Liverpool City Region has many of the ingredients needed to build globally significant tech businesses, thanks to its world-class research facilities and strong founder support to a growing investment ecosystem on its doorstep.
But as industry leaders working across the region’s tech industries gathered for Prolific North’s GRAFT Regional Tech Champions roundtable at Bruntwood SciTech’s The Plaza on 10 June, the discussion turned from what’s working well to a key question: how does the region create more scale-up success stories?
Supported by MHA and Growth Platform, the GRAFT Regional Tech Champions roundtable followed our first editorial piece in this year-long initiative, where we chatted to founders, investors and ecosystem leaders to shine a spotlight on the region’s tech sector.
‘There are two top assets in the world – and one is right here in the city region’
The discussion kicked off by examining what makes Liverpool City Region distinct from other tech clusters across the North. The region’s collaborative culture, where founders, education providers, investors, the public sector and support networks work closely together, was referenced heavily, and followed a similar pattern to some of the conversations we had in the region recently.
Helen Cross, Cluster Lead – Creative Industries at the Liverpool City Region Combined Authority, pointed to “great assets” in the region from Sci-Tech Daresbury, Hartree Centre, Liverpool Science Park and leading universities.
She also highlighted the breadth of support available to businesses, with the Combined Authority continuing to look at where it can further support them, having already invested in LYVA Labs and Baltic Ventures to support start-ups with early-stage capital.
“It’s much easier to work collaboratively here, people are a lot more open to things,” she explained. “While other areas may be focusing more on helping start-ups or spinouts to come through, we’re now trying to help support businesses through that next stage of scaling.”
Ivo Kerkhof, COO at innovation investment company LYVA Labs, agreed that collaboration is a “really strong differentiator for the region” and people are working together to “solve real world problems” in a way he doesn’t see necessarily in other regions.
From a founder perspective, Dan Reilly, co-founder of marketing measurement platform Ruler Analytics, said the region is ideal for business owners like him thanks to it being “cost effective and connected”.
For some like Charlie Murphy, founder of Lotu Education, that ecosystem collaboration is a “huge reason” why he’s opted to keep his edtech firm in the region.
While Matt Littler, founder of VR Production house Ark Immersive, said Liverpool has “always been a creative hub” and the region has long supported that “collision of creativity and innovation” where leaders feel encouraged to try new things.
Beyond people and businesses, the city’s heritage and research strengths were also highlighted. Paul Treloar, Head of Business Support at Sci-Tech Daresbury, said Liverpool possesses unique assets.
“Having a global name is really important and it’s not hard for Liverpool to be positioned as a high-tech, high-knowledge city. We talk about university firepower, we’ve got it, and businesses can pull talent from both Manchester and Liverpool, so having two cities like that close by is very, very powerful for a company,” he explained.
He also highlighted the National Cryogenics Facility at STFC’s Daresbury Laboratory, which recently secured £51m in government investment.
“It will underpin quantum and there’s only one other in the world, in Chicago, and they haven’t got it yet. We’re well on our way and we’re in a race here for who will be the first for critical cryogenic infrastructure for quantum, that’s one of the top two assets in the world – and it’s right here in the city region.”
The next challenge is creating more scale-up success stories
While there was agreement that Liverpool is producing innovative businesses and talented founders at a start-up level, the discussion quickly turned to the next stage of the ecosystem’s development.
Jonathan Read, Managing Director of Village Software, questioned whether the region currently has enough depth of scale-up expertise and reinvestment back into the ecosystem from business leaders.
“Are we collectively, as great business people, are we great at investing in and scaling up companies? For the people I know, and perhaps I just know the wrong people. I would say we are not as great as we could be.
“My own business thrives and does perfectly well, but if we want to see that depth then we have to have depth of investors, depth of experience, of angels, and perhaps that pool isn’t as deep here as it is in other places.”
As Liverpool is a smaller city region, Andrew Matthews, Partner at MHA, questioned whether the region is “made to be an SME start-up region”.
“I don’t see PLCs (public limited companies) every day but we’ve got a huge volume of SMEs, good founder-led businesses and growth businesses. Maybe Liverpool itself is the PLC of all these businesses brought together?”
