As the UK’s second-largest city, it shouldn’t be a surprise that Birmingham is one of the UK’s most significant tech and business hubs, home to more than 2,000 tech startups and more than 6,000 tech businesses overall.
In fact, the tech sector in the West Midlands was named the fastest growing in the UK in both 2021 and 2022, according to government and Tech Nation reports. Venture capital investment into Birmingham tech startups has also increased significantly in recent years; 2023 saw the highest level of funding for Birmingham startups, even discounting one £500m ‘megaround’, investment was more than double that of previous years.
“Over the last few years, we’ve witnessed exciting developments across Birmingham’s tech sector, including industry-wide collaborations, increased attention from investors and a huge number of SMEs using transformative technology to solve a range of business and social challenges,” said Rebekah Taitt, Lloyds Bank’s regional development director for Midlands, SME & Mid Corporate.
“As a result, many tech startups in the city are scaling quickly which brings new challenges, ranging from managing currency exposure due to international investment to establishing appropriate remuneration packages to attract and retain the best talent. Our regional and industry experts at Lloyds Bank have been dedicated to supporting Birmingham tech businesses as they grow.”
Birmingham’s tech ecosystem
Around 40% of the tech workforce across the West Midlands is in Birmingham; the city counts 56,000 tech employees out of 144,000 in the whole region.
The five universities in the region contribute significantly to a large and diverse talent pool, as well as providing research facilities for R&D-intensive companies and business incubation services to academics and students looking to commercialise their innovation.
“The presence of a robust talent pipeline, with 132,000 students studying core subjects at West Midlands universities, strengthens Birmingham’s position as a leading tech hub,” says Svetlana Solomonova, who works at architecture and engineering firm BDP on the design of tech facilities in Birmingham and the surrounding region.
“Additionally, the region’s ability to retain a high percentage of graduates, coupled with its proactive and supportive business environment, distinguishes it from other tech hubs in the UK.”
Yiannis Maos, founder and CEO of TechWM which launched Birmingham Tech Week in 2019, also emphasises that the city’s business and tech success is thanks in no small part to its talented and ambitious citizens.
“Birmingham’s tech ecosystem is a special place,” he says. “The ecosystem is welcoming key players from major industries as they buy into the brilliant potential that Birmingham has to offer.
“That potential is epitomised by the people. Ask any Brummie and they’re proud to call Birmingham home because of how friendly, ambitious, and energetic we are – and that translates to the support felt in the ecosystem.”
Phoebus Software, based in Solihull, is a prime example of how local tech companies help to build a vibrant ecosystem. Founded in 1989, Phoebus provides agile technologies to the financial services sector, and has been supported by Lloyds Bank. Chief finance officer Dave Jones told UKTN that the company is involved in local initiatives to support the business community, social causes and job opportunities in the West Midlands.
He said: “We partner with a charity based in Leamington called Helping Hands who extend compassionate and practical support to those struggling with the causes and effects of homelessness and trauma. We also have very close links with Aston University and take a couple of placement students from them every year. In addition, we are members of the Solihull BID and local Chamber of Commerce.”
Birmingham’s industrial legacy still plays a role in the development of new inventions and manufacturing applications. The city was once known as ‘the workshop of the world’ as a hub of both small-scale metal workshops and large manufacturing facilities. The city still produces innovation which pushes the limits of science and manufacturing, from the University of Birmingham’s world-leading nanotechnology specialism to pioneering medtech companies, many of which also manufacture their products in the West Midlands.
Svetlana Solomonova points out that the West Midlands contributes 8% of the UK’s total medtech turnover, attributing this partly to collaborative efforts between key players like the University of Birmingham, Queen Elizabeth Hospital Trust, Bruntwood SciTech, Calthorpe Estates, Aston University and the University of Warwick.
Other subsector strengths in Birmingham include fintech, digital marketing and gaming, with 25% of the UK’s gaming sector based in or around Birmingham. The specialist expertise and innovation coming out of the city, combined with excellent infrastructure and transport connections, has created a “strong business proposition”, Svetlana adds, which attracts established tech businesses to the region and encourages new business creation. She notes that this has attracted significant foreign investment, particularly from India which allocated 57% of all its UK-destined investments to companies in the West Midlands in 2020.
