An Analysis of Manchester’s Startup Ecosystem
Farzana Haque, 10 August 2023
Manchester is one of the UK’s top five startup hubs with 679 active high-growth companies. The number of private companies headquartered in the region has grown by 46.5% over the last decade whilst the number of high-growth companies has grown by a staggering 78% in the same period, making Manchester an exciting area of startup activity.
To learn more about Manchester’s investment landscape and the companies to watch closely, read on.
A closer look at the landscape
Manchester’s 174k private companies have £133b in combined turnover and an estimated 891,038 employees. The region’s biggest sector is SaaS—with 12.5% of all high-growth Manchester-based companies operating in the sector. Meanwhile, the most common SIC code group amongst all private companies in Manchester is ‘wholesale and retail trade/repair of motor vehicles and motorcycles’ with 16.1% (28,070) companies operating in this sector.
Manchester stands as one of the UK’s pioneering hubs, with 0.377% of all its private companies holding patents—a figure surpassing the national average of 0.268%.
Much like the rest of the UK—in line with the broader global context— Manchester has seen a decline in equity investment in recent quarters. Since the peak of its equity investment received in Q4 2022 (where it raised £167m across 27 rounds), subsequent quarters have witnessed a decline in funding. Last quarter, Manchester-based companies secured £24.1m. As you’ll see, Manchester’s abundance of forward-thinking companies gives us confidence of a resurgence in equity funding as the economy rebounds.
Dominating the investment arena for Manchester-based firms is Praetura Ventures, followed by NPIF Equity Finance in second position and GC Angels in third. Crowdfunding platforms Crowcube and Seedrs occupy the fourth and fifth spots, respectively.
Manchester’s top raisers
Below are the top three companies headquartered in Manchester, ranked by equity investment secured to date.
Total equity raised: £118m
Sector: Smart energy
Iduna develops sustainable infrastructure, including a network of electric vehicle charging points. The company secured £110m from Octopus Energy in its latest round in October 2022 to support expanding its electric vehicle charging network by installing 1000 new charging points by 2024.
Total equity raised: £85.4m
Sector: Artificial intelligence
Peak develops AI-based software that is integrated into businesses’ systems with the aim of using existing data to improve efficiencies and decision-making. Peak last raised equity in August 2021. It raised £54.5m to develop its AI platform, expand into Asia and the US, and hire more staff from investors such as MMC Ventures, Octopus Ventures and Softbank Vision Fund.
Total equity raised: £77.2m
Sorted develops software for carriers and retailers that provides various services for the delivery process, including delivery tracking and shipping management. The company raised its last equity round in early December 2021 to fund its acquisition of Click Sit, a parcel-tracking app. Sorted has since successfully acquired Click Sit.
Manchester’s top grant recipients
Having looked at the top equity raisers, who are the city’s top grant recipients? We’ve ranked them below in order of the number of grants received.
Total number of grants: 16
Total funding received in grants: £7.44m
Technovative provides innovation development consultancy services, specialising in project support from grant funding to software development. Receiving an impressive 16 grants, totalling £7.44m has meant the company has not needed to raise any additional equity or loan funding so far.
Total number of grants: 16
Total funding received in grants: £1.23m
ITS offers their clients industrial process imaging services, providing visual information on pipe and vessel interiors using tomography (x-ray or ultrasound) techniques. In addition to receiving grant funding, the company has also raised £794k in equity investment across four rounds.
Total number of grants: 14
Total funding received in grants: £7.16m
Instil Bio develops cell therapy products for the academic and commercial sectors, specialising in a treatment aimed at treating stage four melanoma. As well as receiving £7.16m in grant funding, the company has also raised one equity round worth £20.0k in July 2017.
Companies to watch in 2023
We’ve discussed the established and thriving companies in Manchester. So now let’s turn our attention to the new players. Below, we’ve chosen three companies to watch this year based on the biggest first-time rounds completed so far this year by Manchester-headquartered companies.
Total equity raised: £6.70m
Sector: Wealth, asset and investment management
Five Wealth provides financial management and planning services alongside investing in a portfolio of client-tailored companies. Founded in 2016, Five Wealth closed its first equity round in March this year. The company raised £6.70m in working capital to grow through acquisitions and improve current services. The investment came from Foresight Regional Investment Fund (FRIF) and Foresight VCT.
Total equity raised: £5.25m
UrbanChain operates a peer-to-peer energy exchange marketplace, which uses integrated blockchain technology to connect generators of renewable energy to consumers on a half-hourly basis. This academic spinout from the University of Manchester raised £5.25m in its first equity round in May this year to grow internationally, expand its workforce from 10 to 21 and develop its technology infrastructure.
Total equity raised: £750k
Sector: Artificial Intelligence
Netacea develops software solutions which use machine learning to reduce businesses’ susceptibility to bot attacks. So far, the company has raised £750k in equity funding from Northern VCT. Back in 2018, the company also received an Innovate UK grant.
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