A tale of two cities: Can startup schemes in Manchester and Liverpool help kickstart the British economy?2013-04-02 5
The UK’s startup scene is more than just a roundabout in London. Or that’s certainly what a collection of new initiatives in Liverpool and Manchester would have us believe. VentureVillage was part of a group of European journalists invited by the UKTI to visit organisations aiming to kickstart startups in northern England. But is it recession-era rhetoric or a new Northwest hope? Could your startup survive north of the Watford Gap? Read on to find out…
Innovation in corrugated iron
We’re in a giant hangar, flanked with an avenue of gloss-black shipping containers. In the middle of the causeway are two tattooed guys playing ping-pong. Outside of Inventid, an über-hip design agency nestles a fixie bike. Inside, a 3D printer quietly whirrs away. Henry, the CEO, is all hipster specs, quiff and winning smiles.
But this isn’t a coworking space in Kreuzberg, or a unit in Tech City London, but a former logistics depot in deepest East Manchester. The £16.5million profit-for-purpose development used to house Sharp Electronics, but the ravages of the recession meant closure and the threat of the area sliding back to its default setting as an urban badlands.
Cue a timely buyout by Manchester City Council, with added cash injections from the European Regional Development Fund (ERDF) and the Northwest Regional Development Agency (NWDA) to create the 200,000 sq ft refurbished warehouse.
Henry explains their decision to take a container: “We relocated from Leeds last year. We thought about London, but we just couldn’t afford it. And anyway, I quite like urban wastelands, so this works for me…
“The other units house 3D animators, international rights lawyers, motion capture guys – there’s a lot of businesses that can provide support for one another here – it’s become an ecosystem.”
The MediaCity effect
Back in Salford Quays, there’s an even more salubrious recipient of regeneration funds. Standing in the middle of the shining complex of MediaCity – the 37-acre development designed around the BBC’s decision in 2007 to move much of its operations from London – is The Landing.
“You either have to be making or moving digital content, to get office space here,” explains Jon Corner, the charismatic Chief Executive of the seven-storey, purpose-built building, aimed at “creating opportunities for small- and medium-sized businesses to work with larger companies and larger projects”.
In essence – to ride the massively lucrative coat-tails of the BBC part-relocation from London to Manchester, which began in earnest in 2011 with 2,500 staff and five major BBC departments, including Sport and Research.
Commercial channel ITV Granada has also followed suit, recently commencing construction of a new £45m home for its hit soap opera Coronation Street at the site. Nearby, The Studios on Broadway house seven massive HD filming studios, the biggest facility of its kind in Europe.
The site is creating an ecosystem for SMEs to flourish from business created by the media behemoths moving here. It’s claimed (by Salford Council) that the development will create up to 10,000 jobs and add £1bn to the regional economy over five years, with plans to expand the site to 200 acres in the next decade.
Sealing deals on the seventh floor
And that’s where The Landing comes in – the 54,000 sq ft building only officially opened its doors in November last year – as we’re shown round the new building, everything has the smell of hope and newness and just-unwrapped plastic.
Corner, a former TV Producer and MediaCity Director explains the concept as we view a room full of gargantuan servers: “We live in an agile, smaller, faster digital world – that’s why we built an infrastructure here that includes a Digital Workflow Lab and a Games Testing Zone – to provide new media companies with the facilities they need to handle content and data.”
Fledgling companes can sign an office space lease or simply hire the labs when they need them. Best of all, Corner has been canny enough to factor in a Soho House-style members’ bar on the top floor – understanding that the majority of deals get done in velvet Chesterfields while sipping something stronger than a cappuccino.
The mysterious “Project Tomorrow”
It looks as if Manchester’s tech scene is advancing beyond its public-funded training wheels. TechHub, a coworking space bankrolled by Barclay’s and attracting more of the coworking crews and “product-oriented startups” that we’re used to in London and Berlin – points to a nascent scene. As does its ping-pong table.
And let’s not forget “Project Tomorrow”. An ultra-secretive tech consortium has invested in 20 properties throughout the city, mooted to host “ground-breaking technology” including virtual reality, 3D modelling and revolutionary communications, totalling 180,000 sq ft.
Although there’s no concrete word on who is behind the project, names mooted have included Apple, Google and Microsoft. It looks as if an official announcement is imminent and there’s no doubt that the arrival of a global tech brand to the mix of traditional media power-players, new tech infrastructures and budding startups would enhance Manchester’s reputation as a viable alternative to its more expensive and crowded southern counterpart.
Liverpool – breaking free of The Beatles
Ian McCulloch’s unmistakable baritone blasts from the speakers, as we’re treated to a roll-call of Liverpool’s most famous musical sons and daughters – Gerry and The Pacemakers, The La’s, The Teardrop Explodes, The Zutons and er, Atomic Kitten.
While Manchester’s pedigree is in TV production, there’s no doubt that Liverpool’s roots are steeped in music. We are in the offices of Liverpool Sound City, a massive annual music and arts festival, while festival director Dave Pichilingi showcases his mate Roger Appleton’s new movie on the city’s musical heritage.
