Plugdin: 7 regional hotspots for fast-growth tech in the UK

Plugdin: 7 regional hotspots for fast-growth tech in the UK

The UK’s fast-tech ecosystem is growing exponentially. Though London and the surrounding areas still hold the lead position in terms of digital tech turnover, digital tech company density is spreading throughout several other areas of the country. 

Here we take a look at 7 of the most successful tech hubs in the UK...

An illustration of UK Tech Meetups by location, indicating the interest in areas outside of the London market [source: Henri Sorotos,]

1. Reading and Thames Valley

Daniel Henwood, Partner

What's the lowdown?

Often referred to as the Silicon Valley of Europe, the Thames Valley continues to be one of the most successful tech hubs in the UK.

Fintech, data technology, cyber security and space tech are all areas of growth, and with the UK digital sector expanding more than two and half times faster than the rest of the economy this region is riding the digi-tech wave with gusto.

The region’s tech sector has received almost $1.3bn in investment, has a £91bn in turnover and a value of $585bn. As a key part of the tech startup and scaleup ecosystem, Berkshire is home to 7,800 digital companies and 56,300 specialists.

More recently, Oxford was listed as one of Europe’s top 20 investment hubs for technology, just after Amsterdam and Munich.

And “now that we’re no longer locked down, there’s a lot of opportunity for business to meet and be connected in the ecosystem,” says Daniel Henwood, a BDO audit partner in Reading.

Who’s here?

There’s a broad mix of established tech giants, such as Microsoft, Virgin Media and Siemens, plus startups. Three of the world’s top ten telecommunications companies are here, with Telefónica O2, Verizon and Vodafone headquartered in Slough, Reading and Newbury, respectively.

BT, Ericsson, Huawei, Hutchinson and 3 Mobile also have bases in the region.

Europe's largest data centre conurbation is located on the Slough Estate, with 333,000 square metres of facilities used by businesses including Century Link, China Mobile, Cyxtera, Equinix, GoDaddy, Iron Mountain, Logicalis, NTT Communications, Rackspace, Virtus and Zenium.

The area is also becoming a major cyber security hub. According to the UK cyber security sectoral analysis 2022, issued by the Department for Digital Culture, Media and Sport, there are 676 cyber security companies in the region.

These include Clearswift, McAfee, Sophos, VMware Carbon Black, FireEye, Herjavec Group, Microsoft, Rapid7, RSA and Symantec.

The growing cluster of businesses is driven by the availability of a strong talent pool and access to academic research and development from the University of Oxford’s Cyber Security Centre.

What’s the appeal?

Heathrow airport is nearby and earlier this year the Elizabeth Line opened to the public further improving connectivity to central London.

“That connectivity to London and Heathrow makes it an attractive place for people who want to be close to London but not necessarily live there, and also for businesses to establish themselves and have access to talent from across the region,” says Henwood.

There is robust investment, not just from private investors and venture capital but also local authorities, enterprise partnerships, the Thames Valley Chamber of Commerce and the Department for International Trade, and this look set to continue.

In terms of education and research, the University of Oxford houses state-of-the-art facilities and provides organisations with a variety of spaces, resources, equipment and facilities to support and facilitate the growth of small businesses.

The Harwell Science and Innovation Campus, a 700-acre centre based in Didcot, is one of the leading science and innovation campuses in Europe. It provides approximately 6,000 employees with over £2bn in research infrastructure.

Additionally, the Westcott Innovation Centre in Aylesbury is home to a growing nucleus of companies developing innovative technologies in the space and aviation-related industries, alongside the Westcott Business Incubation Centre and the 5G Step-Out Centre.

Since 2010, this cluster has grown to include 105 space organisations, employing more than 1,100 people. The area will also benefit from the launch of a digital fibre spine project, which will initially run from Basingstoke to Guildford.

This year, Reading was named one of the best places to live in the country by The Sunday Times magazine. The judges praised the high street, broadband, schools and rail connections, as well as a vibrant entertainment scene, shopping and the pull of the Reading Festival.

What are the main challenges?

One of the challenges in the region is holding onto talent as it is pulled towards the capital. “There's a draw of London for both talent and businesses, so in that way the region could potentially lose out,” says Henwood.

Another issue for Thames Valley tech companies is one that everyone has faced with COVID-19: remote working. This has reduced one of the core benefits of tech clusters.

