Posted on June 1, 2016 by staff

Can Manchester become the UK’s Silicon Valley?


Manchester’s growing reputation for technology was the subject of a roundtable of business experts. Jonathan Symcox reports.

The Industrial Revolution put Manchester on the map, but it is the industries of the future that could now be key to its prosperity.

Technology has been put at the heart of the region’s future plans, something which was boosted by George Osborne’s decision in his 2015 Budget to allocate £4m for a digital business incubator in Manchester.

Manchester City Council held an open meeting in April to discuss Project Forward as it looks to find a partner to help deliver around 70,000 sq ft of tech space in the city centre.

Project Forward has endured a chequered history but there’s no doubt that something positive is going on in Manchester.

UKFast’s CEO and co-founder Lawrence Jones has been tasked by the city council’s chief executive Sir Howard Bernstein to come up with a technology strategy for Manchester.

“I believe that we can create a new Silicon Valley,” he says. “It is already happening. There is talent in Manchester.

“My focus is to try and help Manchester become the number one tech city of Britain – and beat London.”

The entrepreneur was speaking at a roundtable of technology experts, which concluded that high rents and labour costs in London were prompting many tech firms to relocate to the north.

More than 70 per cent of digital businesses are now based outside of the capital. Among them is Wilmslow-based mobile games maker Playdemic, co-founded by Paul Gouge, who also cites a lack of talent as a reason for ditching Shoreditch.

“We used to base ourselves in London but when we began our second company we couldn’t grow there – we landed a couple of contracts and literally couldn’t fill them,” he explains.

“We had to come back to Manchester because that’s where all the people were. We also found it cheaper and our attrition rate was significantly lower.

“We bought into the whole London thing, we thought that was where we were going to be – then we picked up a couple of teams in Manchester in 2005 and they were the bedrock of that business.”

However Manchester remains relatively anonymous on the west coast of the United States.

Garry Partington, CEO and co-founder of RealityMine – who will speak at BusinessCloud’s half-day conference on big data at the 2016 International Festival for Business – recalls pitching to US investors for the first time.

“They’d ask: ‘Where is Manchester?  How close to London are you?’ Even guys we pitched to in London were asking ‘how long does it take to get there on a train?’ The US-based funds had no real idea.”

That could be about to change with the opening of a Virgin Atlantic flightpath between San Francisco and Manchester Airport from the summer of 2017, giving the region’s tech community direct access to Silicon Valley – and vice versa.

Mike Gibbons, who has enjoyed a 30-year career in software consultancy and is best known for his involvement in Cheshire-based software development and integration services specialist Mobica, has seen the impact such infrastructure improvements can have upon a city.

“We set up an office in the Polish city Lodz, which didn’t have a strong technology base – it had one company with about 50 people working in it,” he says.

“Very early on a delegation came to see us and asked which flight routes we wanted in and out of the airport – very practical, low-level things.

“Samsung then came and joined us and now it is a tech city with thousands of jobs there.”

Richard Law, the outgoing chief executive of identity intelligence specialist GB Group, says: “If we want to make Manchester the number one choice for start-ups and scale-ups we need to create a positive force which sucks people in.

“Whether they are people who graduate from the University of Manchester or from somewhere else, they are already coming to Manchester because it’s really friendly and it’s got a feeling of success.”

Gouge is not convinced that the city is ready to position itself as the ‘Shoreditch of the North’ just yet.

“Businesses are built on people, money and culture – you need all of those three components in the ecosystem to make it work,” he says.

“In the mid-2000s we found that the people were here, but the money wasn’t here and the culture of people becoming entrepreneurs wasn’t here.

“There is movement in that direction – Barclays’ new Rise facility (in Deansgate) feels like Shoreditch – but we have to make sure the seed investment is there and the appetite to invest, alongside collaboration between companies.”

Law agrees: “There’s a lot of success here already. But there is scope to increase the amount of investment into these businesses through existing mentor-investor channels.”

Manchester United legend Gary Neville and his business partner Ged Tivey, managing director of Relentless Group, are keeping a keen eye on the tech sector.

“We’ve got money to invest in business,” he says.

“The majority of these projects in terms of reshaping the city centre are property based and it’s me that is trying to bolt tech on to that because property and tech are going to play a big part in the future of Manchester.”

Despite looking to Silicon Valley, Manchester cannot afford to wait for a halo brand such as Google or Facebook to boost its tech credentials.

“We can’t wait for the city council to have some kind of enterprise zone so that Google decides to come here,” says Hugh Campbell, founder of investment banking firm GP Bullhound.

“Manchester isn’t on the world map yet as a tech city, but that’s a 20-year journey to get people in the US recognising that.

“We have to push on with a lot of small initiatives. Connecting all these smart people together is a critical first step. I’m a big believer in the power of the network – if people are smart enough and entrepreneurial enough when they meet, they’ll figure it out for themselves.”

Digital agencies are numerous in Manchester, so it should perhaps come of little surprise that the business panel valued the power of building a brand to boost the city’s tech future.

“The brand aspect is incredibly important. Brands are for selling – you’ve got to promote it, get it out into the media,” says Gibbons.

“Other things will spin off from that, such as improved broadband or infrastructure, once you have a few more people and companies in the area.

“The clustering effect is important. Once it reaches a critical mass, I think it takes off by itself.”

However Steve Purdham, chairman of 3rings – an Internet of Things enterprise that checks your ageing loved ones are safe – believes it works in reverse.

“Shoreditch and Silicon Valley didn’t have a brand until after the fact – people went there because it was cheap and they were around people that they actually knew and the culture grew from there.

“They need to see people in their own peer group and say ‘he was just a student six months ago and he’s now got a business that’s worth half a million quid’ – we shouldn’t forget that initial momentum is key to potential entrepreneurs taking that first step.

“Ninety-nine per cent of businesses in Shoreditch and Silicon Valley fail and you only hear about the 1 per cent that are successful.

“But in creating that wave, we shouldn’t ignore the people who are on the journey now.”