Digital Economy Minister Chris Philp has welcomed record investment in the ‘Northern Triangle’ tech sector and committed to introducing world-leading digital regulation in 2022 that will boost innovation and competition for the thousands of startup and scale-up companies across the North.

Speaking at Manchester’s Digital City Festival, Minister Philp revealed new research showing tech startups and scale-ups in Manchester, Leeds and Sheffield raised a collective £1.3 billion in external funding in the past five years, as investors increasingly look to fund fast-growing companies across the UK.

The Digital Minister set out the government’s plans to create the right regulations to help these UK tech firms thrive. 2022 will be a landmark year for the rules that govern digital technologies, with plans for a new pro-competition regime to level the playing field so small businesses transforming their fields can compete with big tech firms. The government is also expected to drive forward ambitious data reforms to help tech businesses seize opportunities to innovate with fewer burdens and connect with new international markets more easily.



Over the coming year, the government is expecting to introduce the Online Safety Bill in Parliament, publish the next steps in its plans for a new pro-innovation data regime and set out its response to the consultation on digital markets which aims to drive up competition in the digital economy and rebalance the relationship between the most powerful tech firms and the businesses which rely on them. There are also plans to publish a white paper on governing artificial intelligence as part of its new National AI Strategy, which will set out the UK’s plans to regulate AI in a way that encourages safe innovation.



Talent and growth

The new figures on the North of England’s thriving digital sector, compiled by Dealroom and analysed for the UK’s Digital Economy Council, show that together Sheffield, Leeds and Manchester are home to nearly 1,500 startups and scaleups which raised £420 million last year, 32 per cent of all venture capital flowing into the UK’s tech industry since 2017.

Increased investment into the UK’s digital economy means companies are hiring IT talent faster than ever before. According to data from job search engine Adzuna, in Manchester alone, 21 per cent of all job vacancies are in the digital sector and available tech jobs have more than doubled in the past 18 months.


Laying the groundwork for future regional unicorns

Investment in the UK’s regional cities was up 83 per cent last year, with companies raising £9 billion - the most outside of London ever. This support is helping to lay the groundwork for the future unicorns - tech companies worth $1 billion or more - and fast-growing startups which are creating vital products and services.

This includes Zilico in Sheffield which is improving cervical cancer diagnostics and C-Capture in Leeds which is designing chemical processes for carbon dioxide removal to help fight climate change.

There are now seven unicorns and five futurecorns across the Northern Triangle, including companies such as e-commerce giant The Hut Group (Manchester), credit reporting platform TransUnion (Leeds) and deep tech manufacturing company ITM Power (Sheffield). Manchester-based unicorn Instil Bio was a spin-out from the University of Manchester, demonstrating the potential for university research and intellectual property to become leading companies. This is only expected to increase over the next few years as initiatives such as Northern Gritstone, a new investment company to fund spinout enterprises from the three universities, help to fund a new generation of university-founded startups.

Strong jobs demand

Hiring for IT and digital jobs is on the rise across the Northern Triangle ecosystem according to data from Adzuna. In Manchester and Leeds, the IT industry is the fastest-growing sector when it comes to vacancies, with 10,000 IT openings across the ecosystem. Software developers are the most in-demand tech roles making up nearly 9 per cent of all tech vacancies across the three cities, followed by business analysts.

Manchester offers skilled IT professionals the highest advertised average salary, at £53,223, but for certain roles Leeds companies are offering higher advertised salaries. For instance, solutions architects in Leeds can expect an average advertised salary of £81,234, an increase of 10 per cent from last year, compared to Manchester where salaries for the role average £67,425. In general, advertised tech salaries are around 42 per cent higher than average advertised salaries across the ecosystem.

Sustained value growth for the UK

The growth impact of the Northern Triangle tech ecosystem is having far-reaching consequences across the North West and Yorkshire and the Humber. According to analysis last year by the DCMS, the digital sector across the two regions is expected to grow by at least £4.3 billion in annual GVA over the next three years and add an additional 92,000 jobs to the UK economy.

Duncan Johnson, CEO at Northern Gritstone, said:
“These brilliant figures demonstrate the groundwork that has been laid in these cities to create world-leading tech companies. For too long, startups and scaleups from the Universities of Manchester, Leeds and Sheffield have been overlooked by international investors. We established Northern Gristone to tackle this uneven playing field of funding and support the world-class innovation that is taking place every day in this dynamic ecosystem.”

Martyn Collins, Festival Director at Manchester Digital City Festival, said:

“Manchester has a rich heritage in technology, as the home of experimental science, graphene and where Alan Turing’s groundbreaking work created the first modern computer. It’s only right then that the exciting startups and scaleups here are getting the recognition they deserve from leading investors. By working closely with our neighbours in Leeds and Sheffield we’re building an ecosystem that demonstrates the true power of Northern innovation and is more than the sum of its parts. I’ve no doubt in my mind that startups and scaling businesses across all three cities will achieve great things both in 2022 and beyond.”

Paul Lewis, chief customer officer at Adzuna, said: “The digital sectors in Manchester, Leeds and Sheffield have developed in leaps and bounds over the past few years and that’s represented in the solid growth in hiring figures for the industry. The transition to remote work is helping to push up advertised salaries for the most in-demand jobs, as companies know they need to hire and retain skilled talent. As the sector grows over the next few years, tech companies in the Northern Triangle ecosystem will need to think carefully about how they find the right talent for their businesses.”