Leeds vies with Manchester and London as UK’s tech start-up hub

Over the past two weeks, Leeds Digital Festival has attracted 15,000 attendees to more than 200 events around the city, the large majority of which were free. Large technology companies, government ministers, banks, law firms and universities were all in attendance, but the event began in 2016 as a way to draw attention to the city’s success in growing tech start-ups.
Leeds claims to be the UK’s “second city” for start-ups, behind London, at least according to a government report published in March (although Edinburgh and Manchester, to name but two rival contenders, may have something to say about that). In technology, the first start-up success stories were among fintechs with links to the city’s large financial services sector, and health technology businesses, with NHS Digital headquartered in Leeds, said Stuart Clarke, director and founder of the Leeds Digital Festival.
However, there is now a growing number of technology start-ups in all sectors, with the support of the nine universities in the wider city region, which have more students studying science, technology, engineering and maths (Stem subjects) than anywhere outside the capital.
“There’s a big talent pool and it’s growing,” said Clarke. “In the past, students who came out of Leeds universities and wanted to build a start-up would have naturally drifted to London because there was an established start-up community. Now, most are staying. It’s more cost-effective to base yourself in Leeds, in terms of your own housing costs too, and it’s only a short train journey to London.”
One such founder is Revannth Murugesan. The engineering graduate came to Leeds from India to do his master’s at Leeds University Business School, and when he finished the course in 2018 was offered a place on the university’s incubator programme to pursue his idea for a 3D-printing company making parts for electric vehicles, to reduce the emissions produced when the cars are made by making parts on-site and to order, rather than shipping them round the world. As part of the incubator, the fledgling business had office space, grants and Murugesan had support to get a work visa.
When the pandemic hit in 2020 and manufacturing supply chains were thrown into disarray around the world, Murugesan decided his business should pivot to giving companies the ability to do their own local 3D printing. The new company, Antonym, was founded in 2021, also in Leeds, making “factories in a box”. Antonym buys 3D printing machinery, customises it with its own software, and puts the whole manufacturing system into a 45-foot shipping container, which it leases to companies to make spare parts to their own designs on-site.
The company is working with aircraft maintenance, repair and overhaul companies, and is also targeting energy companies and the healthcare sector, for on-site manufacturing of surgical instruments, as well as semiconductor makers.
Antonym is revenue-generating, said Murugesan, and he is working on the company’s first external fundraising for £1.25 million, to open a site in Arizona, between Phoenix and Tucson where a lot of aerospace companies are based.
He will keep Antonym’s headquarters in Leeds, however. “Access to capital is undoubtedly better in the US but access to talent, in Leeds and also Sheffield, is better,” he said. The company employs five engineers full-time and has recently taken on an intern.
Setting up a company fresh out of his master’s course, Murugesan, 28, said: “Being a fish in a smaller pond was better. In London I would have been one of 10,000 start-ups, but here it’s a smaller community and we know each other and support each other personally.”
Nick New, co-founder and chief executive of Optalysys, a Leeds-based company developing cutting-edge photonic semiconductor chips, is also looking beyond the UK to raise larger sums of money, but chose to base the company, started in 2013, in Leeds because nearby universities are producing graduates with the specialist skills he needs.
“Our company is a Silicon Valley-like proposition but based in Yorkshire,” he said. “There isn’t a lot of precedent for raising large amounts for chip development in the UK.”
Optalysys raised £21 million in its latest fundraising last year, from Lingotto, owned by Exor, the holding company of the Agnelli family, which founded Italy’s Fiat motor company, and Northern Gritstone, a fund that works closely with the universities of Leeds, Manchester and Sheffield. Optalysys has expanded from 15 to almost 50 staff and opened a second office in Bristol since raising the money and is now looking to raise a further £50 million.
The company is developing a silicon photonics chip which speeds up ‘fully homomorphic encryption’ (FHE), a type of encryption that is secure even against quantum computers. The expectation is that quantum computing will in future be able to de-encrypt data that is secure today.
Photonic technology, which manipulates light, can be used to make FHE faster than when using conventional electronic computing power, so that organisations such as banks can share data securely and at the speed now expected by customers.
Maths, physics and engineering students from Leeds, York and Hull university have the photonics and cryptography expertise the company needs, said New. Optalysys has also hired several experienced staff who previously worked for Arm, the Cambridge semiconductor chip maker.
Already, some 102,000 people are employed in the tech sector in the Leeds city region, and Clarke said the mood is optimistic among both large tech companies and start-ups in the city, with interest in what the new government will do to support the sector and in particular help UK companies making advances in AI.