“We’ve seen that one of the challenges over the last couple of years is not working together in a similar location, however this is changing now as we adapt,” says Henwood.

What’s next?

Space tech and drone technology are high on the list of growing sectors. In July, it was announced that the world’s largest and longest network of drone superhighways will be built in the UK over the next two years.

The consortium is led by Reading-based Altitude Angel. Working with EE and UK tech startups, it will build 165 miles of superhighways connecting airspace above Reading, Oxford, Milton Keynes, Cambridge, Coventry and Rugby.

The plans for Project Skyways were proposed as part of the Department for Business, Energy & Strategy’s InnovateUK programme.

Recently, BP announced plans to invest up to £50m in a state-of-the-art electric vehicle battery testing centre and analytical laboratory at its global headquarters in Pangbourne. “Being in the forefront of emerging technologies is great,” says Henwood. “The future of the region looks incredibly interesting.”

2. North West

Mark Sykes, Head of Entrepreneurial Business - BSO and Vincent Walker, Tax Principal

What’s the lowdown?

According to Tech Nation’s 2020 Jobs and Skills report, 19% of all jobs advertised in London were for digital and technology roles. But post pandemic there has been a shift towards regional relocations and investment.

In October 2021, an inaugural Market Spotlight report on the UK’s science and technology economy, by Bruntwood SciTech, forecast the creation of 365,000 jobs by 2050, with the North West seeing more new roles than other regions.

Growth sectors such as electric vehicles, electrical equipment, science and technology design and research and development are big draws thanks in part to the government’s countrywide Levelling Up agenda. 

The North West is expected to grow its economy by 6.5% as a share of its current output, the largest increase anywhere in the UK. Mark Sykes, Head of Entrepreneurial Business at BDO Liverpool, says: “Creativity and technology come together very strongly in the North West.”

Who’s here?

The region has a diverse range of tech sectors represented, but with strong credentials around creative sectors such as augmented reality, life sciences and financial services as well as building on the historic expertise in materials technology and links through to manufacturing. The recent announcement that the Innovate UK Launchpad programme would be piloted in Liverpool focused on Advanced Manufacturing, specifically with a focus on new technology and digitisation, also brings fresh focus around innovation in this space. New funds being managed by Lyva Labs will also provide much needed early support for innovation in the region.

Greater Manchester alone is home to UK tech unicorns including The Hut Group, BooHoo, Autotrader, On the Beach, and

Renowned visual effects and VR-AR agencies such as Flipbook Studio, Realtime UK, Studio Liddell and Carbon Digital are based around Manchester, while Cubic Motion, a motion capture and animation company, is situated is Manchester Science Park.

What’s the appeal?

The North West UK Tech Report says the region’s success has been helped by its “proximity to a range of dedicated support services that are available to tech companies with particular specialisms.”

Both Manchester and Liverpool City Regions recognise the strategic importance of investment in the digital sectors, and actively seek to support inward investment. The large number of top universities in the region with strong research capability and their ability to attract young talent also makes these locations attractive for businesses seeking the future skills needed to enable growth. Infrastructure investment is also being maintained and just recently Sciontec revealed plans for a further £2million investment in the Sensor City innovation facilities. 

The northern universities continue to attract students wanting to learn coding and programming. When it comes to engineering and IT, the North West is a talent hotspot. “That's why businesses tend to set up an office up here as well, even if they are based down south,” says Walker.

What are the main challenges?

Funding is the main challenge.

“The main grant-based funding is now from InnovateUK, with other local grants often being limited to small incentives around operation costs. However, recent focus on levelling up is a positive impact for the region and a real opportunity for businesses to seek further support from the main funds, especially when working in collaboration with others, but the challenge companies often face is the skill set to apply for it,” says Sykes, who adds that 90% of grants are being won in the southeast rather than other regions.   

“The recent mini budget has also highlighted further tax breaks for businesses in the region, with enhancements to tax savings for investment and recruitment, as well as a boost to Seed Enterprise Investment Scheme and Enterprise Investment Schemes,” says Walker. “The reversal of the position on the personal service companies, although still being worked through, will also benefit many technology businesses where skilled resources often preferred to operate through such entities.”

There are some challenges however with public transport links proving to be unreliable in recent months and the cost-of-living crisis and shortage of talent in general playing into inflationary pressures which all technology businesses are facing.