We’re in the trendy Baltic Triangle – an area of formerly derelict Victorian warehouses, but now establishing itself as the place to be for young, creative companies in Liverpool. As well as Sound City, you’ll find a cluster of creative agencies, video production companies and app and game-designers – many emerging from the wake of Sony closing its Liverpool development studios in 2012.
Cottage industries move to huts
Whereas Manchester has corrugated iron units, Liverpool’s fledgling startups can be found in the wooden huts of Baltic Creative – a similar initiative aimed at revitalising the area and lifting the city from its post-recession doldrums.
Established in 2009, Baltic Creative – with similar regeneration funding as The Sharp Project – was tasked with “providing a creative space… and playing a part in the regeneration of the Baltic Triangle”. It’s biggest project so far – a warehouse with a series of 18 “startup huts” has been open since October last year, as well as shop-front spaces across the road.
School friends Tim, a web designer and Dave, a street artist, share such a hut. “I came back from abroad and found this place suddenly bubbling up – it’s perfect for our needs right now,” says Dave. And yes, there are fixies out front and an office dog in the advertising agency.
The area’s biggest challenge, however, remains the streets flanked with foreboding Victorian warehouses – while inside they may house creative hives such as Baltic and the well-established Elevator Studios round the corner. From the outside the streets still have the air of a post-apocalyptic wasteland – albeit one with popup art events and vintage fairs.
Again, a much-needed social hub, this time in the form of Camp and Furnace – a massive 2,500 sq metre pub and exhibtion space on the site of a former gallery – provides the area with a much-needed social space, ensuring people don’t just hop on the bus home after work. What’s still needed is better transport links to the centre of town and more public-facing space to provide more visible optimism to the stark industrial streets.
As Alistair Houghton, Business Reporter at Liverpool Daily Post puts it: “In terms of the regeneration of the Baltic Triangle into a genuine creative quarter, the single most important development was Camp and Furnace. Yes, Elevator welcomed a lot of firms into the area. But C&F gives their owners and staff somewhere to hang out after work.
“It’s only a few minutes walk to the city centre, but the road is largely deserted until Baltic Creative, so it seems further away than it is. If bus routes can be improved it will really drive the area forward.”
The public funding paradox
The most noticeable difference between most initiatives in Manchester and Liverpool and ones in, say, France or Germany, is the amount of government and EU funding that has been pumped into them to get them off the ground. Both cities have been identified as areas in need of urban renewal and economic development to create a new business infrastructure.
Unlike Berlin – which had a little EDRF cash available for loans and subsidies – the amount of funding for large-scale projects such as The Landing, The Sharp Project and Baltic Creative has been generous, with extra cash injections from the Northwest Regional Development Agency – the now-defunct public body tasked with the economic development and regeneration of the area.
But thinktanks, initiatives and headline-friendly coworking spaces are all well and good in election year, but are they sustainable when public money runs dry? The NWDA has already become one of the casualties of the Cameron government cuts.
The Landing in Salford, The Sharp Project in Manchester and Baltic Creative in Liverpool have been created around business plans to become sustainable. “The funding meant that it afforded us risks that we wouldn’t have been able to take if we had been privately funded,” explains Rose Marley, Manager of The Sharp Project. “But our plan has always been to grow from fully operational in 2011 to fully sustainable in 2014. We are on time and on projection for this.”
The Landing, which received £6.8m from the EDRF, plus £3.8m from the NWDA and £3.6m from Salford City Council is aiming for self-sustainability by 2016, while Baltic Creative claims it is on course for sustainability this year.
Houghton has this to say on Baltic Creative: “Public money was needed as it’s hard to see how, given the current economic climate in Liverpool, Baltic Creative would have happened otherwise. But it’s more than 80 per cent full. And there does seem to be a trend for creative and digital firms to move to the Baltic Triangle, which means demand should continue to grow, so the project can be sustainable. It has to be – the public sector can’t afford to keep these projects going…”
A new hope or recession-era rhetoric?
While Manchester and Liverpool might not have the obvious cachet of London, and the spectres of the recession(s) might haunt the streets more prominently, the startup culture has been most definitely pinned as the posterboy of the new Northwest economy. Our whole trip is geared towards showing us as many shiny, new symbols of this as possible.
And while both cities have traditionally relied on an ecosystem revolving around one industry and main supporter (whether that’s cotton, shipping, Coronation Street or Sony) the economic crisis has seen a fragmentation of these models.
Like many locations that have taken a fiscal beating, the “startup scene” – essentially small, grass-roots businesses borne from the rubble of a recession – starts to symbolise hope and regeneration, wrapped in the trendy packaging of fußball tables and inspirational murals.
But that’s no bad thing… Manchester and Liverpool might not have spawned many stellar startups as yet, but cheaper, plentiful space and massive potential for development coupled with EU fiscal power-ups (whether you approve of these or not) mean it just might not be so grim up North after all…
Table football – flickr user smudie
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