Tech firms '˜must be a part of Northern Powerhouse'

Hugh Campbell, founder and managing partner of GP Bullhound, told The Yorkshire Post that the rise of tech giants such as Sky Betting and Emis showed that it was eminently possible to grow a large-scale tech business in the region and that the strength of the area’s universities and quality of life can give them the personnel they need to succeed.

Mr Campbell said the fact that private equity houses were increasingly putting funds into tech firms was a good barometer of how well developed the tech sector was.

However he also warned that local authorities across the north of England are often too focused on start-up companies rather than nurturing existing ones and said that access to funding for fledgling firms was still hard to come by locally.

“There is a lot of exciting developments in the Yorkshire tech scene right now,” he said.

“In particular there’s the prospect of an initial public offering for Sky Bet, and I think that is off the back of Pace micro, a stand out deal from a couple of year ago.

“These sorts of signature events raises everyone’s ambition for the whole region and think ‘this is what is possible here in Yorkshire’.”

“In the UK, PE has historically steered away from tech. So the fact that private equity is investing a lot more in tech is a very good barometer for the health and profitability of the technology ecosystem. It shows that, over last 15 years, these companies and these entrepreneurs have become more valuable and more profitable, because if they were not than PE companies, who sit higher up the food chain than venture capitalists, would not be interested.”

Mr Campbell said that the tech industry, which has seen phenomenal jobs growth in recent years, should be seen as being at the heart of any plans for the future of the north’s development.

“My sense more broadly is that if the Northern Powerhouse is going to work than technology and investing in technology has to be a critical part of that.

“It is not going to be successful if it just based on bigger roads, bigger tunnels and faster trains. There needs to be a sector focus and it strikes me that the digital technologies is an important part of it, if only because that is where there has been such massive growth.”

Mr Campbell in particular highlighted the progress of Leeds-based Crisp Thinking, plus Sheffield-based firms Dialogue, Approved Foods and Sumo Digital.

However Mr Campbell sounded a note of caution regarding the sector, saying that local authorities should shift their focus from helping start-ups to supporting established businesses.

“It’s a statistics game”, he said.

“It means they can say ‘last week we created 50 companies’. It needs to focus on helping businesses that are at 10 people grow to 100 people or from 100 to 1,000. That is how in Leeds and Sheffield councils can have a big impact, to shift the spend away from helping people start a company to help people who have already started a company build a bigger, better and more valuable one.”

Another challenging area for the sector he said was the absence of venture capitalists who could help provide much-needed capital during a firm’s early stage.

“You need business angels and venture capitalists in the cities of Leeds and in Sheffield that can not just do the seed stage, by that I mean under £1m, but those that need to raise £1m-£10m. And we need to fund that locally and not just from private equity, we have got tonnes of PE in the north. It is the businesses that are still unprofitable that need venture capital and today, you have to go to London to get that.”

GP Bullhound is calling on the North’s best tech companies to come forward for the Northern Tech Awards 2017 and be part of the region’s first Northern Tech 100 League Table. Held in Newcastle in March, they are open to firms with a minimum revenue of £500,000 per year.