In September 2022, Greater Manchester mayor Andy Burnham said that rail operator Avanti West Coast was in “the last chance saloon” after slashing its timetable.

What’s next?

Transport issues aside, the region looks set to grow as a regional digital tech hub. “We've got to make sure that businesses here are getting their fair share, so what we need to do to incentivise, encourage and help businesses here,” says Sykes.

3. Bristol

James Eastell, Partner and Daniel Bond, Director and Will Daniels, Director

What's the lowdown?
In 2022, Bristol was named among the top 20 European tech hubs for venture capital funding, after its technology firms raised £220m in the first half of the year - according to the UK’s Digital Economy Council.

Notables include ClearBank, which secured £181m in funding in March; offshore subsea firm Rovco, which secured £15.2m in Series B funding; and developer marketplace platform Deazy, which raised £5m from Puma Private Equity.

Additional success stories include software developer Unity5, which provides systems for parking enforcement. “We're continuing to see early-stage tech businesses emerging in the local ecosystem,” says James Eastell “All of that is positive.”

An ever-growing tech hub, businesses in the South West are supported by “incubator-type facilities” often attached to the world class universities in Bristol, Bath, Exeter and Cardiff, which provide a nurturing environment, says Daniel Bond

“Tech businesses are getting investment from VCT [venture capital trust] funds who will back the idea rather than the profit,” he says.

Who’s here?

Chip maker Intel has had a presence in Swindon since 2014, but now machine learning and artificial intelligence (AI) are thriving sectors through businesses that are indigenous to the region.

XMOS, which designs microchips to use in voice activation applications, and Graphcore, which specialises in machine learning and AI applications, are both located in the city, where co-working  spaces such as Runway East, Origin Workspace and Engine Shed make it easy for start-ups to grow.

From a software perspective, Brightpearl, a provider of omni channel SaaS systems for retailers, was recently acquired by the Sage Group, Ultraleap, who leaders in tracking and mid-air haptic solutions, and Amdaris, a global software development company are also located in the heart of the city.

Amdaris was recently recognised as Business Of The Year in the 51-plus employees category by Business Leader magazine at its 2022 South West Awards. Huboo were also recognised in those awards and specialises in order fulfilment for e-commerce.

What are the main challenges?

Bristol and Bath have always been desirable places to live in the UK, which continues to attract people to the region. However, “it’s been a bit of a victim of its own success as it’s quite an expensive place to live now,” says Eastell.

He adds that while the area is a good incubator of early-stage ideas, scaling them hasn’t always been easy. “That's partly down to needing the right combination of commercial and engineering talent on the boards of these companies, which has historically been imbalanced towards the engineering side” he says.

In terms of funding, Bristol is fortunate in that is has two major investors, LDC and BGF, that are locally based. “There are a few smaller VCT-type players including the Wealth Club and the Bristol Private Equity Club, who both invest in early-stage tech businesses,” says Eastell.

“We also see investment coming in from London into the region.”

What is the appeal?

Culturally, Bristol and Bath give London a run for its money. And if you want to travel to London, you can do so in under an hour and a half by train. But it is the universities that are key to the region’s tech success.

“One of the reasons that so many start-ups are created is because you've got a number of high-quality universities doing great research which creates spin-outs” says Eastell. “And Bristol has one of the highest retention rates for students. A lot of quality talent stays in the area.”

Science incubator Unit DX is backed by the University of Bristol and Research England, and offers 45,000 square feet of labs, offices and event space for deep tech start-ups.

Similarly, Engine Shed is an event and co-working space led by the University of Bristol, in collaboration with Bristol City Council and the West of England Local Enterprise Partnership. More than 30,000 people used the space in 2021.

Bristol University also offers a dedicated robotics programme in conjunction with the University of West of England, and programmes at Bristol Aerospace encourage children to develop science, technology, engineering and mathematics skills.

What's next?

The Bristol Tech Fest, which launched in 2019, is now a much-anticipated event that continues to grow. Led by TechSpark (‘designed to strengthen the tech community from Swindon to Swansea’), the festival is becoming more focussed on commercial enterprise as opposed to product development.

Business management consultancy SETsquared Bristol is relaunching its Breakthrough Bursary for the fourth year. Aimed at UK tech entrepreneurs from minority ethnic backgrounds, the bursary provides access to business support at discounted rates. To date, recipients have collectively raised £2.7m in investment.