Ivo Kerkhof from LYVA Labs suggested the region is still developing the “flywheel effect from those exists to create a pool of investors and second-time founders”.
While Paul Treloar from Sci-Tech Daresbury said deeptech innovations can take “nearly 20 years to cook”. He agreed the region “is seeing a cycle” but there is a bigger opportunity to strategically keep those big businesses in the region to grow other businesses around it.
“Our entrepreneurs are so quick. They’re not going to struggle, but strategically, I just think we’re missing leadership,” he added. “We’re building globally critical infrastructure and have an anchor point strategically, but I wonder, if we’re going to fix that leadership, it might come from somewhere else in the world.”
Current homegrown regional success stories were mentioned, from Home Bargains to Applied Nutrition. But there was also a nod to the past, as the impact of Fraser Williams, Liverpool’s former “greatest tech company”, was referenced by Jonathan Read as the business led to a number of spinout companies, which is an example where that cycle “could be developed”.
The games industry was highlighted as another example of where that cycle is working well, with Helen Cross from Liverpool City Region Combined Authority emphasising the impact Psygnosis continues to have after its Sony acquisition, where today you’ll find former employees that have since set up and built successful games companies in the region.
READ MORE: Why the games sector is a ‘significant asset’ generating £220m for Liverpool City Region
Other leaders suggested Liverpool’s challenge is not in creating start-ups but creating more businesses capable of reaching national and international scale before exiting.
Investment is “improving”, but growth capital remains harder to access
Funding proved to be an important discussion topic, kicking off with praise for the support available to founders at the earlier stages, with organisations including LYVA Labs, Gateway Angels and Baltic Ventures helping more businesses to get started.
Katie Nicholson, Investment Director at Gateway Angels, said significant progress had been made in recent years with more initiatives put in place to support companies with early-stage capital, while growth capital is “a lot more challenging”.
Several leaders highlighted Scottish tech firm Skyscanner and the impact its success has had on Scotland’s tech ecosystem, where money has been reinvested back into the ecosystem and where you’ll easily find ex-Skyscanner leaders on the cap table of emerging businesses.
As Nicholson put it: “We need a unicorn like that in Liverpool and that will trickle down.”
Dan Freed, Partner at YFM Equity Partners, suggested there can sometimes be a more cautious and “natural conservatism” mindset among Northern founders compared to businesses elsewhere, especially when it comes to scale-up capital.
“Elsewhere in the world, people are shouting from the rooftops about how great they are. I think there are a lot of good foundations here, but it’s about bringing that together, giving some more confidence and boosting that heritage and those great success stories here,” he said.
He also challenged founders to think more ambitiously about investment.
“With businesses we’re seeing in this region, they’ve got great big plans but they’re only asking for a small amount. We’re trying to encourage them to say we’ve been on this journey with loads of businesses before, you need to invest properly. So go for it properly, rather than just taking a little bit now. There is a lot of growth capital available for the scale of businesses in the UK. It’s just about matching the right asks with the right people.”
Across the investments that LYVA Labs has made in the region, Ivo Kerkhof said they now have just over 20 co-investors across the UK which is an “improving picture”, and more and more investors are coming to the region to engage with Liverpool-based businesses. But there is still work to do beyond those early stages.
From a founder perspective, James Barber from Harker said his business has bootstrapped up until now and has felt “very supported” in the region and is looking to scale the business over the next few months.
“One of the things I think we do really, really well is listening to founders about what they want and need here. In other places, I hear of programmes being prescribed to founders, whereas Liverpool city region listens to feedback from different organisations. There is definitely support there, we’re always going to want more money in the region and more cash to go into more businesses.”
Beyond the city region, he said the government needs to look at creating a more “cohesive offering” and better incentives for investors, particularly for exited founders to reinvest back into the UK, rather than taking their money elsewhere.
For Shilvan Tavares from The Wellbeing Doctors, his business is now looking to scale and while support and grants from the likes of LYVA Labs has been “super helpful”, he is looking for that next layer of support as there is a “grey area” when it comes to that middle pot of growth funding.
