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Northern tech needs to think internationally

bridge

Hugh Campbell, managing partner of GP Bullhound, the technology investment bank and organisers of the Northern Tech Awards. In this article, he discusses why tech firms in the north should taken an international outlook.

For those in the know, the Northern technology sector is one of the most dynamic, diverse and fast growth digital economies in the world.

The 50 fastest growing tech companies in the North, featured at this year’s Northern Tech Awards, grew their revenues by 90% in 2015, and contributed £1.12bn to the regional economy while they were at it.

However, we have traditionally struggled to make much headway in telling people this story.

The North is far too quickly associated with heavy industry and the need for investment in large-scale infrastructure.

Of the seven tech clusters in the North of England featured in this year’s Tech Nation report by Tech City UK, six identified low sector awareness as a key challenge facing the cluster’s further growth.

Bridging the gap

This has left us with a funding gap in the North of England and Scotland.

Across the UK, we have become remarkably good at starting up.

Since 2010, 45,000 new tech firms have been created, a figure that reflects a flourishing entrepreneurial culture and the growing availability of alternative finance and startup loans.

Now, we need to translate this into a powerful phase of scaling up – and this is where the funding gap appears.

We have some emerging tech giants in the region – Skyscanner and Anaplan, two of the latest additions to the unicorn club, were born and bred in the North.

We have some impressive startups, just take a look at the Northern Stars initiative for some inspiration here.

Developing the network

But Northern tech is struggling to bridge the gap between the two.

In particular, we could do with developing the network of venture capital available to high growth tech businesses.

There is a well-developed private equity community across the North, but nothing like the access to VC funding that exists in London and elsewhere.

One of the easiest ways for us to resolve this is to showcase the booming Northern digital economy to international investors.

Some have already taken note: JMI Equity, a specialist software investor from Baltimore, USA recently invested $50m in Avecto, a cybersecurity firm based in Manchester.

But this needs to snowball.

Building an international bridge

London has tended to dominate the investment landscape in the UK, and 75% of the $2.2bn invested in the country’s tech businesses went to those in the capital.

It is reliant upon the key players in the Northern digital economy to start shouting about what we have got going on up here.

Let’s return to that figure of 90% growth enjoyed by the fastest growing Northern tech firms.

That is a staggering rate of growth, especially when you put it alongside the fact that London’s digital economy grew by 101% between 2010 and 2014.

If we shine the right spotlight on this prodigious growth, we will develop a virtuous circle of investment, growth, and profit.

Add to that the international expertise and talent that will come with foreign investment, and we have the building blocks of a world beating digital economy.

We need to engage a global community in the growth of Northern tech.

The likes of Tech North, the government-backed initiative accelerating the region’s digital economy, are making strides in the right direction.

However, to transform the North into one of the world’s leading tech hubs there are some gaps to tackle; let’s build an international bridge.

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