Meanwhile, having recently been named the most active regional VC fund in the UK, BGF (formerly Business Growth Fund) is also very active in Leeds. Since 2011, BGF has participated in 15 equity funding rounds into high-growth companies in the city. Next up are Crowdcube and Finance Yorkshire, both with 13 announced equity deals to their names.
Other notable investors in Leeds include commercialisation company IP Group (including their North East Technology Fund) and the Future Fund co-investment scheme, each with five deals. Managed by British Business Bank, the Future Fund was set up by the Government to support UK companies facing financial difficulties due to COVID-19—it’s now closed to new applicants.
Northern hub for professional services
Leeds is often described as the UK’s second banking centre. And true to its name, the city is one of the top local authorities for Banking and Financial Services, outside of London, with 21 high-growth companies currently operating in the sector. And beyond banking and finance, Leeds is also home to 10 law firms, 44 marketing companies, and 28 recruitment or outsourcing agencies that are either fast-growing or creating ambitious growth plans.
Amongst the top-funded Business and Professional Services companies currently active in Leeds is Reward Finance which provides alternative loan funding to SMEs. Then there’s Plexus Law, payment processing platform Eris FX, marketing company Force24, and Crisp which provides social media moderation and digital risk monitoring services, and has raised an impressive £21.3m in equity investment. Meanwhile, Hanzo has secured seven rounds of equity funding for its data management software, aimed at legal and compliance teams, whilst business intelligence and predictive analytics firm Panintelligence has been named on the Northern Tech 100 list of companies three times in the past five years.
With such a strong financial services industry existing in the city, many believe Leeds is also poised to become the UK’s next new fintech hub. Of the 14 high-growth fintechs based in Yorkshire and The Humber, six are currently headquartered in Leeds—and 12 in total in the Leeds City Region LEP. The city is also home to FinTech North, designed to bring together the region’s fintech community—its collaborative platform is used to share ideas, challenges, and best practices in the sector, and showcase innovative fintech startups in the North.
Still a rather nascent ecosystem, the fintech sector in Leeds has already produced a number of successful ventures like Eris FX, operating since 2006, as well as several exciting startups still in the early stages of their growth journeys. PrinSIX, for instance, has developed a conversational onboarding platform for credit providers, to personalise and improve the customer lending journey. Only founded in November 2019, it’s already secured £420k in equity funding.
Meanwhile, founded in 2018, fellow fintech Tappit has developed a cashless payment and data system for live events, such as sports matches and festivals. Through its mobile app, digital wristbands, and real-time data analysis, Tappit is aiming to simultaneously improve profits and the fan experience. Since launching, the company has already raised more than £8m in investment, including two rounds of equity funding, totalling £339k.
What makes Leeds a good place for startups and scaleups?
In 2019, research showed that the cost of starting a business in Leeds City Region LEP was 80% lower than London. This is just one of many ways in which the startup ecosystem in Leeds continues to attract, retain, and nurture some of the UK’s most innovative companies. Alongside its relative affordability, Leeds is home to a flourishing tech community, celebrated each year through the Leeds Digital Festival. There’s even a dedicated platform for tech companies based in the city, with ecosystem news, local events, jobs boards, and workspace listings. But what else makes Leeds such a great place for ambitious businesses?
Equity finance
Since 2011, ambitious Leeds-based companies have secured 162 announced equity fundraisings, plus an additional 290 deals that were unannounced. The announced deals raised by businesses in Leeds amount to £521m in total, with an average round size of £3.89m, and median round size of £500k. And these investments saw participation from 92 different funds.
With 48 active funds operating in Yorkshire and The Humber, 31 of which have offices in Leeds itself, the city benefits from access to locally-minded investors and growth capital. Meanwhile, a 2019 report from EY showed that Leeds is also one of the leading locations for foreign investment in the UK. It’s no surprise, therefore, that more than a third of ambitious businesses in Leeds have been backed by equity funding.
Accelerators
Of the high-growth companies currently active in Leeds, 163 have attended an accelerator—a scheme that supports companies or founders through a structured learning programme, often alongside mentoring and equity investment. A much larger proportion (32%) of Leeds-based startups have attended one of these programmes than in the general high-growth population (22%).
Ambitious companies in Leeds have been supported by a total of 27 accelerators to date, including one based in Yorkshire itself, Y Accelerator, which was designed to create jobs across the Sheffield City Region. But the vast majority (85%) of accelerator attendances by Leeds startups are down to NatWest’s Entrepreneur Accelerator (formerly Entrepreneurial Spark) which has regional hubs throughout the UK, including Leeds. The programme is responsible for an impressive 254 out of 299 attendances, and recent graduates include edtech Synap, blockchain software development startup CurveBlock, and big data healthcare company Nine Health Global.
Other accelerators actively nurturing the city’s early-stage ecosystem include PwC Scale Programmes, which has so far been attended 13 times by companies based in Leeds. PwC Scale Programmes offers its cohorts a series of masterclasses to help them scale their businesses, plus access to a pipeline of new customers and new channels to market. Its 10-week programmes cover a range of sectors and technologies, such as LegalTech, Cyber, and PropTech. Meanwhile, Leeds is also home to a Barclays Eagle Labs hub which has partnered with co-working space Avenue HQ (Leeds city centre) to provide office space, events, and mentoring to ambitious entrepreneurs in the city.
Universities
Leeds is home to several universities, including leading public research institutions the University of Leeds and Leeds Beckett University. So, on top of support from investors and accelerators, high-growth companies in Leeds benefit from a very strong talent pool, with the city producing and retaining a high level of university graduates each year.
In fact, the University of Leeds is doing a particularly good job of supporting the city’s startup and scaleup community. As well as spinning out 25 high-growth UK companies of its own, the University launched its £40m Nexus innovation centre in 2019. Nexus has been designed as a hub for Leeds’ growing startup community, encouraging collaboration between businesses and with the University, providing access to its research, talent, and facilities. That same year, the University also opened its new Centre for Financial Technology and Innovation (CFTI), to support the development and application of new fintech in the UK.
