The North of England is fast emerging as a key destination for innovation and startup success – being home to world-class universities, innovation hubs and a thriving entrepreneurial ecosystem. Today, 40% of the UK’s fastest growing startup hubs are based in the North, a testament to its growing influence on the national stage.
The government’s Industrial Strategy rightly acknowledges this shift, highlighting cities like Manchester and Liverpool as key launchpads for national digital advancement initiatives. Plans to develop a connected Northern corridor to pilot technology programmes for small businesses demonstrates the strength and capability of innovation hubs beyond the Golden Triangle.
To realise the UK’s ambitions in the eight critical sectors outlined, including AI, advanced materials and life sciences, it must fully harness the capabilities of its regional ecosystems – where cities like Birmingham, Manchester and Edinburgh are already leading the charge.
Acknowledging regional strength is a vital first step. But to truly unlock the UK’s innovation potential, rhetoric must now be matched by investment and sustained commitment across all corners of the country.
Leveraging regional strengths
Our cities are key to developing the sectors we’re already thriving in, like AI, and are crucial to helping the UK catch up in areas where we’re falling behind.Private investment last year was heavily focused on AI startups and scaleups in the UK, according to the British Business Bank, however, other sectors like advanced manufacturing and life sciences were comparatively underfunded next to investment in US markets.
To close this gap, we need to capitalise on the regional specialisms of our non-capital cities. In Manchester, for example, university-linked innovators are leading the charge in breakthroughs for advanced materials like graphene but also silicon which is essential for chip manufacturing and quantum computing. Regions like Birmingham are renowned for developments in robotics, while cities in Scotland are heralded as innovation capitals for medicine and health tech.
The concentration of technology and science-focused businesses emerging from these regions is influencing investment patterns. Despite London remaining the investment capital, accounting for 62% of overall investment, money flowing into other UK cities is rising.
This trend highlights the untapped potential of regional economies to drive innovation and attract capital, not only in AI, but in other high-growth sectors that have often been overlooked. Deliberately integrating these regions into national growth strategies will be essential for unlocking long-term success.
The North as a launchpad for growth
While broader investment into our city regions will take time to realise, piloting growth initiatives in the North – particularly through the development of the Northern Arc – is a natural place to start.
Cities such as Manchester and Liverpool boast deep-rooted legacies in science and innovation, and today, they are home to world-class universities and research centres that position them as prime hubs for AI, the creative industries and net-zero technologies. In fact, Manchester is the most popular British city outside of London for starting a new tech business, according to Capital Enterprise, with 28% of tech leaders saying it’s their top choice.
This momentum is largely being driven by the strength of local innovation ecosystems, particularly their close ties between industry and academia. Northern university spinouts are thriving as institutions increasingly focus on commercialising science-led innovation. This is now being matched by local investment trends, with VC investment into startups and scaleups in the North surging by 86% in Q1 2025, totalling to £138m. Of these, the IT and digital businesses attracted the highest share of funding.
With this in mind, targeted regional investment isn’t just locally beneficial, it’s nationally strategic, laying the groundwork for a more balanced innovation economy that leverages the strengths of cities outside traditional centers of growth.
Innovation districts powering UK-wide growth
At the heart of these high-potential innovation regions is a thriving business ecosystem which is supported by startup hubs and innovation districts. In a challenging business landscape, marked by rising business costs and a more cautious VC environment compared to the US, many startups are looking abroad for growth. In this context, innovation districts are playing a critical role in equipping UK-based startups with the tools they need to succeed at home.
By leveraging expansive networks, these districts connect high-growth businesses with affordable office and lab space, expert advisors, cutting-edge research and skilled talent pools. Particularly in the North, districts offer competitive rates, with 30% less operational costs than London, enabling businesses to focus their investment on real growth opportunities.
Their position, being deeply rooted in community, also makes them primed engines for talent generation, providing accessible training opportunities to help individuals from underrepresented backgrounds gain in-demand skills that address the talent gap, one community at a time.
Our regions have provided the government with successful models to address startup challenges and drive success in its eight priority sectors – working with these hubs and replicating ecosystems on a national level will help us reach our goals faster.
Building an inclusive innovation economy
The Industrial Strategy demonstrates the momentum building across the North and other regional powerhouses in the UK. With world-class institutions, vibrant ecosystems and growing investor confidence, non-capital cities are proving their capability to lead in sectors central to the UK’s future including AI, advanced materials and life sciences.
However, realising the full potential of these regions will require more than pilot programmes and policy recognition. It demands long-term, place-based investment and infrastructure development that gives UK regions a voice and a key role in our national growth strategy.
If the UK truly aspires to become a global science and technology superpower, it must build on the successes of every region and acknowledge the huge untapped potential of the UK’s non-capital cities.
