Is Manchester Emerging As The New London For Indian Startups Looking At The UK?

Notwithstanding Brexit, the UK — which is the fifth-largest economy in the world, is language friendly, and has Indians as the single-largest ethnic minority group — remains a favourite destination for Indian startups and enterprises.

UK’s capital London, the world’s largest financial centre, was hitherto the most preferred city in the country for startups. However, given the fact that it is also the second-most expensive city in the world to rent, London dreams don’t come easy to everyone, particularly to bootstrapped Indian startups foraying into the UK market in their early stage.

As a result, other city clusters in the UK — Manchester, Leeds, and Birmingham — offering digital and fintech infrastructure are now attracting Indian startups and enterprises looking to enter the UK and set up base there.

With its brand new digital infrastructure (reportedly the best in the UK), affordable living, loads of coworking spaces, acceleration programmes, and funding access, Manchester has reinvented itself as the ‘digital city’ of the UK to feature high up on the list of startups exploring technologies like blockchain, cybersecurity, AI, IoT, and machine learning (ML).

The growing partnership between India and the UK is evident in various nodal programmes such as the UK Rocketship programmes, Mayor of London’s IE 20, Manchester-India Partnership (MIP), and Manchester’s Inward Investment Agency (MIDAS) programmes for five startups from Deloitte Fast 50. These are just some of the initiatives that enable Indian startups to soft launch in the UK and gain access to the market by bridging a huge gap in terms of legal, tax, and other consultancy requirements, funding (in some cases), and other operational requirements of startups.

With unmatchable digital infrastructure at an affordable cost, pre-incubation, incubation, coworking spaces, and availability of funding - Manchester is poised to become the next investment destination for Indian startups!

Given Manchester’s rising popularity, I recently took the opportunity to visit the city and interact with ecosystem stakeholders there to understand what it offers to Indian startups. The aim was to explore how suitable Manchester is as a base for Indian startups looking to expand their operations to the UK.

And I found that given Manchester’s unmatchable digital infrastructure at an affordable cost, subsidised pre-incubation, incubation, and coworking spaces, and availability of funding infrastructure — which includes a number of British Indian corporates looking to invest in Indian startups — the city is poised to become the next investment destination for Indian startups.

Why Manchester?

So, what is it about Manchester that makes it conducive for Indian startups to set up their base?

After Brexit, Indian startups, with limited money in their pockets, often have to choose between the UK market and the EU market. The EU, as the second largest economy in the world, is attractive, but taking in 27 countries and different languages — German, Italian, French, Spanish — it poses its own challenges. Manchester doesn’t have these problems as English is spoken here and it’s a one-stop shop for startups.

Commenting on the Manchester ecosystem, Greater Manchester Mayor Andy Burnham says, “Manchester is the fastest growing city in the UK outside London. While it is the second home to the world’s largest broadcaster, BBC, now the Government Communications Headquarters (GCHQ) is also considering to set up its facility here. This will further solidify the digital infrastructure here. Manchester has got all the ingredients — infrastructure, a pool of talents, digital skills, and business support (required for startups).”

According to reports, the economy of Greater Manchester has grown faster than that of London in the three years since the Northern Powerhouse initiative was launched. Manchester is also Britain’s strongest performing city today, with a predicted economic growth of 2.4% every year until 2020, said an EY research report.

Apart from the infrastructure, the ecosystem, the facilities, are the initiatives that Manchester has taken ease the path for Indian startups to soft-land there. For instance, MIP, along with MIDAS, Deloitte, The Growth Company, Manchester Airport Authority, and other organisations extend their support to Indian startups, helping them set up base there at low a cost. Every year, MIDAS also shortlists five startups and enterprises from the Deloitte Fast 50 programme and offers them a paid visit to Manchester, free consultancy, and other facilities.

Bengaluru-based 42Gears made a successful soft landing in Manchester last year under the initiative. Kaushik Sindhu, AVP, 42Gears who heads the company’s UK unit, tells Inc42, “Last year, we started our operations in Manchester. That’s how the journey started. In July, 2017, with a week or two, we got registered. I must say, the expansion has been very smooth. We were also provided free consultancy, which otherwise would have cost a lot of money.”

“Within such a short span, we are serving over 1,100 customers in the UK and hiring talent. Manchester is a great mix of talent and cost-effectiveness,” he adds.

