Early stage tech companies in the South West need clearer signposting to the funding opportunities that are available to them in the region, a new report released today has revealed.
The recommendation is one of many laid out in the report, commissioned by Tech South West, that explores how to better support tech startups in the South West.
Tech is the fastest growing part of the South West’s economy. Venture capital investment in the sector totalled over £500m in 2020, representing a 500% increase from 2016.
Developed with contributions from tech leaders across the region, and featuring expert insight, data and analysis, the report provides a roadmap for the sector to improve the opportunities and growth potential of early stage tech companies in the region.
Three key areas are identified where support for startups should be improved. They are: access to funding, business support and talent.
The report also provides tangible next steps to help the tech community to improve the landscape for emerging companies.
Other recommendations include:
- Enhancing communication channels between tech employers and education providers
- Fostering deeper regional collaboration between tech hubs and clusters
- Showcasing investment opportunities in the region to investors
- Feeding ‘live’ skills requirements into education programmes
- Providing a blend of hub-based and remote business support for tech companies from early stage upwards.
Toby Parkins, chair of Tech South West and director of Cornwall-based software firm Headforwards, said: “Digital tech productivity in the region is estimated at £87,000 per worker per year. This report highlights some of the ways that the tech sector can better support early stage companies to improve their product, attract investment, connect with the tech community, and grow their team. If we can crack that nut, the entire region - not just the tech sector - will benefit.”
The report was developed from discussions at the Tech Leadership Forum, a quarterly session led by Tech South West with tech leaders from across the region including Steve Cliffe of Ultraleap, Matt Baker of Jurassic Fibre, Emily Hill of Ghyston, Ben Shorrock of TechSPARK, Niki Davies of Software Cornwall, Aimee Skinner of Future Space, Richard Godfrey of Rocketmakers and Luke Lang, Entrepreneur in Residence at SETsquared Exeter.
Underpinning the discussion were the results of a survey commissioned by Tech South West into the support structures currently in place for early stage tech companies. Those findings were explored by the group, before the delegates split into smaller focus groups to produce tangible steps forward for the sector. The outcome of those discussions fed into the report.
Aimee Skinner, innovation manager at Future Space Bristol, said: “Support for startups is extremely important in the South West, because not only do new businesses bring with them the creation of new jobs and opportunities for the region, but also new ideas and innovation.
This is integral to helping us to tackle the many environmental, economic, and social challenges we face.”
Among the issues raised at the forum was the challenge faced by emerging tech companies seeking funding for their next stage of growth. The group agreed that the funding landscape is more difficult to navigate for young companies than established ones, with not enough information out there in terms of what’s available for whom and how to get it.
Colin Dart, Technology Manager at SETsquared Exeter, summed up the problem: “It comes up in every conversation about what the priorities are for startups: finance. It’s access to finance, it’s visibility to what finance is available, but also it’s the skewing of finance towards late stage. That’s the issue at the moment.
“We’re looking at pre-seed or early seed investment...where does someone get that ‘take it out of the bedroom into a coworking space’ financing? How do they find it? How do they get prepared to ask for it, without having to jump through too many hoops?”
In response to this issue, Tech South West is establishing a Funding Advisory Board, where emerging companies can receive guidance on the funding options available to them and how to access those channels.
In early 2021, Tech South West also launched the StartUp Studio, a virtual accelerator to support South West tech companies prepare for investment. The programme, which is free for the startups involved, took place for the first time in spring this year and is soon to return for a second round.
Ben Cooper, director of Skowt Consulting, funding lead for Tech South West and a delivery partner for the StartUp Studio, said: “The South West Funding Advisory Board will seek to better coordinate the deployment of funding across the region. That means making it clearer what is available; ensuring all sources can align to maximise the effectiveness of the money deployed and boost the bang-to-buck ratio for those deploying grants, those making investments and for those companies receiving funds.
"This will improve the experience of startups and scaleups seeking funding, and make investment in South West companies more attractive to organisations such as Innovate UK, British Business Bank, the combined authorities, LEPs, local authorities, the Angel groups, investment funds, and help support the region’s tech ecosystem as a whole.
“Our StartUp Scene Report shows that early-stage companies can often be overlooked when it comes to both support and investment. The Funding Advisory Board and StartUp Studio programme are a direct response to this research, and part of our mission at Tech South West to improve the routes to market for new and innovative tech startups in the region.”
Dan Pritchard, co-founder of Tech South West, said: “We are delighted to present this report highlighting some of the key ways we can continue to support emerging tech companies across the region.
“Tech is the fastest growing part of the South West economy, already employing over 68,000 people and showing no signs of slowing down. Supporting the emergence and development of tech startups is one of the most effective ways we can ensure the health of this vibrant sector, provide lasting economic resilience to the region’s economy and increase the availability of game-changing career opportunities in the South West.”
The report can be downloaded for free at https://www.techsouthwest.co.uk/reports/