouldn’t be successful if they have a good idea and good execution.”
Even without a well-developed ecosystem, it does feel like something might be changing. Maybe it’s the economic downturn sparking people’s entrepreneurial spirit, but I’ve had two potentially top-notch, consumer-facing startup ideas from Manchester companies pitched to me within the past couple of weeks (more on those on The Next Web soon) – something that’s been absent in the two years that I’ve been closely watching the scene in the city.
Manoj Ranaweera plans to make the Northern Tech Awards a larger affair next year, taking in companies from a wider swath of the north. Hopefully by then we’ll have seen more collaboration between startups and a better developed startup culture in places like Manchester.
It won’t be easy though. As Jon Bradford notes, “Startup life is hard, and more so in the North. Whilst there are definite signs of green shoots, but they require nurturing from all of the ecosystem participants rather than this falling upon the shoulders of a few.”















Martin, thank you so much for a great summary of the tech ecosystem in the North West.
Best regards
Manoj
Very good article.
I am myself living in the North West, due to graduate this summer with a CS degree. I’ve been bootstrapping an idea with a friend since August, and although we are looking at launching in the summer the North West looks pretty dire for potential investors or collaborators. It’s a shame that we are lacking a creative hub such as the Silicon Roundabout. Hopefully Tech Centre Manchester may bring a change about. Until that happens most start-ups will probably keep their eyes set on moving South to get more exposure and be where “things happen”.
Northwest is changing for the better.. its been a long time coming. Infrastructure is being built.
liverpoolwaters.com 5.5 billion development
wirralwaters.com 4.5 billion development
mediacityuk.com 650 million development (200 acre media city)
now just need finance, and the companies.
@vocalize I don’t mean to be pessimistic, as far as Media City is a really cool project, I doubt I will see Liverpool/Wirral Waters completed in my lifetime so the projects will be nice for future generations, but for people looking to start now, not a lot is available. It’s time to strap up and keep trudging along.
Wonderful. Share a website with you , ( http://www.goodshopping.us/ ) Believe you will love it. We accept any form of payment
It has been ever thus, when I first started looking for finance (15+ years ago) for my first project everyone in the North West wanted to provide funding on a ‘loan’ like basis even though the rest of the world was making cavalier investments based on the idea.
The bursting of the dot com bubble entrenched that view as the people who’d been cavalier either ran out of money or moved elsewhere for the ideas that they could really exploit. There hasn’t been a wave of new ‘sexy’ investment since :(
Each time I look at the projects to build a new ‘silicon valley’ I want to cringe they are all trying to build a model of something that grew organically rather than sitting down with a blank sheet of paper and say what makes a good ecosystem for something like SV to exist (low rents space, excellent connectivity and a constant source of raw talent would be my choices – 2 out of 3 Manchester has)
Manoj seems to be going in the right direction by not creating a grand plan, but a small project without the support of local government will only go so far and (from painful experience) the thought of building an ecosystem for startups isn’t something that (local) governments want to get involved in (nor do they have the experience to do so).
I disagree with the whole premise of the article. There are TOO MANY informal get togethers in the North West, the space is so crowded with events at MadLab, GeekUp, groups for developers in Ruby, Python, PHP, etc., etc. that everybody is so busy going to events to actually build companies.
I’ve worked for over half a dozen startups in the Northwest in the last 6 years. Some of them bootstrapped, some of them Angel-invested, some of them VC-backed. The idea it’s not happening is ludicrous…. Could it happen more? Or more visibly? Maybe. But more networking events isn’t going to be the answer.
@Paul Robinson Interesting point Paul. There certainly are a lot of developer meetups etc, but that’s different from events aimed at helping entrepreneurs get together, pool resources and compare notes in a startup-focused ecosystem. Developer meetups certainly play a part but I’d say that there’s a lot more that can be done.
@Martin Bryant I know of at least 3-4 a month in the North West alone, not including Manoj’s events! However, that for me is not the issue: networking events in themselves acheive very little. There are in fact too many events, and not enough start-ups getting the visibility they need…
@Paul Robinson Are you still planning to host your Lean Startup Weekend?
You’re right, but Manoj isn’t going to build this – he’s a marmite character who makes far more enemies than friends and has trouble positioning his own start-up so that anyone understands what value it adds. Many people don’t like to be associated with him and the baggage he brings with.
If this is seriously going to happen in Manchester to create a real buzz (and not just a time-wasting series of self-promotional events), it needs to be run by (a) a proven entrepreneur with (b) VC experience who can (c) open serious opportunities for the community and (d) do it without charging (a fortune).
Nothing personal against Ranaweera, but he’s no start-up supremo, and TechCentreMcr ain’t no TechHub.
BB
@broadbandbuilder :)I don’t know Manoj personally – but I know lots of successful ( some uber successful) tech entrepreneurs – Most of them are Marmite characters
@broadbandbuilder You’re right that it needs to involve more people than just Manoj, which is why I ended the piece with that quote. I think we can all help by being constructive and moving in the same direction. I hope with a bit of traction, something worthwhile comes out of the conversation.
@broadbandbuilder would be interesting to pick a conversation to understand your grievances, if I have pissed you off somehow.
Nice piece
I have some experenice of all of this having both founded a start-up, raised angel funding sold part of the business and acted as an advisor to Manchester CIty Council.
I find it bizarre that we are so hooked up on the great North South thing. Manchester is only 2 hours from London (that would be nothing if you were on the continent or in the states)
Perhaps the efforts should be put to closing the gap between London and the NW. Manchester which has a large bio and tech graduate base and a great location, international airport… (shitty weather of course)
What it lacks is funding, mentors, notable exits.
Top down led movements are never particularly successful. Public bodies are awful at understanding entrepreneurs their drivers and needs and politically have their hands tied even in prosperous times.
Manoj efforts are to be applauded – As James points out small projects without the support of local government will push the above. Small community with then Angels ( those that actually invest) and Mentors – that drags the VC’s then the exits.
I enjoyed reading this, but as a NW tech entrepreneur, I’m not sure I agree with some of the points. There ARE big success stories in the NW – moneysupermarket.com & laterooms.com spring to mind as 2 of the biggest, but there are many other entrepreneurs that have had significant exits. There are also a lot of mentors if you go looking and ask people for help – ok, I’m not sure we can get direct access to the likes of Larry Page, but could you even if you lived in Silicon Valley?
I must admit I’ve not looked at the VC route for funding, and was probably lucky to have secured bank finance around 18 months ago. But from talking to people and attending Manoj’s Techcelerate events, I can see that there are pro’s and con’s to VC funding, just like there are pro’s and con’s to bank funding, bootstrapping, etc. One thing I do find is that there seems to be an incessant noise that you can’t make a startup succeed without getting VC funding, that somehow it’s the end of the world if you don’t get it – I just don’t subscribe to this. There are many ways to fund a business and you have to take the ones that are there in front of you at the time, whether this is customers, Friends/Fools/Family, customers, banks, credit cards, a 2nd job, customers, angels, VC’s, customers, selling a kidney (joking!) or any other route.
If being an entrepreneur is about solving problems, and if the problems we are faced with is UK-style VC’s instead of US-style VC’s, or having to find our own mentors, or getting less handed to us than perhaps US startups are perceived to, then perhaps in the end this hard work will start to reward those who dig in and work through it?
Manoj is working hard to build an active and supportive community, and I have personally benefited from attending his events over the last couple of years. Is it the best answer? I don’t know. Does he need help from those who have been through the process of starting, growing and exiting a tech company? Yes, absolutely, but the more of us that help, the better things will be for us all in the long run.