This time last year, Northern tech leaders predicted 2025 would see a “huge shift toward the ‘less flashy’ technology that powers the AI mega trend” and it seems like they were right.
For a little trip down memory lane, 2025 saw numerous plans emerge from data centre operators and cloud providers across the North, from a £100m “neural edge” AI data centre in Stockton-on-Tees to a ‘critical’ £250m data centre in Salford.
The North East finally had its time in the spotlight too as the government also pledged over $30 bn in international investment, including from leading US tech firms, and more than 5,000 high-skilled jobs through a new AI Growth Zone. But what about the rest of the North?
Chancellor Rachel Reeves’ Autumn Budget in November outlined the government’s aim to make “Britain the best place in the world to start up, scale up and to stay,” as a series of measures designed to help tech companies access funding, retain talent, and grow were announced. There was a mixed reaction, but tech leaders in the North still described it as “promising.”
Prolific North continued to shine a spotlight on the North’s tech sector, from launching a new Scale-up edition of Tech Companies to Watch – showcasing 11 ambitious, high-growth tech businesses emerging across the region – to the latest Tech Start-ups to Watch list, which celebrated 14 early-stage companies for 2025.
The inaugural GRAFT event, launched earlier this year, united the North’s top tech minds , CEOs, founders, investors, and policymakers to help shape the future of Northern tech. There was one clear message: the North is ready to scale, and the special event will return next year.
So, as we strap in for another rollercoaster of a year (full of optimism over here), we’ve spoken to several tech leaders across the North for their insights, trends and predictions for 2026. Spoiler alert: AI pops up. A lot.
Ben Davies, marketing director at PXN Group
Talent and capital will gravitate towards the North’s key sectors – We’re seeing a rise in start-ups and scale-ups moving to the North, viewing it as a viable growth region. As the sector becomes more cost-conscious, access to world-class talent and infrastructure at more palatable prices can be a genuine differentiator in increasingly competitive markets. We expect this will continue in 2026, which in turn, creates more critical mass and pulls even more companies here. For homegrown companies, this can mean competition, but it also means more potential buyers, deeper talent pools and greater investment.
In terms of fundraising, the bar for new deals will only get higher and diligence will become more detailed. Generally, showing how you meet milestones whilst maximising runway will be a key focus for investors. As portfolios lean on existing funders for follow-on investment, we will see more syndication and collaboration on deals, but we’ve generally got a positive outlook for 2026. We’re hoping to crowd in as many co-investors as we can and get more money into the region.
The North’s demand for capital far outpaces supply.
In addition to this, we will continue to see the rise of investors who centre their expertise around specific sectors and offer more hands-on support. This has been echoed by the government’s modern industrial strategy, which will help the North focus our efforts on the sectors with the most potential. This will help fuel the momentum behind some of our most promising areas such as Advanced Manufacturing, CleanTech, FinTech, HealthTech and Life Sciences.
In terms of growth areas, we saw a record-breaking amount of capital funneled into AI over the last few years. This has had a knock on effect on businesses who support that technology For example, we’re seeing some really exciting propositions in AI infrastructure at the moment.
Dr. Giovannie Jean-Louis, co-founder and CEO of research matchmaking app PROBr
By 2026, we will move beyond voluntary AI ethics into mandated regulation, particularly in high-risk sectors such as healthcare, education, and finance. As AI becomes increasingly embedded in consumer-facing tools, governments and regulators will be forced to step in, not to slow innovation, but to protect public trust and safety.
Alongside this, I predict the rise of formal verification systems for clinicians and subject-matter experts online. Much like blue ticks once signified identity, we will begin to see speciality-specific digital credentials or “virtual badges” that verify a professional’s qualifications, scope of practice, and area of expertise when sharing educational content online.
This represents a significant shift from today’s creator-led landscape, where algorithms often amplify engagement over accuracy. In healthcare especially, misinformation has real consequences. Regulators, platforms, and professional bodies will increasingly face pressure to differentiate qualified experts from well-meaning but unverified voices.
This may feel like a 180-degree change from today’s largely unregulated environment, 2026 will mark the start of serious conversations, and early implementation, around how verification, regulation, and AI governance can coexist. The focus will be on protecting online consumers without constraining innovation completely, and on rebuilding trust in digital information at scale.
David Levine, CEO of Glenluna Ventures and principal of Manchester Angels
2026 is going to be a messy but defining year for AI. The arms race isn’t slowing down – it’s getting uglier. Nvidia, which has basically run the table for years, is finally getting pushed by Google who isn’t just building TPUs for itself anymore; it’s starting to sell and rent them out, potentially even to Meta. That shifts Google from “big customer” to “serious competitor,” and suddenly Nvidia’s moat such as CUDA looks a bit less untouchable as custom chips and open-source frameworks mature. Nvidia will still be king, but it’ll have to work a lot harder (and spend a lot more) to stay there.
