These ecosystems are formed of numerous investment sources from business angels to private equity; support structures such as universities, accelerators and incubators; and good local governance that offers partnerships and other initiatives to assist with growth.
A local authority that is well-equipped in these areas makes for a strong ecosystem that can offer the finance, support and expertise needed by young businesses with growth potential.
The benefits of well-cultivated technology ecosystems are not to be overlooked. Early-stage innovative businesses are more likely to survive, leading to the development of new products and markets, as well as fostering business cooperation and healthy competition. High-growth companies can contribute to both regional and national economies with increased revenues, use of local office space and offering jobs which upskill the workforce and attract top talent from overseas.
Edinburgh is the city headquartering the most high-growth companies outside Greater London and saw £1.3b of equity investment into high-growth businesses between 2011-2020, of which £940m went into the technology sector. Top investor Scottish Enterprise and top incubator CodeBase are playing major roles in the flourishing Edinburgh tech ecosystem.
Greater Manchester is home to 1,213 high-growth companies which raised £2.4b between 2011-2020. Around 70% of this figure was raised by technology businesses, which make up just over 30% of the total companies. Several of these are supported by Manchester Science Partnerships, a collaboration between Bruntwood SciTech, Manchester City Council and the University of Manchester among others.
In both Edinburgh and Manchester, there is a strong correlation between accelerator attendance and equity investment. With both areas having dipped in 2020 as a result of the pandemic, focus on local technology ecosystems is vital to supporting high-potential businesses and rebuilding the economy.
An ecosystem can only thrive and survive when all the key players make a commitment to work together to give the businesses in their region a boost and springboard their growth. We’ve seen throughout this report that businesses located in areas where the local authority plays an active role to drive economic growth tend to thrive and go from strength to strength.
Local authorities are perfectly positioned to play an ever-increasing role in the growth, success and long term sustainability of their respective tech ecosystem and with this in mind, we recommend that:
- Local authorities and government agencies make full use of available Government funding and provide education, facilities and direction to local businesses and business groups about the available support and funding for tech businesses.
- Central government should consider mobilising additional funding and support, such as the Midlands Growth Engine and Northern Powerhouse, which is ring-fenced for local authorities to tap into and empower them to build more thriving local economies throughout the country.
- Local authorities seek support from organisations, like Barclays Eagle Labs, who have a strong track record in building tech ecosystems.
Building a strong economy is more vital than ever in a post-pandemic environment and we all need to play our part.