The UK's Top Startup Hubs (Outside London)

You may have noticed that we released our Equity Investment Market Update for Q3 2023 recently, in which we found that last quarter, equity investment distribution continued to improve on a regional level.

While the capital’s share of deals increased from 43% in Q1 2023 to 50% in the most recent report, this is still lower than the 53% that was seen in Q1 2022. Though there could be a multitude of reasons for this, such as foreign investors pulling back, it inspired us to look beyond the capital to the other thriving startup hubs that exist across the UK.

In this article, we’ve explored the top five regions for startups outside of London by the number of active high-growth companies in the respective local authority. For this ranking, we have understood active companies as ones that are in the seed, venture, growth established or zombie stages.

Top UK cities for startups and scaleups

Investment trends in Bristol

Despite being home to fewer high-growth companies, Bristol has closed more funding rounds and raised more investments than Birmingham. With 746 rounds since the start of 2013, Bristol-based startups have raised a total of £2.20b.

The top funded active company in the city is the University of Bristol spinout, Graphcore, which has raised £528m across nine rounds since 2016 date. Other well-funded companies are OVO Group (£259m across four rounds) and Immersive Labs (£151m across six rounds).

The city’s top funders by number of fundraisings participated in are Seedrs and Bristol Private Equity Club (both at 28) and Crowcube (17).

Investment trends in Birmingham

Since the start of 2013, the city has raked in £543m in fundraisings across 465 rounds. Investment levels have remained fairly stable over the past decade, with a spike in 2017 and a slight drop in 2022. With the help of a huge equity round to the tune of £60m held by Joblogic, the city is on track to break its record of equity investment raised this year.

Other big raisers in the city include Onto (£83.2m through seven rounds), Market Location (£42m across one round), Aquapak (£39.4m across four rounds), and Macc Care (£32m across three rounds).

The top funders in the city are Midlands Engine Investment Fund (MEIF), which has participated in 15 fundraising rounds, Minerva Business Angel Network with 13 rounds, and Mercia Fund Managers with 12 rounds.

Investment trends in Leeds

Over the last decade, there have been 512 announced or unannounced fundraising rounds raising a combined £941m in Leeds. Much like Edinburgh (and the rest of the country), deal volumes fell in 2022 from 2021, but in contrast, the amount of equity invested actually increased by 4% from £147m to £153m.

AMO Pharma, a company that develops drugs to treat debilitating diseases, is Leeds’ best-funded active high-growth company. It has received £62.8m in equity funding across four rounds. Other well-funded companies in the city include Pharmacy2U, Maria Mallaband Care Group, Encon Insulation, and ARC Inspirations.

Investment trends in Manchester

The city of Manchester has seen 986 announced or unannounced fundraisings since the beginning of 2011, which have raised a combined £1.75b. It’s worth noting that the spike in equity raised in 2019 is attributed to two rounds worth £1.13b, raised by the now-insolvent Greensill.

The most active investors in Mancunian companies by deal volume include Praeture Ventures (contributing to 26 fundraisings), NPIF Equity Finance (with 23 fundraisings) and Seedrs (with 18 fundraisings). Raising £125m across two rounds, Renaker—a property development and real estate business—is the most-funded, currently active Manchester-based company. Other big raisers in the city include Iduna, a cleantech that develops sustainable infrastructure, Peak, creator of AI-based software used to improve business efficiencies and decision-making, and Sorted, a developer of software for carriers and retailers for the delivery process.

Investment trends in Edinburgh

Since the beginning of 2011, 1,300 announced fundraisings have been held by Edinburgh-based companies, raising a combined £1.68b. Having participated in 135 of these fundraisings, the most active fund in Edinburgh companies is the Scottish Co-Investment Fund, managed by Scottish Enterprise.

Despite equity investment dropping nationally in 2022, Edinburgh saw an uptake in the amount of money invested into the city from 2021. Though in line with the national trend, deal volume did decrease in 2022.

Securing £177m across five rounds, GoFibre—a startup providing full fibre and wireless broadband in rural areas—is currently the most funded active company in Edinburgh. Other Edinburgh-based companies that have secured significant VC investment include online games developer Build A Rocket Boy (£144m across four rounds) and vertical farming company Intelligence Growth Solutions (£66.3m across 13 rounds).

Looking to the future

Outside of the UK’s capital, Edinburgh, Manchester, Leeds, Birmingham, and Bristol are the quintessential epicentres of innovation, each distinguished by their own unique blend of historical significance, industrial resurgence, community cohesion, economic dynamism, and creative impetus. These cities epitomise the diverse and dynamic nature of the UK’s entrepreneurial landscape, serving as crucibles for the convergence of talent, resources, and ambition.

With each of these areas on an upwards trajectory, we anticipate a sustained impact going forward as they continue to boost the UK’s business and innovation efforts in the future.

To find out more about how Beauhurst can help your business locate and analyse accurate, up-to-date information about the UK’s startups, book a demo or get in touch with a member of our team today.