North East Tech: The Rising Hub for Startups in the UK

4 mins read

The North East region of England is no stranger to being recognised for its natural beauty and historical sites. However, it is now making a name for itself as a fast-growing hub for technology businesses in the UK. According to CreditSafe, more than 12,000 startups were launched across the region last year, with Newcastle being one of the most prominent tech hubs in the North East. Tech firms in the city secured £86m in venture capital funding, while the sector employed over 1,300 people, as per the government figures in 2021. The region is showing remarkable growth potential for tech startups, thanks to its highly-skilled talent pool, world-class incubators and accelerators, and university excellence. However, the North East tech sector also faces some significant challenges, including the need for more venture capital investment, a lack of a unified tech ecosystem, and a skills shortage when it comes to tech talent.

University Excellence and Talent Pool

Access to skilled workers is essential for the growth of any region’s tech economy. The North East has that in abundance, with several distinguished universities located within the region, such as Durham University and Newcastle University. These institutions ensure that thousands of young people acquire the vital skills required for the digital economy, and many of them stick around to provide a healthy talent pool for local companies. The region has one of the highest proportions of STEM students in the country, with more than 67,000 people studying science, technology, engineering, and maths. It means that tech firms have access to some of the country’s brightest and best to employ. Furthermore, collaboration between academia and business can create new spinouts at research-intensive universities, such as bioetch company CellulaREvolution, which span out of Newcastle University.

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Immersive Tech

The North East has been commended for its immersive tech cluster, with the Department for International Trade recognising it as being “internationally significant.” This includes everything from virtual and augmented reality to simulations. Thanks to its strong track record for creating gaming and creative studios, the North East may find itself in a prime position to take advantage of the buzz around immersive technology. Coatsink, a Sunderland-based video game developer valued by Dealroom at $30m, is among the largest players in the immersive gaming industry in the North East. Other key players in the sector include the Gateshead-based video game developer Eutechnyx and the Newcastle-based esports company Hitmarker.

Startups and Tech Titans

The North East isn’t just home to exciting young startups and scaleups like Newcastle-based SoPost and Kani Payments. Sage Group, a British multinational enterprise software company, is based in North Tyneside and is not only a tech titan of the North East but a giant on the global stage competing with the likes of Salesforce and SAP. Founded in 1981, it has a public valuation of £7.7bn and is one of the UK’s largest and most successful technology companies. The North East is also home to tech companies that are on the cusp of going public. Atom Bank, a challenger bank based in Durham, has raised more than £570m in funding, with a UK public listing in the pipeline for later this year.

North East Tech Challenges

Despite being a thriving tech ecosystem, the North East still lags behind the North West of England in tech funding levels. Startups based in the North East received $283m in venture capital funding in 2021, up by 66% on the year prior, while those based in the North West raised $975m over the same period. The region needs to attract more venture capital investment and create a unified tech ecosystem to compete with other regions. Additionally, there is a skills shortage when it comes to tech talent, and the shift to hybrid and remote working has resulted in local talent looking elsewhere for employment. North East employers are having to compete against the higher salaries offered in different parts of the UK. The challenge lies in the way the North East is positioned outside of the region itself, according to Adam Jacobs, founder of Bloom Procurement Services. He believes creating a more cohesive strategy from leaders that represent the North East will help to effectively communicate what the region has to offer to the tech ecosystem. Bringing stakeholders together to speak with one voice will help the North East build on the momentum it has already generated.

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The North East Devolution Deal

The recently agreed North East devolution deal, which is yet to be ratified, would unlock notable funds and transfer significant powers to the North East under a new combined authority led by an elected metro mayor. This could be the next step to turbocharge the North East tech sector. Tieva’s commercial director, Steve Norman, says, “The North East of England has long been a hub of technological innovation, but in recent years, it has struggled to remain competitive in the global tech market. Key challenges include a lack of venture capital investment, a need for a unified tech ecosystem, and a skills shortage when it comes to tech talent. With the right investments and initiatives, the region can remain competitive and ensure its future success.”

UK Tech Startups set to Benefit from Indo-Pacific Tech Envoy

The rise of the North East tech sector highlights the potential for tech startups in the UK. The announcement of the Indo-Pacific tech envoy presents an excellent opportunity for tech startups in the North East region and across the UK to collaborate on setting global technology standards, innovating new technologies, and solving global challenges. The envoy’s role is to champion the UK’s tech and science sectors in the Indo-Pacific region. The initiative aims to maximise the tech expertise of both countries, and India, as an emerging global leader in technology, provides immense opportunities for better collaboration.

Conclusion

The North East of England is a rapidly growing hub for technology businesses in the UK, thanks to its highly-skilled talent pool, world-class incubators and accelerators, and university excellence. The region’s thriving tech ecosystem has strengths that power growth in several sub-sectors, including immersive tech, fintech, cybersecurity, and medtech, with startups and tech titans alike. However, the North East tech sector also faces significant challenges, including a lack of venture capital investment, a need for a unified tech ecosystem, and a skills shortage when it comes to tech talent. The recently agreed North East devolution deal could be the next step to turbocharge the North East tech sector. The announcement of the Indo-Pacific tech envoy also presents an excellent opportunity for tech startups in the North East region and across the UK to collaborate on setting global technology standards, innovating new technologies, and solving global challenges.

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