2020 is set to be a year of huge expansion, investment and hundreds of new jobs for the Liverpool City Region's tech sector, a leading industry figure has predicted.
Business and technology manager at LCR Activate Jonathon Clarke has given his forecasts over what may happen in the region's tech scene based on insight from the programme's Tech Climbers report - and his experience providing support to businesses here.
LCR Activate is a support and funding programme for helping digital and creative firms across the city region, and Mr Clarke said with Liverpool having witnessed small, tech-oriented businesses play a pivotal role in development of areas like the Baltic Triangle, Daresbury and the Knowledge Quarter, environments will continue to be created where such creativity can flourish.
Here's what he said:
With the rate of expansion having a significant focus on skills, Mr Clarke said Liverpool City Region’s tech scene will become a lucrative market for employment opportunities in 2020.
He said: "According to our LCR Tech Climbers Report 2019, just 53 top tech businesses are predicting the creation of a huge 700 jobs between them in the next 12 months. On average, that’s over 13 employees in each business.
"What’s more, it appears that the region is generally bucking the trend of the tech skills shortage, with talent being cited in the report as a key benefit for businesses being based in LCR. A strong pipeline of talent coming out of our colleges and universities, coupled with a thriving and exciting city lifestyle, has been a boon for our community."
Increasing levels of funding
Seed stage funding is an issue that comes up repeatedly as a make-or-break determinant for startups all over Europe, Mr Clarke said.
He added: "There isn’t as much liquidity around as in the USA or Far East, and it causes our startups considerable pain. From conversations with businesses on Activate it’s clear that there is a huge appetite for such funding in the city region – and, increasingly, businesses can demonstrate real traction with their customers, making a strong case to would-be investors that they can generate returns on what they receive.
"What’s good about this is not only does it indicate that we have a huge amount of ambitious businesses in Liverpool City Region, but it also shows investors outside of the region that there is massive potential here. I also think that investors are paying attention to what’s coming out of the region, and that in 2020 we’ll see the start of supply catching up with demand."
He said that applies "equally to VC houses and PE companies as much as it does to angels", adding that LCR Activate worked on the Tech Climbers report with Praetura Ventures.
"[Praetura Ventures] have invested over £100m into early-stage businesses and have a passion for supporting entrepreneurs in the North. Then there’s the continued support and interest from local investors like William Currie Group, which has supported some of the region’s most exciting tech companies like Syrenis.
"I also think the recent announcement of the £75m business growth package announced by the Metro Mayor will stimulate activity in the sector locally. With the bulk of this funding kicking off in 2020, I think the future of funding in the region is looking bright."
Liverpool City Region goes international
Mr Clarke said: "I was positively surprised when I found that 51% of the tech businesses we surveyed in the report were already successfully trading internationally, and another 43% had plans to do so or had overseas deals in the pipeline.
"In light of Brexit uncertainty, the positivity of the city region’s tech businesses when it comes to international trading is a trailblazer for other industries.
"It makes sense when you consider the wider context. According to the Combined Authority’s Skills for Growth Action Plan for 2018-2020, tech is expanding 2.6x faster in LCR than the remainder of the UK economy, and the output from the sector doubled over the last decade, compared to 37% growth in the rest of England."
Tech to take on traditional sectors
According to Mr Clarke, the sector is actually seeing a richer array of subsectors form.
He explained: "Specifically, we saw a growing cohort of businesses tapping into the markets of education, health, and business process software, in addition to the strong video games and entertainment heritage we have long known about.
"EdTech and HealthTech in particular can be difficult markets to operate in because of regulatory hurdles and purchasing cycles. Many of the successful businesses we have worked with who supply goods and services into these sectors boast a high level of sector-specific knowledge in their leadership teams which enable them to overcome these hurdles.
"Thinking about the direction of travel at Government and international level, I think that we will soon see a demand-side push for tech products and services in industries like EdTech which (at least in the UK) have been a little less receptive to businesses coming in to ‘disrupt’ (I use that word wryly) the status quo. Recently NESTA held a funding competition with Department for Education which I think is a sign of things to come.
"I can see these sort of opportunities increasing in number, presenting a fertile market territory which startups should be capitalizing on where possible."
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