4. Birmingham

Alper Dervish, Assistant Director and Ross Northall, Partner

What’s the lowdown?

Birmingham’s profile received a significant global boost as the host of this year’s hugely successful Commonwealth Games. But those in the know are already aware of its importance as a tech hub. For seven years running, until 2021, the city had been named the UK’s number one regional startup capital, and the trend for innovation continues as hundreds more startups have chosen Birmingham as their home.

They range from tech behemoths such as Shopify, which has a satellite office in the city, to newbies such as Live Tech Games, which won StartUp of the Year for the Midlands at the StartUp Awards National Series back in June. A game studio for live tournament-based mobile games, Live Tech Games were only founded at the start of the pandemic in March 2020.

This year, CBRE’s Tech Cities listing ranked Birmingham in the top 15 tech locations in the UK outside of London, based on a variety of criteria, including access to talent, availability of office space, proximity to universities, cost of living and employment costs. The city also sits in the middle of Britain's proposed HS2 high-speed rail line and has impressive 5G mobile connectivity capabilities. “It's a diverse sector too, from fintech to e-commerce,” says Alper Dervish, corporate finance advisor at BDO.

“Creating those success stories in turn creates a good atmosphere for people. We’ve got impressive talent and a lot of universities bringing forward the kind of skilled people, such as software engineers and programmers, needed in the technology sector. That sets Birmingham apart.”.

Who’s here?

Boasting more than 13,000 tech businesses, employing more than 100,000 people, Birmingham is also home to large corporations including Cisco, HSBC, Deutsche Bank and Jaguar Land Rover. However, it’s the newcomers that are making a splash. Energym, founded by Will Flint, takes exercise equipment and turns it into clean energy. Essentially, you can go for a bike ride then charge your phone with the energy you’ve produced.

Other notables include Codemasters, a games publishing company recently bought by Electronic Arts, and Onto, an electric car subscription service now heading towards a billion-pound valuation. Additionally, the Midlands is home to satellite offices of some major London businesses including online retailer ASOS, the BBC, Channel 4 and Shopify.

What's the appeal?
Investment for tech companies comes from many sources, including the government’s innovation funding service. “It’s a mix,” says Dervish. “We've got regional funds from the Midlands Engine Investment Fund, which was launched in 2018, and is backed by the British Business Bank. Private equity fund managers are tasked with deploying that capital. In this instance, their focus is to promote growth and job creation in the Midlands. They have specific funds with that remit.”

The city has been included in The Sunday Times’ annual Best Places to Live guide and in 2022 was named as one of the best places to reside, with the judges singling out the thriving Jewellery Quarter. Another big part of the attraction of Birmingham is its diversity. This is a city where 26% of employees have a diverse ethnic background, compared to the national average of 15%. And with the Midlands being one of the youngest demographic regions, “it’s a place that people starting their careers want to be,” Dervish says.

What are the main challenges?

According to the latest government figures, the Midlands, which has a population of more than 10 million, generates more than £230bn in gross value added. That’s equivalent to around 13% of the UK economy. But funding, although currently robust, needs to remain consistent to keep up with the sheer number of new businesses. Ultimately, says Dervish, it’s a question of educating entrepreneurs that funding exists. “Promoting the region is probably one of the challenges,” he says.

“We don’t want early entrepreneurs or serial entrepreneurs leaving the region and moving down into London to pursue other interests. They often get early success and then they move away. We need to encourage them to stay in the region.”

What's next?

HS2 is still almost seven years away but blue-chip companies such as Goldman Sachs, HSBC and Deutsche Bank are already moving their tech workforces into the area in anticipation of the connectivity the high-speed rail link will bring.  “A lot of them are investing, which is great for us,” says Dervish. “It feels like we’re moving to become an attractive fintech base.”

5. South East

Owen Pettifor, Audit partner at BDO South East and Jeff Harris, Corporate finance partner, transaction services at BDO South East

What’s the lowdown?

The South East continues to dominate the tech industry alongside London, remaining a preferred location for many technology companies including a steady stream of start-ups.

These are attracted by the region’s strong transport links, proximity to London, easy access to international airports such as Heathrow and Gatwick —and to the continent via ferries—and a significant concentration of talent and universities.

The ScaleUp Institute has identified the South East, alongside London, as the most successful English region for scale-ups. The technology sector is a driver of this trend for fast-growing companies.