Manchester: A Hotbed Of Talent And Innovation

The grand old city of Manchester is emerging from the shadows of Manchester United as well as discarding the label of being the BBC’s second headquarters to rebrand itself as the gateway to the UK market. Offering 40% lower operational cost compared to London, Manchester is also one of the most tax-friendly cities in the world.

Manchester has always been quick to adopt technology and use it to disrupt status quo. This is the city which started the Industrial Revolution. It’s the city where the first random access computer memory was invented at the University of Manchester. It is also at the University of Manchester that the revolutionary 2D material graphene was discovered, winning physicists Andre Geim and Konstantin Novoselov the Nobel Prize in 2004.

The fast-growing economy and digital infrastructure provide startups and enterprises with the impetus to set up their base here.

While the University of Manchester alone has so far created 25 Nobel Laureates, the 10 metropolitan boroughs of Greater Manchester — Bolton, Bury, Manchester, Oldham, Rochdale, Salford, Stockport, Tameside, Trafford, and Wigan — represent the largest city region economy outside London, with a gross value added (GVA) of $84 Bn. In the decade up to 2012, Greater Manchester’s economy grew by 42%. It has also been one of the major UK city-regions driving job growth (84% between 2002-2015), at a rate twice that of the north.

The city is, thus, a hotbed of technological innovation and talent that is nurtured at the University of Manchester, Manchester Metropolitan University, Salford, and other institutions. This, along with the fast-growing economy and digital infrastructure provides startups and enterprises with the impetus to set up their base here.

Manchester: The Rise Of A Startup Ecosystem

While considering entering a new market, some of the essential parameters that entrepreneurs look at are the market potential, affordability, funding scenario, infrastructure, connectivity, incubation facilities, and affordable coworking space availabilities.

Just like India, where startups work closely with corporates, Manchester has a great blend of corporates and startups. Some of the leading startups in the city are BooHoo (ecommerce), DueCourse (fintech), Digital Bridge (AI), Peak (AI), and Market Invoice (fintech).

It houses over 8,000 companies at present. Among these are a number of Indian MNCs including Hero Cycles, Tech Mahindra, ICICI bank, Tata, HCL, and other companies. Hero Cycles, Manchester, recently designed and developed e-bikes that were showcased to the UK and Indian PM during the Commonwealth Summit in London earlier this year.

Leading banks Barclays, Llyods and RBS are deeply involved in shaping the fintech ecosystem in Manchester. Barclays Bank’s Rise Manchester (Manchester Escalator) and NatWest Entrepreneur Accelerator programmes are some of the leading acceleration programmes in the space.

Media City: The Digital Soul Of The City

After the fall of the cotton textile industry, MediaCityUK is fast becoming the new backbone of the Manchester ecosystem. “The rise of the startup culture in Manchester is largely due to the establishment of the MediaCityUK, extensive public transport, and it being a cheaper investment destination,” according to Richard Gregory, director of Tech North.

Designed and developed by the Peel Group, MediaCityUK was developed on the banks of the Manchester Ship Canal in Salford and Trafford and is home to BBC, ITV Granada, the University of Salford, and a number of other companies. The facilities here are open to independent content creation companies as well as those seeking AR and VR filming, high-speed Internet, and cybersecurity infrastructure as part of their operational requirements.

The rise of the startup culture in Manchester is largely due to the establishment of the MediaCityUK, extensive public transport, and it being a cheaper investment destination

The Studios, Dock10, which houses seven high-definition studios, is said to be the largest such facility in Europe. Around 7,000 people work in MediaCity, and the number is set to cross 10,000 soon. There are three studios backed with light, sound, and production galleries, four-level electricity supply, and AR and VR facilities. An entire studio can be redesigned overnight to suit the requirements of any new programme.

Jon Corner, CEO of coworking space The Landing, MediaCityUK, said, “We have thousands of motorised lights and cameras that maximise the utilisation of the studio. An additional feature of this studio is its AR and VR capabilities. It’s the merging of the worlds of broadcast and gaming.”

The studio

Housing the best-in-class digital infrastructure, the studios can be of great service to Indian digital startups in the field of filmmaking, VFX, 3D modelling, AR and VR gaming, and related fields.