On the investment side, the days of “let’s fund anything with AI sprinkled on it” are done. Capital is shifting to applied AI where companies are solving painful, vertical-specific problems with clear ROI. If you’re building another generic horizontal platform with no differentiation, good luck. 2026 will be a shakeout year, and the winners will be the ones who own a real problem in a real industry.
Europe’s actually in a decent spot through all this. Valuations here have always been lower than the US; frustrating on the upside, but a lifesaver when markets wobble. There’s simply less hot air to blow out. Expect European VCs to get even more selective, backing bigger rounds for scale-ready companies, especially in AI.
Meanwhile, the UK… yeah. Higher taxes, weak growth, and shaky confidence aren’t doing any favours. Even with Reeves trying to signal that AI is a national priority while destroying the economy, the overall direction feels heavy-handed. The result: more UK tech talent quietly packing bags and heading to Berlin, Paris, Amsterdam, Dublin, anywhere with a clearer runway and fewer policy surprises. The UK risks becoming a net exporter of its best people unless something changes fast.
Amman Ahmed, angel investor, entrepreneur and exited founder of MusicforPets
Music Tech prediction for 2026 — By 2026, music tech will properly grow up.
For years, the industry has been obsessed with scale — more streams, more creators, more noise. What’s coming next is a shift towards ownership, sustainability, and smarter capital. Artists, labels and rights-holders are starting to think less like talent and more like founders, and technology is finally enabling that shift.
A big signal of what’s ahead was The Weeknd’s recent deal with Lyric Capital. Rather than selling his catalogue outright, he used it as a financial asset — unlocking significant capital while keeping ownership and creative control. That kind of structured financing will become far more common, especially as better data, forecasting and rights infrastructure make music cashflows easier to understand and underwrite. The old “sell early or struggle” mindset will start to fade.
AI will be everywhere, but mostly in unflashy ways. Not writing the hits, but helping decide when to release, where real demand sits, and how to extend the life of a catalogue. The best music tech won’t shout about AI — it’ll just quietly make better decisions happen.
We’ll also see more purpose-led music projects emerge, built for specific moments and audiences — from wellness and sleep to gaming, fitness and niche communities. Technology will let creators run multiple focused brands efficiently, without huge teams.
By 2026, the winners in music tech won’t be chasing hype. They’ll be helping creators build durable, long-term businesses — and doing it quietly well.
George Fairhall, founder and CEO of wac
In 2026, the biggest shift won’t be what people build with tech – it’ll be how fast they can build it. Tools like Rork and Lovable are already changing the game, and over the next year, this will completely redefine what an “MVP” even means. As a founder, it’s striking to see how different this is from five years ago – what once took months and endless fundraising can now be built in weeks, sometimes days.
That speed will create a lot more experimentation, but it will also accelerate a shakeout. While AI will continue to dominate, many of the AI-first products launched over the last couple of years will struggle. Not because AI is fading, but because it’s becoming cheaper, more embedded, and easier to build into existing products. AI won’t be the product in 2026 – it’ll be the expected infrastructure.
We’re also pleased to see worker tech finally getting the attention it deserves, and I expect that momentum to continue into 2026. That’s great for companies like wac, which was built to support people on variable income – shift workers, freelancers, and gig workers – who’ve historically been overlooked by traditional tech.
More broadly, I think we’ll see a shift away from hype-led products towards tech that’s genuinely useful. The companies that win in 2026 won’t necessarily be the loudest or best funded, but the ones quietly solving real problems and earning long-term trust from their users.
Jonathan Summers, executive chair at twisted loop
Our perspective is intentionally practical. These trends are rooted in data and real-world adoption, not speculation – but how they play out will depend on how each business approaches change. The complexity is real and shouldn’t be underestimated. However, organisations that move step by step, focusing on embedding new capability into core workflows rather than treating AI as a bolt-on, will be best placed to take advantage of what comes next.
And what comes next is significant. A new wave of compute is set to break in 2026, reshaping the working reality of every agency, tech team and media business across the North. The scale is difficult to overstate. The systems coming online are roughly a thousand times more powerful than those that produced GPT-3, backed by an almost surreal $571bn of investment from the major technology firms. When that much force enters the system, it never stays abstract. It shows up in the tools leaders rely on, the platforms clients demand, and the expectations that quietly harden into new standards of delivery.
What this generation of models will enable is increasingly clear. They will take on long, multi-stage tasks with a level of autonomy that feels closer to a seasoned specialist than a statistical engine, and they will do it with a consistency that challenges long-held assumptions about what only humans can do. Crucially, this shift will not arrive as a single headline-grabbing moment. It will materialise in more subtle but more consequential ways, as client expectations rise, competitive cycles shorten and the definition of “high quality work” expands faster than many organisations are prepared for.