The South East, covering northeast Hampshire, Surrey, East and West Sussex and Kent, boasts strength in three technology sub-sectors:  CreaTech, which brings together creative skills and emerging technologies to create new ways of engaging audiences, SpaceTech and Med-Tech.

In 2022, CBRE’s Tech Cities listing ranked Brighton in the top 15 tech locations in the UK outside of London, based on criteria including access to talent, availability of office space, proximity to universities, cost of living and employment costs. 

Who’s here?

In  CreaTech, the UK Tech Cluster Group notes that a host of Brighton start-ups and scale-ups have been acquired by the likes of Disney, Warner, Epic, Cision and more. The sub-sector employs more than 6,500 people and is worth over £1bn annually to Brighton’s economy, resulting in it having the highest density of creative-embedded companies in any UK cluster.

CreaTech companies raised $1.26bn (£1.4bn) in investment last year. Virtual and augmented reality, artificial intelligence and 5G-enabled edge computing all power CreaTech innovation and these all flourish in the South East.

Gaming studios and developers in Guildford – “The Hollywood of Games”, include EA, Epic Games, Supermassive Games, Hello Games, nDreams and Activision Blizzard, also boost the region’s  CreaTech economy, supported by a mixture of business and academic partnerships that results in a collaborative melting pot of talent and ideas.

 SpaceTech is another fast-growing industry, with more than £1bn in turnover. The South East is at the epicentre of this growth.

Clustered mainly around Guildford and the Harwell Complex in Oxfordshire, the SpaceTech sector employs approximately 100,000 people and hosts specialists in upstream (i.e. launching the technology into space), and downstream (i.e. using data to create new products and services), such as Surrey Satellite Technologies – a spin off from the University of Surrey.

Med-Tech is another high value cluster in the region with more than 90 firms and 30 Therapeutics Discovery and Development businesses mainly located in and around the Surrey Research Park, Brighton, Worthing, Crawley and Horsham.   

The South East is also home to thousands of other tech companies  in sub-sectors ranging from aerospace and defence (based around Farnborough’s QinetiQ and BAe Systems), digital and cyber security (including many university partnerships), data processing and hosting, fintech and cleantech. 

Covering North Hampshire and West Surrey, Local Enterprise Partnership EM3 is a co-investor in the 5G Innovation Centre at the University of Surrey, which is the largest open innovation centre for 5G development in the world and recognised by the G7 nations.  EM3 led the Government-sponsored Innovation South Science and Innovation Audit, demonstrating how the area stands out for expertise across a range of digital enabling technologies, including 5G, cyber security, big data, photonics and quantum.

What's the appeal?

The strong transportation links in the South East mean that just about anywhere in the region is commutable, allowing many to live in idyllic countryside villages but enjoy good employment opportunities in a major town or city, together with some of the finest schools in the country.

“This is a real best-of-both-worlds option for many. From the employers’ point of view, the region boasts a significant pool of talent, a cost-base lower than that of London and a concentration of technology companies that creates and pulls a dynamic peer network into this region”, says Owen Pettifor, Audit partner.

For investors, the region’s relative proximity to the City and international airports facilitates active oversight.

What are the main challenges?

There is no denying that while there are many opportunities in the South East, it can cost you far more than living in other parts of the country. 

The acceleration of working from home is challenging the need to live somewhere so relatively expensive while working for companies that are geography agnostic and can tap into virtual talent pools. The attraction and then retention of good technology talent is a constant challenge. 

Furthermore, the South East’s proximity to London means that companies in the region can also find themselves competing with the capital on pay levels.

What's next?

“Despite the shadow of growing economic uncertainty, tech deal multiples are currently holding up against other sectors, showing their enduring value.  These deals are however taking longer to complete; reflecting the increased caution present in the market. Businesses that actively incorporate ESG into their strategy are able to demand premium valuations and be more attractive to PE houses and other investors”, says BDO’s South East Jeff Harris, Transaction Services partner.

“The UK technology market continues to be an extremely strong export product with London and the South East is expected to continue to be the backbone of this”, says Owen Pettifor, Audit partner.

6. The Central South

Alex Stansbury, Director and Matthew Carter, Director

What’s the lowdown?

The Central South region could be considered the new kid on the block in terms of importance as a small-to-medium enterprise (SME) digital and tech hub.