‘We don’t want to build a wall around the city region’
Several leaders highlighted infrastructure and connectivity as important factors for growth, particularly stronger links between Liverpool, Manchester and London.
When leaders were quizzed on the environment for growth in the region, Dan Reilly from Ruler Analytics said: “Liverpool is a globally recognised name and I don’t see anything but advantages. When it comes to scaling, we’ve had a lot of successful businesses, perhaps it’s in the DNA and culture of the local region where when a sale happens, people take money off the table?”
James Barber, CEO and co-founder of Harker, said some people spend “too much time being worried” about the lack of money regionally.
“The barriers to scaling are the barriers to scaling yourself only in Liverpool, but we don’t want to build a wall around the city region. We need to be finding a way for the city region to benefit from those businesses who are going to London and going to Manchester to get more money.”
For Chelsea Slater, Founder of InnovateHer, her business is a not-for-profit social enterprise and acknowledges it has been a “struggle” to scale but she has seen that shift more recently.
“Recently, I have seen a little bit of a change. We’re going for social investment. I think Liverpool is really good from a purpose-led and social investment space. Support that the likes of LYVA Labs have given us has been, and hopefully will be, the catalyst for us to get a little bit more investment in future as we’re heading into the e-learning space and hoping to try and commercialise that.”
But if there was one topic that generated broad agreement, it was talent. While there was praise for the pipeline of graduate talent emerging from Liverpool’s universities and higher education institutions, there was acknowledgment around a gap in senior leadership.
Carol O’Gorman, marketing manager at investment specialist Deepbridge Capital, said while more and more graduates are opting to stay in the city, it is “more difficult” to source senior talent at an executive level as they take longer to develop.
Helen Cross from Liverpool City Region Combined Authority said efforts are continuing to improve links between employers and emerging talent: “We feed these issues back into the Combined Authority and where money needs to be spent, so hopefully we can start to see change.”
Confidence, visibility and telling Liverpool’s story
Whether discussing world-leading research facilities, successful tech businesses, founder support or investment activity, there was a shared belief in the room that the city region should be more confident in promoting its achievements.
Liam Spence, Business Development Manager at the University of Liverpool’s CHI-Zone, said the city is “moving in the right direction” but needs to tell its story more effectively outside of the region.
“We’re attracting more students, we’re doing a lot more in terms of research, and we are focusing down and almost doubling down on our strengths in terms of health and life sciences and advanced manufacturing, so I do think it is moving positively. It just needs to be communicated better outwards.”
For Paul Treloar from Sci-Tech Daresbury, the region has a “phenomenal backstory” which needs to be shouted about more.
“Sci-Tech Daresbury has a globally leading backstory. We’re not talking about second-rate stuff here in Liverpool. We had the world’s first ever inter-city railway, our heritage is unbelievable. But we don’t talk much about this, do we? But we really need to – if you look at the states, they don’t hold back!”
While leaders acknowledged challenges around scaling, it was clear the next opportunity is for the region to support businesses to scale successfully and build on generating that ‘founder flywheel’ capable of accelerating growth for the next generation of businesses.
Full list of attendees:
- Ben Waterhouse, Chair of the discussion and commercial director at Prolific North
- James Barber, CEO and co-founder, Harker
- Jennifer Fenner, co-founder and MD, DefProc Engineering
- Dan Freed, Partner, YFM Equity Partners
- Ivo Kerkhof, COO, LYVA Labs
- Matt Littler, Founder, Ark Immersive
- Charlie Murphy, Founder, Lotu Education
- Andrew Matthews, Partner, MHA
- Helen Cross, Cluster Lead – Creative Industries, Liverpool City Region Combined Authority
- Katie Nicholson, Investment Director, Gateway Angels
- Dan Reilly, co-founder, Ruler Analytics
- Chelsea Slater, Founder, InnovateHer
- Liam Spence, Business Development Manager, University of Liverpool – CHI-Zone
- Carol O’Gorman, marketing manager, Deepbridge Capital
- Shilvan Tavares, co-founder, The Wellbeing Doctors
- Paul Treloar, Head of Business Support, Sci-Tech Daresbury
- Jonathan Read, Managing Director, Village Software
- Rowan Porter, Transaction Services Director, MHA