Affordable Coworking Spaces, Which Double Up As Accelerators And Pre-Incubators

MediaCity and the rest of Manchester are dotted with affordable coworking spaces, which, unlike coworking spaces in India, also provide pre-incubation and acceleration services to startups.

At the very heart of the MediaCity is The Landing. The popular coworking space currently houses around 118 startups and enterprises in healthtech, edtech, music and governance, with 560 people operating from there. The Landing hosts accelerator programmes and facilitates funding as well. It recently concluded a healthtech acceleration programme which shortlisted around 12 tech startups, of which eight are from outside the UK.

Dotted with affordable coworking spaces, which, unlike coworking spaces in India, also provide pre-incubation and acceleration services to startups.

Paul Billington, commercial director, The Landing said, “The least performing startup in the programme received $ 24.13 Mn (£18 Mn) in investment right after the programme. We host companies until the manpower reaches 50. After that, we move them out to the local area somewhere in Salford.”

Come outside the MediaCity into Manchester and there is a host of coworking spaces including The Federation and All Work & Social. Partly funded by the Omidyar Network, the Federation provides the coworking space at subsidised rates to startups that share a similar ethos and pledge as the Federation community — which is they’re looking to make an impact in society through their digital innovation. For startups that need up to four desks, they provide a host of facilities such as access to meeting rooms, conference, event passes, etc.

The Federation

Emer Coleman, technology engagement director of The Federation, tells Inc42, “However, not all startups are allowed to work here. We shortlist startups that are like-minded and share our values. They are collectively known as ‘Friends of the Federation’. Given the fact that even the unicorn model is not sustainable, we want sustainable digital businesses with a social and ethical approach.”

The Digital Innovation Centre, Manchester Metropolitan University is among the other places that provide coworking spaces and pre-incubation facilities at subsidised rates in the city.

The coworking space at the university acts like a pre-incubator and is agnostic in its selection of startups. Speaking to Inc42, Paul Bason, director, digital Innovation, Manchester Metropolitan University, says, “We don’t make judgements about the ideas, what we do judge is whether the people are serious about their ideas. It has to be a thriving environment.”

Paul Bason, Director, Digital Innovation, Manchester Metropolitan University

The university charges just $70 (INR 4,733) a month (for the coworking space and related facilities it provides), which is way below the market value. In fact, if you compare the facilities it offers, it is cheaper than the some of the coworking spaces in Mumbai and Bengaluru. The centre has provisions for 3D printing for developing prototypes, university scholars who extend their expertise to startups, a sports arena, and more.

The best part is that the charges are same for UK residents as well as outsiders. In fact, for graduates and student entrepreneurs, the first three-six months are usually free. “The subsidy we extend is our effort to make their business successful and operational while residing in Manchester,” says Bason.

R&D and Talent Echochamber Meets Fintech Gaps In Manchester

Fintech is booming in India with the rise of digital payments and fintech startups such as Paytm, Razorpay, I-Exceed, and SirionLabs. Manchester, which is home to the second-largest fintech ecosystem in the UK after London, is a natural choice for Indian fintech startups looking to foray into the UK market.

To begin with, the city offers great talent for the industry. The University of Manchester, along with the Metropolitan University, offers a pool of high-quality talent in the fields of cybersecurity, big data analytics, healthcare, fintech, IoT, AI and other tech areas. Then there are the University of Salford and Lancashire University which too churn out talented people.

The University of Manchester produces the highest number of employable fintech-related talent in the UK.

Cybersecurity is one area where Manchester continues to score, in terms of talent as well as the overall ecosystem. While the city is already home to global giants Raytheon, Northrop Grumman and NCC Group, the UK Government’s intelligence agency GCHQ has also announced to relocate to Manchester in 2019. The GCHQ is known for its cybersecurity standards globally and its advent will further strengthen the talent base in cybersecurity.

The University of Manchester produces the highest number of employable fintech-related talent in the UK. Rachel Kenyon, business engagement officer, University of Manchester, says, “What we have been doing for the last 12-18 months is coordinating our research on fintech. We see huge recruitments in finance, cybersecurity, and legal tech from the university. We are currently applying for an academic centre of excellence for cybersecurity as well.”

The interdisciplinary collaboration at the University of Manchester blends talent from altogether different streams to come up with the most brilliant results. For instance, computer scientists work with social scientists to devise counter-terrorism solutions.