Pre-pandemic, Southampton was considered one of the top five super clusters in the UK for medium-sized tech businesses of between 20 to 70,000 employees. This put the city ahead of Oxford and Bristol, and from that lofty perch it is continuing to grow in stature. While Bournemouth and Poole were highlighted as a key tech cluster by Tech Nation, not just for their mix of fintech, cybersecurity and large digital agency sector but the growing strength of aerospace, engineering and software development in the area.

“It’s not an obvious location for such a cluster,” says Matthew Carter, tax director at BDO Southampton. “But if you dig deeper, it’s a great region for start-ups, SMEs and there are a number of big global players supporting its growth.”

Southampton is also home to the world-leading Web Science Institute and one of the founding members of the SETsquared Partnership, a business incubation network run by five universities across the south.

Who’s here?

Ordnance Survey, which dates to 1747 and is a global leader in location data, is a mainstay of the region. Ordnance Survey data is used in sustainable projects such as monitoring and analysing coastal erosion, siting renewable energy and planning the UK’s roll-out of electric vehicle infrastructure.

Digital bank Starling opened an office in Southampton in 2019 and recently advertised 100 jobs on the side of double decker buses to catch the eye of local talent.

Other significant businesses, including JP Morgan, Siemens, IBM, Fujitsu, Arqiva, Sony and Garmin, the wearable technology specialists, who have been in the region for many years.

The gaming and creative sectors are strongly represented, with companies in the area providing services for major brands such as Google, Mattel, Microsoft Studios, Nickelodeon and Lego.

Located on the Solent, the marine and defence sector also continues to thrive, with aerospace giant Cobham in Bournemouth helping make the Central South a natural home to specialist businesses in artificial intelligence, cyber security, unmanned systems, and electromagnetic intelligence.

What’s the appeal?

Between Southampton and Bournemouth, the New Forest National Park is an area of outstanding natural beauty, while strong transport links, including the proximity to Heathrow, are regarded as a huge plus even in this era of remote working.

“If people do need to travel to London, the region certainly benefits from its geography, and that’s a huge part of the appeal,” says Alex Stansbury, audit director at BDO Southampton.

VentureFest, a festival of innovation, Bournemouth University’s BFX Festival, a week-long event designed to celebrate visual effects, animation and games and the Business Innovation Expo South, held in Portsmouth, are examples of how the tech community is supported.

“There’s a very collaborative business environment here. The local tech community is very good at connecting like-minded businesses and events such as the Business Expo are great for showcasing the latest innovation and tech talent,” says Carter.

The University of Southampton Science Park offers grants via its Catalyst programme, which targets entrepreneurial spirits with early-stage science and technology businesses.

And the SETsquared Southampton Business Growth Programme works with companies that want to scale rapidly and sustainably.

What are the challenges?

Despite there being many exciting young businesses, big names, accelerator programmes and a robust incubator community in the region, many of the venture capital networks are not as well developed as they could be. “It's not a region that people immediately associate with tech,” says Stansbury.

“So, while proximity to the venture capital and private equity houses can be bridged by virtual meetings, there’s less activity here than the London and Thames Valley regions.”

What's next?

In 2021, the Solent was granted freeport status. Also called free-trade zones, freeports are designated areas where the normal tax and tariff rules of the country do not apply.

Solent Freeport, which encompasses Southampton and Portsmouth as well as areas of the New Forest, Isle of Wight and south Hampshire, has the potential to bring 32,000 jobs to the region.

“If, for example, you’re a business who imports components, there will be some benefit in placing yourselves in and around Southampton,” says Carter. “Although at this stage it’s early days so watch this space in terms of how impactful the freeport will be.”

Bournemouth’s reputation as a digital hotspot has just been given a major boost with the news that New York-based financial technology business Hazeltree, a leader in treasury and liquidity management technology for the alternative asset management industry, is to open a new fintech engineering centre in the town.

In 2021, the Fawley Power Station in Southampton Water was demolished to make way for the UK’s first ‘smart town’, including 1,500 homes, commercial areas and a science & technology hub, all with the ambition of being operationally net-zero.

“There are definitely some really exciting developments on the horizon,” says Stansbury.

7. Leeds

Mark Langford, Partner and Laura Burton, Director & Gareth Jones, Partner

What’s the lowdown?

A report this year from the Department of Digital, Culture, Media and Sport has identified Yorkshire’s digital industry as the fastest growing in the UK. It showed the Yorkshire and Humber digital sector’s economic output grew by an impressive 6.5% between 2014 and 2019.

