As an increasing number of new businesses choose to set up shop outside of London, GradEye marketing manager Georgina Ladd puts forward the argument for Sheffield – a city strongly embracing the entrepreneurial culture and with a strong pipeline of talent.
The last year was a good year for entrepreneurship in the UK. A total of 608,110 businesses were launched according to StartUp Britain’s tracker. However, not only was the total number of startups greater than 2014, but there was a significant increase in the number of regional startups outside of the capital.
Birmingham, for example, played host to more start-up companies than any city outside of London in 2015, seeing 14,152 companies registered during the year, overtaking cities including Manchester with 8,712 and Leeds with 6,962.
Why has the number of start-ups increased?
There is an overall increase in new companies for a range of reasons. One reason has certainly been the economic downturn, which has resulted in people having difficulty finding a job and turning to entrepreneurship, according to John Van Reenen, director at the Centre for Economic Performance and professor of economics at the London School of Economics. Other reasons also include access to finance. Whilst loans from banks continue to be difficult to secure, there has been a huge growth in alternative funding options. A 2014 report by Nesta (the National Endowment for Science Technology and the Arts) found that the UK alternative finance market doubled in size year-on-year from £267m in 2012 to £666m in 2013 to £1.74bn in 2014. Options such as crowdfunding have brought equity investing into the mainstream and have been a catalyst for the creation of a new funding landscape.
The rise in regional startups
With a growing population, updated infrastructure and increased funding and facilities available, entrepreneurship has grown significantly in other regional cities. Entrepreneur communities are maturing and the support given to new startups has never been greater.
GradEye is a recruitment platform which uses video CVs to connect graduates with hiring companies. It is a startup company which has been running for just under two years. The company originally started in London, quite simply because at the time we thought that we needed a central London postcode to be taken seriously. Of course the postcode was accompanied by massively high costs, primarily incurred from rent and wages, but needs must for quick growth right? Wrong. We assumed that due to the high concentration of graduate hiring companies, growth would come easily, but we didn’t take into consideration London also hosted a huge number of new businesses and a huge number of similar companies we had to compete with, resulting in a constant uphill struggle.
In addition to worrying about breaking even, the founder Jacob Perkins had to cover his own rent and spend an unnecessarily large part of his day commuting in one of the most congested cities in the world. Perhaps it took longer than it should have, but the true northerner eventually came to a realisation. Being an online business, the company could run on the moon as long as it had decent WiFi. So GradEye packed up and returned to Perkin’s university city of Sheffield.
Sheffield has been ranked number seven in Startups.co.uk City Index 2015, which ranks the 25 best places to start and grow a business in the UK, outside of London. In addition, Sheffield has a blossoming tech industry made up of dynamic and exciting entrepreneurs and a vibrant startup culture to match which perfectly aligned with GradEye’s needs. There is growing funding available to new businesses in Sheffield as part of a series of developments including the launch of the Northern Powerhouse to drive economy in northern cities, as well as a range of both public and private incubators and accelerators to nurture new business growth such as the Advanced Computing Research Centre, Sheffield Digital, and Maker Hub, a new incubator for small tech businesses in Sheffield backed by a £3.5 m grant.
Dotforge is also a Sheffield-based pre-seed startup accelerator driven by a network of business leaders that support entrepreneurs by providing investment, mentoring and networks to create successful companies based in the North of England. Dotforge is now developing sector programmes to build on the strengths of key cities in the North and to create a global conversation on innovation and change.
But funding and support aside, there are a huge number of reasons why starting a business outside of London could be one of the best decisions you make.
Jake Perkins, MD of GradEye, said: “The obvious financial benefits aside, moving GradEye to Sheffield was beneficial for so many reasons. A big one for me was the fact that Sheffield is close to the Peak District and I am a keen cyclist. I cycle to work, but also often head into the Peaks. If I wanted to do that in London I have a higher risk of being hit by a bus, and a long commute out to get into some decent countryside. Personally I think the standard of living is much better in the north, and I have been able to develop my life and own my own home in a way that I wouldn’t be able to in London.
“GradEye is an online business, so it doesn’t really matter where we operate, but we have started to work more with Sheffield based companies as a result. We have also found that our client demographics have changed slightly, finding work with more SMEs both locally and nationally who are realising how great graduates can be for business. But that’s great for us because we really enjoy working with independent businesses and helping them achieve their recruitment goals.
“The young business culture in Sheffield is also a great environment to work in. We often use independent freelancers for a lot of our design work and outsource for software development usually trying to find local developers to help us. We have built some great relationships with local independent businesses and that is something that is difficult to achieve in more fragmented and larger cities such as London.
“I think a lot of recruiters feel the need to be based in London because that’s where a high concentration of talent is based, and it is, but with graduates, we have found that there is a growing interest in working for smaller businesses and even startups, because they develop a wider range of skills across different departments. In addition there is now less importance placed on financial incentives for graduates, and more of an importance on enjoyment of their work and a work life balance. With hires at GradEye for example, we have employed graduates from both Sheffield and across the country and have found some really great people who were willing to either commute or move because they were excited about the work.”
With the growth of regional economies coupled with the increasing range of finance options and support initiatives, cities across the UK will continue to see more startups every year, as well as more businesses that will move from London, particularly business in the tech and creative industries where the provision of a particular industry focused culture is really important.
Despite Sheffield obviously working for GradEye as a base, recent research covered by Business Advice found that startups are more likely to prosper in London than other European cities.
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