Tech start-ups have captured the public’s – and business media’s – imagination like little else over recent years. After all, many of the world’s biggest and most successful companies – Google, Facebook, Apple – started life as tech start-ups. The typical image of such a start-up is agile and innovative – the classic ‘move fast and break things’ mantra which Mark Zuckerberg was said to live by. Tech start-ups are said to already contribute over £5 billion to the UK economy with initiatives in place such as the Northern Powerhouse to support their growth further.
However, just as fortunes have been made through tech start-ups, they have also been lost. More than half – 60 per cent – of start-ups across all sectors fail within their first three years, and 20 per cent are said to close their doors within their first 12 months. Those in the technology sector may also be more likely to have shelled out substantial resource on research and development, or expensive hardware or software, which is then wasted capital.
So, what is to be done?
It is no secret that businesses in the same line of work often cluster together. Silicon Valley is the most dramatic example in the technology sector, but it has become such an iconic name that we tend to forget its origins. The term first emerged in the 1970s, thanks to a significant number of manufacturers and innovators specialising in silicon-based MOS transistors and integrated circuit chips setting up home there. And this, in turn, was thanks to a confluence of factors – plenty of skilled STEM research taking place in local universities, plenty of venture capital, and plenty of spending from the US Department of Defence. Like attracts like, and over time a technology community built up.
Similar principles can apply on a much smaller scale. Start-ups are far more likely to be successful when they have easy access to talent, to investors, to potential customers and to brand advocates. And this kind of ecosystem can be fostered, in turn, by property developers and investors, networking organisations and government bodies.
Several principles need to come together to foster the ideal tech start-up community.
Workspace is clearly a foundational principle. Yes, communities can come together remotely online, but there is no substitute for physically bringing together early-stage entrepreneurs, who can then actively participate in everything from organised seminars and workshops to the kind of casual water-cooler chats which can spark the next big idea.
The power of being social, and speaking to peers on a similar journey should also not be underestimated. A community of likeminded entrepreneurs may have faced similar problems, and be willing to share their solutions. This type of organic and natural networking is most likely to happen over a coffee, or something stronger, within the confines of a coworking community or city district, and is an important part of start-up life.
Tech start-ups need access to affordable, flexible workspace with the right infrastructure – including, of course, superfast connectivity – to power their growth. This workspace should be scalable, so that successful start-ups can seamlessly move into larger premises as their teams grow.
Then, within these workspaces, there must be focused investment on knowledge-sharing and up-skilling. As mentioned above, bringing tech start-ups together in a physical space opens up great opportunities for collaboration, training and development. But these are supplementary activities to the core business of running a start-up – which means that they need to come under a separate remit. Having a team or organisation in place which can organise events such as up-skilling sessions, training days and high-profile speaker events can massively enrich a start-up community, encouraging a far more collaborative culture.
From there, tech start-up communities are in a much more powerful place to reach out to potential customers, investors and partners – because they are stronger as a group than as individuals. With the right marketing and communications, and a proactive approach to connecting with other organisations, tech start-up communities can begin operating like one cohesive community – and benefitting enormously from the profile which goes along with that. For many early-state entrepreneurs, it is easier to set up a meeting with an angel investor as part of an established community with a track record of innovation than it is to achieve this ‘cold’.
These are the principles behind Exchange, a revolutionary new digital and technology programme for the UK’s next best start-ups, delivered in collaboration with Tech Nation. Over the next 15 years, Exchange aims to support over 2,000 ambitious individuals within the tech start-up sector, funded by the Department for Digital, Culture, Media & Sport (DCMS), and supported by Manchester City Council (MCC).
From start-up to scale-up
Entrepreneurship is inherently ambitious. No one launches a tech start-up hoping it will go out of business in a year or two – and yet the statistics tell us that this will the reality for most.
To improve those statistics, a culture of collaboration is essential. The right infrastructure and support can empower entrepreneurs and start-ups to develop their ideas, to form fruitful relationships and to attract investment, giving them the resources and the contacts they need to go from start-up through to scale-up in record time.
Michael Ingall, founder and CEO, Enterprise City