Aaron Baker, a Birmingham-based investor at Business Growth Fund (BGF) has seen Birmingham’s tech ecosystem mature in the last few years.
He says: “We’ve seen remarkable progress in recent years in terms of the quality of the businesses scaling in Birmingham and how the ecosystem has evolved to support these entrepreneurs.
“Until fairly recently, it’s fair to say that the majority of the UK’s tech success stories hailed from London and the South East, Manchester or even Leeds, but Birmingham has really made its mark in the past five years and that’s testament to the ambition, vision and talent of the business owners based here, the region’s leadership, and fantastic initiatives such as TechWM.”
Microsoft’s Greater Birmingham initiatives
Zephaniah Chukwudum, director, Local Government, Microsoft UK shares:
Upskilling and levelling-up are at the centre of helping more people to make the most out of the tools and augment existing business processes. However, research shows that the widening skills gap continues to be one of the biggest challenges UK organisations face today. Almost a third of UK workers say they lack sufficient digital skills required for their job roles.
Our team here at Microsoft has been actively working with organisations and local authorities in the Greater Birmingham area to close the skills gap. It is our goal to make sure that everyone, everywhere, in every organisation is equipped with the right skills needed to succeed in the new age of AI.
Most recently, for example, in collaboration with STEAM House, the digital hub powered by Birmingham City University, we’ve been hosting a series of educational initiatives and events. This partnership creates an opportunity for conversations on various technology topics through events such as hackathons, which seek to promote knowledge exchange and skill building among students and professionals alike, supporting innovation and entrepreneurship within the city.
We’ve also been working with the Department for Work and Pensions (DWP) and the Microsoft Philanthropies team on initiatives focusing on job centres in Birmingham. These efforts are aimed at reducing costs through auxiliary innovation, with a specific focus on supporting ethnic minorities in skilling and work readiness in Birmingham. On top of this, we run a monthly programme with the Association of Directors of Adult Social Services (ADASS) to empower more people in the West Midlands region exploring ways to leverage technology, particularly AI, to support adult social care services, ultimately improving efficiency and resource allocation within the public sector.
With a £1.8 billion benefit plan to improve public sector productivity, the UK Government made it clear that they are focused on enhancing efficiency and empowering public sector professionals with the help of technology innovation to achieve more with less resources. The recent strides in the advancements of generative AI and large language models (LLMs) reveal a real opportunity for the public sector. We’ve worked closely to start the rollout with over half of the local authorities in West Midlands to roll out the generative AI-powered work companion, Copilot for Microsoft 365.
Beyond productivity and engagement gains, Microsoft is championing research and collaboration with the public sector on initiatives making smart cities a reality. This involves leveraging data and sensors to enable informed decision-making and improve urban infrastructure. By adopting a smart approach to city management, Birmingham and its surrounding areas can enhance efficiency, optimise resource allocation, and improve the quality of life for residents. Collaborative efforts with councils, such as the Walsall Council, demonstrate our commitment to driving innovation and sustainable development in the region.
Growth drivers
TechWM’s Yiannis Maos believes that – while Birmingham has experienced increases in both tech investment and the number of tech business scaling – this ‘growth’ is in fact the result of a concerted effort to generate more recognition and awareness for what was already a successful and thriving tech ecosystem.
“In terms of the high potential of the region and the fantastic people and business operating here, nothing has changed,” he says. “The development has been in spreading the word and getting investors, c-suite staff, and startups to share our vision of how the ecosystem can flourish in the near future.
“Outside of celebrating who we already have in Birmingham, in the last five years, we’ve also made big steps to welcome more incredible businesses at varying stages of growth who have gone on to become staples of the regional ecosystem!”
National and international businesses have set up headquarters or offices in Birmingham recently, including Goldman Sachs, Arup, HSBC and SaaS company Advanced.
“This influx signals a revitalised era of economic growth and business expansion, promising long-term benefits for the city and its residents,” says Zephaniah Chukwudum, director for Microsoft UK’s local government work.
“The establishment of technology arms and research developments by these major players has created fertile ground for the emergence of startups and small businesses. This ecosystem of innovation and entrepreneurship contributes to the vibrancy of the local economy and fosters a culture of innovation.”