With blockchain emerging as an important technology in many fields including banking, the university is working on a host of blockchain projects to ready a relevant talent pool for the city’s startups. Professor Sher-Huang Poon from the university says, “We have specific projects in blockchain and are also setting up a member consortium to address issues related to the technology. Next month, we will spend some $40 Mn to learn how to infuse AI in the sectors related to accountancy and insurance.”

Affordable Apartments And Drinks As Cheap As Mumbai & Bengaluru

Barring Silicon Valley, where the innovation culture scores over other factors, affordability and nightlife are an inherent part of the startup culture. Manchester offers both. The city offers bedrooms starting from $1,000 against the $3,000 in London.

Manchester offers some of the most amazing nightlife experiences to its residents and visitors. Junkyard Golf, Cottonpolis, 20 Stories to Albert Schloss — many of the restaurants and bars don’t shut their doors till 2 am, even on weekdays.

And all the best alcohol brands are yours for the sipping, at rates as low as Mumbai and Bengaluru. Sample this: You can have a dirty martini, margarita, and some other drinks for as low as $5! If that’s not reason enough to head to Manchester, we don’t know what is!

The Manchester-India Partnership: Calling Indian Startups

Last, but not the least, there is the Manchester-India Partnership (MIP), a public/private initiative launched on February 21, which has been promoting ‘Make in India, Innovate with Manchester’ (In line with India’s Make In India campaign). The MIP has been founded by the Manchester Airport Group, Deloitte, Growth Company, MIDAS, and Greater Manchester Local Enterprise Partnership.

The partnership does this by leveraging Manchester’s innovation and research capabilities in a broad range of sectors in collaboration with Indian industry and research institutes. The aim is to build stronger, deeper ties between Manchester and India in the areas of trade, investment, science and innovation, connectivity, and culture.

As part of MIP, MIDAS has launched a programme that selects five startups and enterprises from Deloitte’s Fast 50 programme every year. Deloitte Fast 50, held annually in more than 30 countries, is a benchmark of fast-growing technology companies across the globe by international financial media.

These startups get the opportunity to win a Manchester establishment support package worth over $15,380 (INR 10 Lakh). The prize also includes complimentary flights to Manchester, three nights deluxe accommodation, and more.

MIDAS helps these startups in every way — except for marketing — while they’re soft launching in Manchester. Some Indian startups selected under the programme to base their operations in the city are 42Gears, BIZOM, e-Zest, ZIFO, BRIDGEi2i, Appnomic, etc.

Martha Sama, head of business development, creative, digital and tech, at MIDAS, explains, “It (Manchester) is the heart of financial and professional services. But it has also started attracting digital and tech companies. And, there is now increased collaboration between the financial, professional services, and the digital and tech sector. The industrial belt is, kind of, outside the doughnut.”

Although Manchester is way more affordable than London and has an ever-growing ecosystem to nurture startups, there are some areas in which there is lack of clarity. For instance, what tax implications will Brexit’s implementation have for Indian startups looking to gain a foothold in the EU market while being based in the city?

The city with population density 215 times less than that of Mumbai does nót pose any challenge in terms of traffic congestion, which Bengaluru faces every day.

Also, although the travel time between London and Manchester will be reduced from the two hours to one after HS2 (High Speed two) project implementation, there is no direct flight between Manchester and India. However, MIP officials have already met Jayant Sinha, minister of civil aviation (state) and the Manchester Airport Authority has announced the launch of direct flights between Mumbai and Manchester from November 5 onwards. Direct flights from Bengaluru and Delhi is expected to be announced soon.

The city with population density 215 times less than that of Mumbai does nót pose any challenge in terms of traffic congestion, which Bengaluru faces every day.

Brexit or no Brexit, Manchester offers an ecosystem that addresses most of the infrastructural requirements and needs that Indian startups might have while expanding their base in the UK. Moreover, MIDAS and MIP are committed to connecting the remaining dots of the ecosystem.

As Sama says, “Manchester’s advantage is that it is large enough to be significant, to provide opportunities, and small enough to navigate.”

Disclaimer: The writer of this article was in Manchester on a sponsored trip by MIDAS.

Note: We at Inc42 take our ethics very seriously. More information about it can be found here.