In the late 18th century the North of the UK came to global prominence as the birthplace of the industrial revolution. Fast forward a few hundred years on it now seems that in the 21st century the regions international prominence is back on the map as the North’s tech sector gathers momentum.
The digital technology sector now employs around 1.5m people across Britain and more importantly, is predicted to outperform all other occupation categories by 2020. Investment into the UK’s tech sector is growing at the rate of 11% per year with the Internet economy alone forecast to be worth £221bn by 2016.
A recent survey by Barclays stated that UK Venture Capitalist funding doubled in 2014 with technology-based companies attracting £1.4bn of investment. The report also highlights that tech companies in the North are set to grow twice as fast as GDP. This growth in the Northern Tech sector has resulted in new sources of finance and investment.
This confidence is also evident in the regions deal flow across all sectors. The North saw 655 M&A transactions during the first three quarters of 2015, compared to 562 over the same period in 2014, representing a 17% increase. These figures speak volumes for the North’s growth as London only saw a 2.4% increase in M&A activity in the same time period.
Northern businesses are innovating.
The surge in deal flow in the region is testament to the international impact our Northern businesses are having by working with category leaders at the cutting edge of technology. A great example of this is Mobica who recently received investment from Inflexion Private Equity. Mobica is a Cheshire based award winning software development company, which employs over 900 people internationally. Their staff are working with Intel, T-Mobile and many of the largest global technology companies shaping the future of various sectors including the semi-conductor and automotive industries. Following the investment from Inflexion, we expect Mobica will continue to be involved in the most high profile technology projects, helping to put the North on the map as a region that has the ability to innovate at the forefront of technology.
Northern businesses are disrupting.
Zuto (previously CarLoans4u), based in Macclesfield has enabled a shift in the process for the way in which a consumer goes about financing a purchase of car. Zuto’s online platform and customer service team gives consumers greater transparency on their car financing options by opening the quotation process to a wide range of lenders rather than only having the in-dealer finance option. Zuto took £8m of investment from Scottish Equity Partners (SEP) in 2014 which has seen Zuto become the UK’s leading online car finance company and have also opened up a new office in Manchester.
Northern businesses are attracting global interest.
We have seen an increased level of interest for investment into the North from overseas. A recent example is Orca holdings, a U.S investor who is set to acquire Opsec Security Group Plc in a £66.7m deal. Opsec, an anti-counterfeiting technology and Services business with European Headquarters in Newcastle, is a global player supporting international companies and governments in their fight against counterfeiting.
The U.S is not the only party that have recognised the North’s potential. Chinese online gaming giant Net Dragon acquired Blackburn based Promethean in a deal worth over £84 million. This interest has been further reinforced by a recent visit from Chinas president Xi Jinping and the new announcement of direct flights now being held from Manchester to Shanghai, which is predicted to contribute £50 million annually to Manchester’s economy. Both these overseas investments underline the North of England’s position as a key contributor to the Tech sector.
Technology deals are driving a new dimension to the growth of the Northern Powerhouse economy. This continued investment in the region is over time shifting the emphasis of the economy away from the dominance of the manufacturing and services sector and supporting the regions enviable reputation as a leader in the tech revolution.
If Northern based technology businesses continue to innovate and disrupt then global interest in Northern firms will continue to grow. And I see no reason why we cannot keep on this positive trajectory and be seen as a key region in Europe’s technology economy.
Hugh Campbell is a Founder and Managing Partner of GP Bullhound. Hugh is passionate about technology innovation and entrepreneurs with 15 years’ experience advising and investing in Europe’s current and future Unicorns. He has worked with all the leading growth equity funds in Europe and has sold businesses to Real Networks, Tesco, Disney, Accenture and Experian amongst others. Hugh opened the Manchester office in 2013, is a Manchester Grammar School alum and graduated from Pembroke College, Oxford. Hugh is now a member of the Tech North Advisory Board.
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