“There are too many start-ups for the number of VC’s here and we need to change that ratio in the North,” Markella Mikkelsen, founder and CEO of AI-powered genomics platform MolMart, told Prolific North at a recent roundtable. “We are raising our seed fund, it’s very rough.”
She added there needs to be more “risk-taking” in the North – and may even need to consider a US move as her start-up grows.
Her comments were made at a Prolific North roundtable discussion on 23 January at Bruntwood SciTech‘s Centurion House in Manchester, as tech leaders and recent winners from the Prolific North Tech Awards 2024 came together to share their insights on funding and investment, talent shortages, and of course – AI and automation.
Attendees:
- David Prior (chair), editor, Prolific North
- David Davis, product delivery principal, AND Digital
- Andrew Durkin, Head of Business Development, Answer Digital
- Claire Sidney, Talent lead, Apadmi
- Laura Lightfoot, marketing manager, Apadmi
- Jonathan Moran, co-founder and director, Better Placed
- Joseph Venables, associate commercial director, Bruntwood SciTech
- Michael Keddy, Innovation Delivery engineer, Electricity North West
- Andrew Rankin, partner, Gateley
- Sam Meiklejohn, partner, Gateley
- Markella Mikkelsen, founder and CEO, MolMart
- Leigh Gammons, CEO, Tangent
- Misha Khan, stakeholder engagement, Turing Innovation Catalyst
Following a welcome from David Prior (Prolific North), who congratulated attendees for their recent wins at the Prolific North Tech Awards, he kicked off the discussion to delve into what leaders are seeing across the industry when it comes to talent.
According to Jonathan Moran (Better Placed), 2024 was generally a “good time” for tech companies looking to hire, especially for those scaling. But in the second half of the year, this pivoted slightly to London and US firms looking to recruit in the AI space. He says “lots of those businesses” are often biased toward to a pool of candidates that have been to Oxbridge, and warned this “needs to be addressed in future” as the likes of the University of Manchester have an abundance of talent with its “robust” computer science department.
At a grassroots level in schools in the North, Sam Meiklejohn (Gateley) asked what students are learning as children are now a lot more tech savvy.
There is “less of a barrier to entry now” says Moran (Better Placed), who finds “some of the best engineers” have been self-taught. Yet in the AI space, he has discovered that there is a “pushback” against candidates who haven’t been to those desirable universities but are still more than qualified for the job.
When it comes to talent shortages, Laura Lightfoot (Apadmi) explained how TalkTalk works with local schools in the North with female coding courses, and bootcamps count towards some student’s GCSE’s. “Manchester Digital are doing some brilliant things,” she added.
According to talent lead Claire Sidney, Apadmi also works with tech-led initiative InnovateHer. “In terms of graduates, the University of Manchester is excellent and we work closely with them. The talent there is exceptional and we now have an extensive graduate programme, investing in early careers as it has been key for us.” It has led to some interns even returning to Apadmi, with a number of them now leading their own teams.
When it comes to talent, plenty of businesses now go down the route of tech academies and training programmes at the likes of Northcoders, agreed Andrew Durkin (Answer Digital).
With MolMart now in a “growth phase”, the start-up still has a small team due to the nature of its work blending genomics with AI, explained founder Markella Mikkelsen (MolMart). Due to the niche sector it covers, the start-up typically recruits post graduates, but as it grows it is “open” to training and developing graduates. And another perk they offer is not needing someone in the office – but this can be a “difficult balance” for small start-ups.
Leigh Gammons explained how Tangent has seen success with hiring out of Poland and South Africa, urging that beyond the North, UK tech companies need to “branch out more” especially for talented people specialising in maths or scientific subjects.
“We are trying to test for problem-solving and curiosity in a lot of the systems and products we are building. In our team, we have different skills, we’ve had to go all over the place to find talent.”
Investment and funding – there is a “real bias”
Some specific VC funds are set up around Oxbridge, because it’s “what they know”, said Durkin (Answer Digital). Keen to champion what’s happening in the North, Meiklejohn (Gateley) explained how the likes of Praetura and the Northern Powerhouse Fund (NPIF) have been set up to “champion the North”.
For Mikkelsen (MolMart), her start-up is “trying to break the mold in the North” and “go against the Golden Triangle” – but quizzed other leaders in the room on what is actually being done to shake up the status quo.
There are plenty of VC’s in the North trying to do this, argued Durkin (Answer Digital), with private equity houses such as Par Equity championing the region. Moran (Better Placed) agreed, pointing to the AI-powered successes of companies like Fireflai and Powder. “They focus on great talent but mainly London based start-ups still have that bias”.
Cybersecurity in an age of disinformation
From unknowingly being pulled into WhatsApp scams, deep fakes, to undercover ‘spies’ from Asia, the leaders delved into the increasing importance of cybersecurity.
According to Michael Keddy (Electricity North West), it is now getting to a point of “low cybersecurity confidence” and there is always risk, especially when moving to new systems. For Moran (Better Placed), when tech firms are hiring for fully remote roles it does bring with it an element of risk as it can lead to nefarious people attempting to take advantage of remote-based working.
He explained how Better Placed has a robust verification policy to combat any cybersecurity issues, especially when working with data-heavy firms.
