County can emulate success of Tech City to create its own hub

Yorkshire needs to learn lessons from east London’s Tech City hub to best exploit its technology sector, it has been claimed. Suzan Uzel reports.
Lee StraffordLee Strafford
Lee Strafford

SINCE the Tech City initiative launched in east London in 2010 to support the growth of its technology cluster, the number of businesses in the area have grown from 200 to 1,300.

These range from start-ups to large corporates including Intel, Cisco, Amazon and Google. “So in an area no greater than the centre of Leeds or the centre of Sheffield, they’ve added 1,100 creative and digital industry businesses in the last two years,” said Lee Strafford, one of Yorkshire’s leading tech entrepreneurs.

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The former Sheffield Wednesday chairman and co-founder of Sheffield-based internet service provider Plusnet said that while the technology sector in Yorkshire is “probably the best-performing sector” out of the whole economy, there is still more that can be done to exploit its potential.

“Business growth in the sector could be accelerated by changing the access to finance offer and the wider economy could benefit from more interaction with the sector. If you look at the success story of Shoreditch, the Tech City movement, then there’s some easily transferable lessons that we could apply in the region.”

The Yorkshire region can emulate the success of Tech City by focusing the access to finance model away from grants, reconfiguring the public sector support policies and programmes in this area to enable the private sector to come together and fostering the relationship between angel investment and start-ups, said Mr Strafford.

He said the region must move towards an “open and collaborative approach”, away from a “closed and protected model”, adding that Yorkshire is at risk of being out-competed by other cities such as Manchester and Bristol if it isn’t “ambitious in changing how we bring our businesses together and how we give them access to finance and growth capital”.

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Yorkshire is already home to a rich seam of technology businesses, with key players such as set-top box maker Pace and mobile phone technology business Filtronic hailing from the region.

But Justin Whitson, chief executive of Fleetondemand, a Shipley cloud-based technology company which operates in the automotive sector, accused the Government of having a “London centric approach” with the East End being “the focal point for technology business”. He said: “In fact, it’s happening all over the UK, in particular in Yorkshire.

“We have now got really robust companies in this area. But I think there’s one thing we don’t do enough of and that’s collaboration.

“The whole ecosystem needs to come together and say right, we’ve got great entrepreneurs, we’ve got great infrastructure businesses, we need to bring together early stage VC (venture capitalist) backers into that equation who are prepared to take risk on early stage tech businesses.

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“That is the fundamental ingredient. Yes you can have the biggest mentor network and collaboration but really it’s all about risk isn’t it? Facebook wouldn’t have got to where it is without those early stage investors.”

Mr Whitson said that it is “all too conventional” in Yorkshire. “Mid market private equity is about as exciting as it gets. We need more early stage backers and the support infrastructure around them instead of professional services firms trying to earn fees out of tech start-ups.”

From 2008 to 2010, Mr Whitson backed start-ups via a tech incubator called Venturelab, which was housed in his property on Brewery Wharf, Leeds. Its aim was to build on the growing tech community in Yorkshire.

Previously, he had built up a tech business called Nexus Rental and sold it to Isis Equity Partners at the start of 2008. His current firm Fleetondemand works with key partners such as the RAC and Hitachi Capital, while it has recently expanded into South Africa.

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Andrew Tillman, managing director of Leeds-based G2M Technologies, which aims to help technology companies bridge the gap between creating successful products and realising their revenue potential, said: “The two biggest issues facing technology start-ups in Yorkshire and, no doubt, the country as a whole, are their ability to acquire the necessary commercial experience and the funding needed to enable the start-up to become a fully-fledged operational business.

“Yorkshire certainly has the technological skills and imagination to create great products and to compete with anywhere in the world but that’s not enough on its own.

“Technology developers are generally completely focused on their goal, which is to build the next great technology product but, without support and advice from seasoned business people, they are unlikely to avoid the pitfalls that are all too easy to miss without the necessary experience.”

That is why it is so important to have business incubation and mentoring services available for these young companies, he said, adding: “Without doubt, however, the biggest obstacle at the moment is funding.

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“I’m sure the Government has the best of intentions when it talks about creating an environment that makes it easier for the banks to make funding available to small businesses.

“However, the reality is that it’s just not happening and it’s certainly not reaching the businesses that need it.” But he said that private investors are looking for ”more efficient” ways to invest their savings.

“Private fund managers are now utilising the benefits of enterprise investment schemes to create exciting investment opportunities for their clients who are willing to take a higher risk for part of their portfolios.”

Mr Tillman, who was also recently appointed as managing director of Roadsense Technology, based in Manchester, was formerly strategic development director at Leeds-based telematics firm Masternaut.

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Martin Port, who founded Masternaut and is now behind a new venture called BigChange, also based in Leeds, raised concerns about attracting people with the right skillset to the sector. He said: “The biggest challenge for Yorkshire technology companies at the moment is the ability to recruit developers of a certain competence.”

He added: “The whole IT sector is growing and growing but we need more companies like ourselves to take on apprentices with funding from the Government to support their training.”

Adopt policies that led to success

LEE Strafford said he hopes that policies akin to those adopted in Shoreditch can be implemented via the Sheffield City Region Local Enterprise Partnership’s CloudCity programme, which aims to drive economic growth through attracting technology-based jobs.

Backed by Creative England, which brings capital through the Government’s Regional Growth Fund, and a group of private investors, recently launched start-up support programme dotforge combines investment with an intensive mentoring and execution programme.

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“We have a fabulous technology-driven industrial base. Unfortunately, the reality is a lot of the funding and support is still in situ as per legacy models and an underlying cultural trait of those policies has been to bring people together to network but it hasn’t been to bring people together to co-design, develop solutions,” said Mr Strafford, a private sector board member of the LEP.

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