Tech Nation Scale Ratio report
North West business ecosystem is ideal place for nurturing start-up and scale-up businesses, report shows.
Research finds that Manchester is a high performing hub with a business make-up consistent with the largest sums of VC capital invested.
Manchester has been named as one of the highest performing tech hubs in the UK after new analysis reveals the city’s perfectly balanced start and scale-up business ecosystem.
Research by scale-up support network, Tech Nation, has found that cities and regions with the ideal ‘scale ratio’ are more likely to attract significant investment, and this ratio is reflected in the proportions of seed, early growth and late growth businesses operating in Manchester and the wider North West region.
According to Tech Nation’s research, regions with 50% seed, 30% early growth and 20% late growth firms indicate a mature, balanced ecosystem which accelerates the growth of late-stage companies while supporting the next wave of tech scale-ups.
This 5:3:2 ratio has been dubbed the “Scale Ratio” and is best reflected in Manchester, London and Cambridge, where the largest investments were made in 2020.
Manchester’s Scale Ratio is 53:26:21 and the North West’s is 51:26:23, suggesting the region is an ideal incubator for tech scale-ups. A slightly higher proportion of seed companies indicates the potential for future growth as the region’s business appeal continues to grow. This well-balanced ecosystem has helped fuel Manchester to be named the fastest-growing tech city in Europe.
Knowing how well-placed Manchester is to support early-stage tech companies, Enterprise City launched its Exchange programme in 2020. The revolutionary tech and digital scheme offers ambitious, early-stage tech companies access to tools, infrastructure, and expert mentoring partners they need to succeed, as well as the opportunity to root down and grow in Manchester.
Speaking about Tech Nation’s research, Tanya Grady, head of partnership at Enterprise City said: “The North West and Manchester, has been developing as an international tech hub at an incredible rate over the past few years, which is why we chose to develop the Exchange programme here with Manchester City Council. This insight demonstrates that the area and ecosystem we are helping to create will generate some of the UK’s next best start-ups, and that this is the place for growth, investment and opportunity.
“Tech Nation is the knowledge partner for the entrepreneurs and businesses on the programme, and this research suggests a very exciting and successful future for the Exchange cohort of tech, digital and creative start-ups.”
Liz Scott, head of entrepreneur engagement at Tech Nation, said: “The Scale Ratio is a really interesting way for us to look at ecosystems, how they’re developing, how they compare – and crucially for us to think critically about what should happen next to drive growth. We really do believe that it takes a village to support scaling founders, so we’re hopeful that providing this data-set that allows us all to visualise the structure of our most invested-in ecosystems will help drive growth right across the UK. There are so many pieces of the puzzle when it comes to a healthy ecosystem – Enterprise City’s Exchange programme in Manchester is already having a positive impact and we’re proud to be a part of it”
The report shows that 68% of investment in Manchester tech scale-ups went to late-stage companies, a lower proportion than London (76%). Investors’ heightened interest in early tech start-ups in Manchester has been beneficial for Exchange member Pixel Max, which received £250,000 initial investment earlier in the year, from Solid Bond Venture Builder.
Shay O’Carroll, director at Pixel Max, said: “It’s no surprise that Manchester is experiencing a tech boom as more and more firms are drawn to the appeal of the city, and its start-up friendly ecosystem. We secured funding last year as an early-stage business which has allowed us to build it further, and has propelled our development. As Manchester, and initiatives such as Exchange continue to nurture new tech firms, the region will benefit from the influence scale-ups have on economic growth and it’s a very exciting development to be a part of.”