Further projections show Yorkshire’s digital sector could reach up to £1.6bn in annual gross value added by 2025, with the potential to create more than 42,000 new jobs. Gareth Jones, Business Outsourcing Services Partner at BDO Leeds, says activity in the region is robust.

“It's a burgeoning tech sector that has its centre in Leeds,” he says. “But it’s not just Leeds—the tech sector is evolving throughout the region.”

Who’s here?

EMIS Group, which provides NHS digital services including primary, community, acute and social care, is here, with revenue increasing by 6%, to £168m, during 2021. This has tempted Bordeaux UK Holdings II Limited, an affiliate of Optum Health Solutions, to buy the group.

Office and laboratory space provider Bruntwood SciTech has locations all over the country, including Manchester, Birmingham and Liverpool, but its dedicated tech hub Platform, in Leeds, has become an important focal point. It is home to a cluster of more than 80 innovative start-ups and scale-ups.

Deb Hetherington, Head of Innovation at Bruntwood SciTech, is also a board member of the Leeds Digital Festival (LDF), which launched in 2016. The 2022 Festival saw over 200 events celebrating everything from artificial intelligence, coding and software to cyber security and sustainability.

“The Leeds Digital Festival is all about putting on free events, and I think that makes it stand out,” says Laura Burton, Tax Director for BDO Yorkshire and the North East. “It's about sharing and trying to upskill everybody in tech so that we continue to thrive as a sector.”

Also in the region are Channel 4 and Sky Betting & Gaming. “One of the biggest things that kick-started digital in Leeds was Sky moving up here,” says Mark Langford, Audit Partner at BDO Leeds. “Today they employ something like 2,000 people across the city.”

Stuart Clarke, from communications firm Paceline, is a co-founder and the Festival Director of the Leeds Digital Festival, as well as an active investor in the city's startup scene. Stuart also created the Leeds Tech Map, which shows the breadth and wealth of digital and tech businesses within the city.

Commenting on the growth of the Leeds Digital Festival, Clarke said: "As an open platform festival, the success has been driven by the unique collaborative nature of the Leeds tech sector, we're all about making the pie bigger for everyone".

What’s the appeal?

There are nine universities in the region, generating 39,000 graduates each year. Leeds University offers Nexus Connect, an event series that brings together innovators who share common areas of interest. “This appeals to digital businesses who are looking to recruit strong candidates,” says Burton.

“There are many good initiatives that look at educating people from minority backgrounds.”

Office space and property prices are more economical than other parts of the country, and now that the cost-of-living crisis is starting to bite this, along with events such as the LDF, has made the region increasingly attractive.

“Historically, people felt that they had to go to London or the Thames Valley, or even Manchester, to work in this sector, but that's no longer the case,” says Jones. “It's just gathering momentum all the time.”

What are the main challenges?

The tech sector in Yorkshire attracted just under £40m in venture capital in 2020. But Manchester remains more developed in terms of venture capital and private equity funding, says Jones.

“And whereas initial conversations might be happening in Leeds, or even Yorkshire as a whole, quite often it’s case that funding and investment is coming from outside of the region,” he says.

However, last year Leeds City Council handed out nine grants ranging from £5,000 to £25,000 via an Innovation@Leeds scheme.

The winning bids were from FinTech North, Paceline, Yorkshire & Humber Academic Health Science Network, Whitecap Consulting, AI Tech North, The Grad Soc, No Code Lab and Nexus in collaboration with NorthInvest.

Another challenge is one that seems to be hitting the country overall: that of finding and keeping top hires. “Social mobility and movement of people post-pandemic also come into it,” says Burton.

What's next?

As a tech hub the region will continue to grow, with doors opening thanks to events such as the LDF.

Diversity, inclusion and equality are high on the agenda; this year Channel Four launched a Content Creatives initiative in Leeds, aimed at training 18-to-24-year-olds with a passion for content creation and creativity.

And Bruntwood's Female Founders Incubator aims to empower five early-stage female entrepreneurs through a six-month incubation period; Paceline also created the PARSE roundtable series for startup founders. Earlier this year, BDO sponsored the first Growth Programme, which is dedicated to helping high-growth technology businesses to scale up.

“It’ll be interesting to see who makes it through to Series B funding,” says Jones. “We’ll be back in 2024 to take a temperature as to what’s happened in the sector.”