Electricity North West takes cybersecurity very seriously, added Keddy. As for the growing importance of cybersecurity, David Davis (AND Digital), explained even when you spot risks and propose mitigation, it still is “mitigating risk”. When it happens, that’s when the “problems starts”.
For Durkin (Answer Digital), clients are keen to make sure their data isn’t used for training AI models. “Our approach is – if it’s not burning, don’t touch it”.
“There needs to be more risk-taking in the North”
The conversation returned back to investment, with Prior (Prolific North) quizzing attendees on their thoughts on the funding landscape and whether start-ups now need to demonstrate more in return for funding.
According to Misha Khan (Turing Innovation Catalyst), whenever the accelerator comes across a start-up, its first port of call is always about being in touch with a VC. Beyond the golden triangle, she argues there are plenty of places and VC’s that start-ups should be tapping into beyond Manchester.
“Bruntwood SciTech has its innovation district Sister providing investors that view of what’s here. We are very aware of what’s going on, but those outside of Manchester don’t always know,” said Joseph Venables (Bruntwood SciTech). He added how the provider of workspace, scientific services and specialist support has seen some great successes with the likes of Urban Chain now raising over £15m.
“London VC’s only know what they know,” he explained, yet said Bruntwood SciTech actively works to bring those investors down South up North to see what’s happening here.
“Hauling VC’s up here doesn’t sound like fun,” argued Mikkelsen (MolMart). For Venables (Bruntwood SciTech), many of those investors may not have visited Northern cities in over a decade so knowing what’s out there is a “massive step change” and it’s thanks to the likes of MIDAS and spin-outs from the local universities that they can continue to bang that Northern drum.
The barrier to entry is “much higher” than it was three or four years ago, said Meiklejohn (Gateley). Pre-pandemic, practically any tech company could raise money as it was just about growth then. The problem with “growth, growth, growth” is 18 months later it comes back to shareholders, meaning there is now an increasing importance on VC’s and PE houses to get that valuation right at the start.
As the barrier to entry tightens, he urged there are plenty of other ways of start-ups looking for financing, from debt financing to bank loans against IP.
There needs to be more “risk-taking” argued Mikkelsen (MolMart), as across the pond there is much more appetite for risk, where they get more unicorns from the likes of Air Bnb sprouting up. “Investors there understand one in 20 is going to go bust, but that one company becomes a unicorn and that makes up for the others. That’s the problem we have here – we don’t have that attitude.”
As MolMart continues to grow, she said this means her start-up may need to look at moving to the US due to the “cash situation”. She added: “Sadly, as a proudly Manchester founded company, it is a brain drain.”
AI and automation
Moving away from the challenges facing tech leaders across the North, the conversation turned to the opportunities leaders are seeing right now. Unsurprisingly, AI was a hot topic. Andrew Rankin (Gateley) said there are “huge opportunities” for AI, particularly in the legal sector. Gateley’s strategy is to “stay at pace with what the market is doing” and has even built and started using its own solution, which helps with tasks such as bulk document analysis.
Leigh Gammons (Tangent) said it has been interesting to see how the legal sector has evolved with AI. Some law firms are still unsure about AI’s uses while others are creating their own bespoke tools. AI is being applied to the “same business model we have today” which is why “none of them have really worked”. For AI to really transform the likes of the legal sector, fundamental business models need to be reviewed otherwise it is just “gluing something new on top”.
Michael Keddy (Electricity North West) added that AI has “huge potential” and is “not trying to replace jobs” as the technology works to improve efficiencies, but he said within that “jobs may be lost”.
Companies need to start experimenting with AI and automation or they risk “being left behind”, said David Davis (AND Digital).
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The leaders discussed the importance of using AI “smarter” such as shifting peak times. For Misha Khan (Turing Innovation Catalyst – TIC), there are plenty of SME’s interested in using AI but have no idea where to start – she hopes TIC’s programmes will be able to help level that up at a regional level.
Employee wellbeing
Younger people in the workplace are now “more vocal about mental health” explained Claire Sidney (Apadmi). As talent lead, she’s discovered more staff get value out of speaking to Apadmi’s mindfulness coach in the office, although they aren’t a qualified counsellor but it is something staff are interested in having in future. To ensure all staff receive the additional support they may need, she says Apadmi has also updated its inclusive gender and neurodiversity policies.
Similarly at Bruntwood SciTech‘s Bloc building, Venables said there are psychologists and physios on site on a daily basis to ensure people have access to support. “That stuff is key” for businesses and teams to thrive in a physical environment.
It’s what Moran (Better Placed) is seeing at a recruiter level too, with more and more candidates asking about employee wellbeing perks. Better Placed has updated its own healthcare policies, introduced talking therapy and a 24/7 helpline for staff, and even introduced a working group for those with menopause.
Managing finances is key to employee wellbeing too. Sidney (Apadmi) explained how working with the Financielle platform “changed” her life after being given access to the app’s courses as she was able to then buy a home and make the most out of her salary.
The leaders all agreed on the importance of being “big champions” of talking about employee wellbeing, but said it can be a “difficult minefield” for employers to navigate at times.