BGF’s Aaron Baker agrees that multinational companies setting up in Birmingham is a key driver of growth for the tech sector, since these businesses bring and retain essential talent in the city while also collaborating with other players to generate new ideas.
But Phoebus Software’s Dave Jones highlights that companies outside of the region are now competing to hire local talent, which presents challenges for local companies unable to match London salaries.
“Covid had a significant impact due to the start of wide scale remote working,” he said. “Very quickly it became apparent that London firms were recruiting local talent – on London salaries – and still allowing people to be based in the Midlands and work remotely. This has presented a significant challenge for talent acquisition and retention.”
Nonetheless, new partnerships and initiatives – particularly TechWM’s work – are promoting Birmingham’s potential internationally and supporting tech businesses to expand globally. During Birmingham Tech Week 2023, a ‘Global West Midlands’ event emphasised the role that Birmingham and the surrounding region is playing in supporting the UK’s ambition to become a science and technology superpower by 2030.
“Birmingham Tech Week has been a significant force for good in recent years and we’ve been proud to support this initiative,” says BGF’s Aaron Baker. “The event gives a focal point for tech businesses and those who support the sector to be able to share ideas, collaborate and set new ambitions.”
Microsoft’s Zephaniah Chukwudum says that Birmingham’s status as a leading higher education hub is central to the development of the tech sector. “The synergy between academia and industry has facilitated knowledge exchange, research collaborations, and talent acquisition, further propelling the city’s tech ecosystem forward.”
Physical developments in the city will also support and facilitate more innovation, says Svetlana Solomonova, including a new precinct of university STEM buildings which will connect Birmingham’s tech companies directly with ground-breaking university research. A new clinical skills centre at the University of Birmingham’s Health Innovation Campus (BHIC) will help meet the demands of health employers locally and nationally using medtech innovations.
The excellent business support available for tech startups in Birmingham has enabled more companies to reach ‘scaleup’ stage and prove their commercial models, says BGF’s Aaron Baker. This, in turn, has meant that growth-stage investors like BGF see more opportunities to invest in Birmingham’s tech sector.
Future development
Birmingham’s “incredible success” of the past few years needs to be sustained with even more work to put the city’s tech sector on the map globally, says TechWM’s Yiannis Maos.
BGF’s Aaron Baker agrees and believes this will take even more collaboration to “build the Birmingham brand nationally and globally”.
Like many regional tech hubs in the UK outside of London, Birmingham would benefit from a more diverse national investment landscape in which a greater variety of companies are funded, both in terms of geography, business type and demographics, adds Yiannis.
Better coordination and collaboration between public and private sector stakeholders in Birmingham’s tech sector will be crucial for realising the city’s potential, according to multiple people interviewed for this article. This would address the digital skills gap, develop digital infrastructure and ensure that the city has enough and the right type of physical innovation spaces.
Microsoft’s Zephaniah Chukwudum adds: “By harnessing the strengths and expertise of each sector, Birmingham can pave the way for a future where technology not only propels business success but also fosters positive societal transformation. This collaborative approach ensures progress, innovation, and shared prosperity in a digitally empowered world.”
Established institutions with a presence in Birmingham like Lloyds Bank are key to fostering greater collaboration across the sector and supporting tech businesses to achieve their growth ambitions.
Lewis Sheen, relationship manager for the technology sector at Lloyds Bank, says: “Birmingham’s vibrant tech sector contains an important mix of disruptive startups, successful scaleups, multinationals and longstanding tech businesses which provide essential services and infrastructure.
“The interaction of all these players has enabled world-leading innovation in Birmingham and the West Midlands more generally, but it remains crucial for all tech businesses to have access to the right support and financing options. At Lloyds Bank we’re harnessing our regional and business expertise to ensure that Birmingham’s innovators can achieve their global ambitions.”
Lloyds Bank’s relationship managers are experienced in the tech sector and are keen to support further growth of this vibrant industry. Please get in touch today to discuss how we might help your business.
Lewis Sheen is Relationship Manager, Technology Sector at Lloyds Bank
For more information about how Lloyds Bank supports UK tech businesses, click here.
In partnership with Lloyds Bank
