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September 2023
Liverpool’s tech ecosystem is at a low to medium level of maturity. Despite a record year of equity fundraising for the city region’s startups, deal flow remains comparatively low to northern neighbours Manchester and Leeds. There are signs this is changing. An influx of new initiatives – including accelerators and seed funds – from both the private and public sectors is helping to drive momentum.
But Liverpool is not coming from a standing start. Liverpool’s economy – historically skewing towards professional services, property, hospitality and the arts – has been embracing digital and creative. Output from the digital and creative sectors in the Liverpool City Region has grown by 77% over the past decade, compared with 44% in England as a whole, according to Invest Liverpool. In summary, Liverpool’s tech sector is “still nascent”, says Startup Grind’s Jonny Clarke, “but with large untapped opportunity”.
Funding is a universal challenge for businesses. Beauhurst data shows that Liverpool firms bucked the downturn trend last year, perhaps explaining why access to funding was not cited as a key challenge by tech company managers in our Censuswide research. LYVA Labs and Seedrs were the most active investors in the region, the data shows. However, there is concern among some stakeholders that northern VCs overlook Liverpool for Manchester and Leeds. Rebeca Garcia, CEO of no-code startup Cubode, says that “founders of tech startups often have to look for investors and money in other places, which means their businesses end up leaving the region”. She adds that “supporting early-stage companies will contribute to creating further wealth and retaining talent as these startups grow to be global giants”.
An upcoming seed fund for the Liverpool City Region, backed by £10m from the combined authority and £5m from the Merseyside Special Investment Fund, will provide additional support for early-stage businesses. It’s not the only public sector support that could boost tech: in July, the Liverpool City Region was selected as England’s second investment zone, which will provide tax relief to drive investment into life science businesses. However, more investment is required to develop the region’s smaller tech hubs, such as Southport and St Helens, to meet growing demand for workspaces.
The supply of early-stage capital is crucial to scaling the region’s startups to the next level. This is an important next step to spur more company exits, which play an important role in new startup creation. Founders and early team members often use the financial proceeds and acquired knowledge to launch new ventures – Estonia’s so-called “Skype Mafia” is an example that Liverpool should strive to emulate. Liverpool’s notable exits include the £21m acquisition of LivingLens in 2020; the acquisition of LPW Technologies for around £80m in 2018; and the sale of Parentapps in 2021 for an undisclosed sum. However, it doesn’t yet have the exit level or deal flow of neighbouring cities, and is yet to produce a unicorn company with a $1bn+ private valuation.
“The tech sector within Liverpool City region is going from strength to strength and its contribution to the wider UK economy is growing year on year. Creative innovation and thriving entrepreneurial spirit are driving the sector forward along with the City Region’s place-based innovation approach. This, coupled with investment from both the public and private sector, bespoke support and ultra-fast digital connectivity, will enable tech startups to innovate, collaborate and push boundaries at a pace that will be pivotal for the next stage of growth.”
"What the Midlands has done well is capitalising on the industries the regional economy was built on," says Aaron Baker, investor at BGF. "The automotive sector and its entire supply chain has seen exceptional tech innovation in the region – from batteries to electric vehicles – and that's because of the talent, experience, and rich heritage here. And this has evolved into global leading verticals in the sector, such as Leamington Spa's dominance in the gaming industry."
"What the Midlands has done well is capitalising on the industries the regional economy was built on," says Aaron Baker, investor at BGF. "The automotive sector and its entire supply chain has seen exceptional tech innovation in the region – from batteries to electric vehicles – and that's because of the talent, experience, and rich heritage here. And this has evolved into global leading verticals in the sector, such as Leamington Spa's dominance in the gaming industry."
Supporting British businesses and the UK economy is central to what we do. Whether you are an entrepreneur starting out or an established business, we can help you manage your business. Accessing finance, supporting with day-to-day business needs, and helping to protect businesses from the growing threat of financial fraud, are just some of the ways we can support.
For many tech businesses, access to banking other sectors take for granted isn’t always available. Our knowledge of the sector means we can provide banking that’s crucial to managing your money from the get-go. Our local Relationship Managers across Merseyside and beyond are experienced in the sector and keen to support further UK tech growth. We have a range of different products and services designed to meet your banking needs so that you can focus on growing your business in this fast-paced industry.
As you begin to scale up, you need a bank that grows with you. Whether it’s managing FX, deposit options or access to third-party support, we can connect you to the right people to maintain your trajectory.
Find out more about Lloyds Bank’s support for the technology sector here.
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Founded in 1881 as the original ‘red brick’, the University of Liverpool is one of the UK’s leading research-intensive higher education institutions with an annual turnover of £614.9 million, including an annual research income of £145m.
Our interdisciplinary research, unique model for collaborations and cutting-edge facilities and equipment enable our research community to create global solutions aiming to improve health, create wealth and ensure social justice.
As a university, we are committed to developing partnerships that meet the needs of the rapidly evolving tech landscape. This report has highlighted how universities play an important role in the tech ecosystem. In addition to developing talent and advancing technology, they are key in driving economic development through close collaboration with industry, local and national governments and the third sector.
Collaborate with us to help address your needs, connect with the right people and access funding. Find out more here.
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