A region of a thousand (21st century) trades?

Last week Pitch@Palace On Tour came to Birmingham?—?what can it tell us about the local technology community in 2017?

Last week I had the privilege (and related increase in stress levels) of hosting The Duke of York and his Pitch@Palace On Tour event at our offices in Birmingham. The event saw 120 invited business leaders, investors and influencers listen to 16 entrepreneurs pitch their businesses for the opportunity to progress to the next stage of the process?—?a day long Bootcamp at The University of Nottingham where they have the chance to ultimately stand on stage at St James Palace in April.

So what did we learn?

Editors note : this piece is written in a personal capacity but using information gained from my professional life with KPMG. None of the information contained is private or confidential and indeed the only people likely to be annoyed by it are my own employers!

There is a lot going on

While the event was open to any UK based entrepreneur almost two thirds of the businesses hailed from the Midlands. With representatives from both West and East it demonstrated that the level of activity in the region is as buoyant as the latest Start Up Loans Company statistics suggest.

The Midlands is certainly looking like a good place to be an entrepreneur.

But it is not all about startups?—?VoxPopMe, Peppermint Technologies, Chemist Direct, Wealth Wizards, Icon Polymer and Solid Solutions Management demonstrate the region has the ability to build, grow and fund successful technology businesses.

During the day we also heard from David Hardman (Innovation Birmingham) and Joel Blake OBE (FeeLYX and Silicon Canal) who provided examples of the many and varied community, incubator and accelerator spaces ready to connect and accelerate the growth of local entrepreneurs.

A breadth of talent (and geography)

It is not just quantity?—?there is a breadth to the ideas and concepts being built.

From travel (Limitless Travel) through VR (AtmosVR) to biotech (NuVision) the entrepreneurs on stage showcased the wide variety of markets and sectors that are being tackled from their bases in the Midlands.

And while the geographic size of the region helps in many respects it does have its downsides.

From Malvern in the West to Nottingham in the East, each cluster struggles to connect efficiently with one another to share dealflow, talent and capital. This results in missed connections and difficulty in scaling past each local ecosystems natural size. That does not help us compete on a global basis where having the scale to fail is as important (and probably necessary) to creating breakout successes.

A calling card for the region

And another thing about that breadth.

Despite its recent successes and developments neither Birmingham or the region as a whole is on the (very short) list of cities / regions that can truly claim to be world class across the full spectrum of today's ‘technology’ sector.

It is surely impractical and counterproductive for us to suggest we can be leading in areas as diverse as digital media and autonomous vehicles when our investment, talent and industrial pools are limited relative to London, San Francisco / Silicon Valley, Tel Aviv or Boston (especially if we continue to be geographically constrained in local ecosystems).

We run the risk of trying to be ‘all things to all people’ and fail to articulate and execute on where we can be world class.

And don’t get me wrong?—?the areas in which we have the background, experience and skills to be world class are not small opportunities?—?automotive, advanced manufacturing, healthcare, biotech?—?all are multi-billion pound opportunities with an affinity with the region.

This is not to say we should forget about everything else. There is of course a need for creating an ecosystem of enabling technologies, talent pools and entrepreneurial mindsets.

But we need a calling card.

Something that clearly articulates to the global investment community when they should look to the region to find world class dealflow; an elevator pitch to global tech companies as to when and why they should invest in the region.

The elephant in every room

Any ecosystem (outside of the handful of world tech cities outlined above) put access to funding at the top of their wishlist of things to improve. That view is certainly supported by the team at Beauhurst— their review of 2016 shows deal numbers and investment both down compared to 2015 on a UK level.

But what about the Midlands?

• High growth companies are still being funded?—?again referring to the companies listed above it is possible to grow and fund a business in the region.
• Startup funding is still sporadic and hard to come by with the crowdfunders increasingly playing a vital role. Many are looking to have a local presence in 2017.
• Angel investment is an issue that needs attention. There are high net worth individuals (HNWI) in the region but many wouldn’t call themselves ‘angels’ so keep themselves under the radar (here I’m making a distinction between those that just invest out of interest / passion, and those that do it as part of an investment strategy).
• For those angels that do exist, they seem too risk averse for where they sit in the investment cycle?—?looking for a magical combination of traction, team, sector and valuation that makes investment at scale difficult.
• This risk aversion may come from the increasingly useless use of the word ‘technology’ as a sector. To use some cliches, HNWI who have spent their life building manufacturing businesses locally are going to take a lot of convincing to invest in an early stage social network trying to be the next Facebook for cats. That’s not to say these businesses are not investable, just not in the region and that the entrepreneurs may need to look further afield.
• More institutional money is coming across the range of investment stages. Whether it be NorthEdge Capital or the soon to be contracted Midlands Engine Investment Fund additional funding is coming to the region as activity and promotion increase.

So is investment an issue? Yes. Is it really a barrier to building a world class ecosystem?—?I’m not so sure.

A window of opportunity

So, a strong base of entrepreneurial skills and talents, world class industries and no bigger an investment issue than many regions. The Midlands is well placed to ride the undoubted local and global challenges and opportunities 2017 and beyond will bring.

But there is much still to do.

• How do we activate the early stage investment community at scale locally?
• How can we efficiently (and without creating yet another organisation or layer of complexity) to better link West to East? Do we need to? Is ‘the Midlands’ a useful nomenclature?
• What should the relationship be between the Midlands and London? How do we best utilise a ‘world city’ that is only just over an hour from us without us simply becoming a feeder of talent and entrepreneurs? Are we confident in our own strengths to go toe to toe with them in areas where we can be world class?
• Where are the corporates? The team at Innovation Birmingham (and others) are doing a great job of showcasing how innovative companies can address the issues of large institutions and the public sector. How do get more involved in a meaningful way?
• We have one of the youngest populations in the world. What do we need to do to get them to stay, train and build businesses in the region?
• How do we make sure the success of the tech community is not confined to just the glass buildings and office blocks of Colmore Row and the science parks? We need a mechanism by which the full diversity of the region is brought to bear on the opportunities and challenges of our time?—?and share in its successes.
• How do we better promote the region on a national and international stage? Pitch at Palace On Tour was a great opportunity to showcase what is going on, what else can we do?

I’m a recent immigrant to the Midlands.

In the short time I’ve been here I’ve become convinced there is a massive untapped potential in the region. 2017 may well be our window of opportunity to build on the great work that is already going on; to ensure it converges into a coherent message for the region that can be projected onto the world stage.

For anyone interested in continuing the conversation?—?get in touch. Don’t agree? Get in touch. Have different ideas? Get in touch.