The leaders who navigate this transition well will treat 2026 not as an inflection point to fear, but as a moment to modernise how their organisations operate. That means creating clearer workflows so the new capability has somewhere to land, strengthening internal skills so teams can work with the technology rather than around it, and giving staff the psychological and practical space to explore how this intelligence can elevate their craft instead of overwhelming it. When organisations do this, something important happens: AI fluency begins to spread across the enterprise, and that fluency becomes the single most reliable predictor of adoption, performance and ultimately enterprise value.
James Heggs, tech director at Counter, B2B technology consultancy division
To predict 2026, it might be worth reviewing the past. The tech industry had a phase in the sun, salaries seemed to be always on the increase and decisions were around whether or not to have astro turf in the office. Sometimes even in light of not actually providing value to a customer or end client. Something that might actually realise return on investment.
That period of time has ended and whatever your opinion on it, tech leaders are now asked to give insight and back up decisions whether that be technology choices, hiring, removal etc with commercial reasoning. Something I personally think is a good thing and generates a whole new series of skills for tech leaders. People I’ve spoken with in the tech community, the successful ones are navigating this with curiosity, realism and awareness.
As we turn to 2026, much of AI adoption and the large economic spend has often been positioned internally as an enabler for the humans in the ecosystem to create time for them to work on the higher value pieces of work. I predict that given the money being spent in that area, organisational leaders will have to provide answers to that very question in order to avoid the potential AI bubble burst.
For engineering teams, code generation tooling Claude etc are just one tool that is being explored and certainly engineering teams that aren’t exploring those could be falling behind but I fear it also has potential for optimising the wrong area of the life cycle such that organisations won’t necessarily realise too much extra value gain. The slow part of any application/software delivery life cycle is very rarely the typing part.
Avril Murphy, CEO, Dote
The personalisation gap – AI has proven itself in the enterprise world. It’s helping detect cancers much earlier. It’s predicting supply chain disruptions before they happen. It’s catching fraud in real-time and accelerating drug discovery. The technology works. Businesses trust it with critical decisions. But when it comes to the daily challenges of being a new parent? We’re still Googling or prompting symptoms at 3am.
There’s a massive gap between what AI can do in boardrooms and what it’s doing in living rooms. We’ve seen early signs of change – WHOOP and Oura use machine learning to optimize sleep and recovery, changing how people approach their health. People trust these algorithms enough to go to bed earlier or cut back on alcohol based on their data and the personalised advice.
Yet parenting – one of the most overwhelming experiences in life – remains stuck in the analogue age. New parents are drowning in conflicting advice, second-guessing every decision, relying on one-size-fits-all guidance that ignores the fact that every baby is different. As Steve Jobs once said, “Technology is nothing. What’s important is that you have faith in people, that they’re basically good and smart, and if you give them tools, they’ll do wonderful things with them.”
The technology to help already exists. 2026 will be the year ‘consumer AI’ finally tackles the problems that matter most to people’s daily lives – not adding more data to stress over, but providing clarity that takes the guesswork out of parenting.
At Dote, we’re building a platform that combines continuous monitoring with machine learning to understand each baby’s unique patterns – which over time, gives parents personalised guidance and confidence in their decisions, not more things to worry about. I have never been so sure that 2026 is the year of transforming parenting!
David Taylor, founder and managing director of Aruga Cyber
As the UK tech sector looks towards 2026, cyber security will be shaped less by headline-grabbing innovation and more by how organisations manage trust, identity and response speed in an increasingly complex environment. AI will continue to accelerate activity on both sides, making attacks easier to launch through more convincing phishing, deepfakes and automated malware, while also enabling defenders to detect and contain threats far faster than before. The real differentiator will not be whether organisations are using AI, but whether it is embedded securely and backed by people who know how to interpret and act on what it surfaces.
Identity will sit at the centre of this shift. As businesses become more cloud-dependent, compromised credentials and supply-chain weaknesses remain the most effective routes in. Zero Trust is moving from theory into day-to-day operations, driven by regulation, customer expectations and hard lessons learned from breaches. At the same time, scrutiny of cyber security providers themselves is increasing. Buyers are more cautious about who they trust with access to their systems, and for good reason. Proven experience, transparency and the ability to respond quickly will matter far more than big promises or generic assurances.
There is also a misconception that AI will simply remove jobs. In reality, it is stripping away low-value, repetitive tasks and allowing security teams to focus on higher-impact work such as threat hunting and live response. In 2026, the cyber security businesses that stand out will be those that combine AI with human expertise, operate at speed, and earn trust through how they deliver, not just what they say. Detection alone is no longer enough; stopping a threat as it happens is what will separate credible providers from the rest of the market.
