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Business Schools Help Form UK Start-Up Hubs Beyond London

As business education evolves to include a focus on innovation and entrepreneurship, the UK’s business schools are helping to drive a changing workforce.

Tue Jan 13 2015

Door Ironmongery Ltd, an innovative take on old-age manufacturing and shipping of iron goods, is a product of Aston Business School. Gaurav Singhal, the MBA who founded the firm to expand his fleet of start-ups, sees the west midlands university as a hub of entrepreneurialism.

A collaborative initiative with Aston and the city of Birmingham has provided mentoring and workspace to help the venture flourish, and funding to purchase software upgrades.

Birmingham has taken the lead of the UK’s cities that are hoping to rival London, the capital, as a venue for innovation in business.

Data compiled by StartUp Britain show Birmingham – known as Brum to local founders – was home to 18,337 start-ups in 2014, up from 16,281 the previous year.

“London is famous for businesses with global brands, but today’s start-up businesses of Birmingham can become the global brands of the future,” says Gaurav.

As business education evolves from a focus on strategy and finance to include innovation and entrepreneurship, the UK’s business schools are helping to drive a changing workforce.

Britain as a whole produced 581,173 new businesses last year, 60,000 more than in 2013. Many of these are clustered in London but regional hubs like Manchester, Nottingham and Sheffield are carving a larger slice of the innovation pie.

Cities across the UK are emerging as start-up hotspots. Edinburgh has a hold over artificial intelligence, Manchester has a thriving media sector and Dundee is a hub for video games design.

These cities all have different areas of expertise, but boast cheaper accommodation than London, and a pool of graduates from business schools that are fast on the rise.

Oxford’s Saïd Business School is ranked higher than most in London by the FT. At Cranfield School of Management, based between Milton Keynes and Bedford, 17% of the MBA class launched businesses within three months of graduating.

“Developing a business is no longer a secondary career option for many MBAs,” says Paul Schoonenberg, MBA Careers manager at Aston Business School.

The economic downturn pushed many MBAs into non-corporate roles as jobs dried up, but the rising profiles of successful entrepreneurs has seen this trend continue to surge, according to James Hickie, a lecturer in entrepreneurship at Manchester Business School.

“They want to take control of their own destinies. There is a profound cultural shift taking place in terms of people’s understanding and attitudes towards entrepreneurship,” he says.

London has its financial centre and nascent Silicon Roundabout collection of technology start-ups, but as criticism grows that the capital absorbs too much economic power, the UK government has begun to notice the tech sector in particular elsewhere.

Tech City, founded to promote London’s tech start-up scene, especially the hotspot around the Old Street area of Shoreditch, has become Tech City UK. The well-funded public sector agency has formed an alliance with cities across the country.

Universities are key to unlock regional hubs’ potential. A 2013 government report by Lord Young, an enterprise adviser to the prime minister, said the UK’s 130 business schools must act as “anchor institutions” to help grow local economies.

This is something that schools are keen to develop – it provides jobs for students and expertise for their start-up companies – but in reality is much harder to implement.

“The practical element of working with businesses is core to our program,” says Andrew Bagshaw, MBA career relationship manager at Lancaster University Management School.

He adds that MBA students at the business school, based in the northwest of England, visit successful local businesses including Lancaster Brewery, owned by C2 Investment, which has a majority of shares in a collection of trade businesses nearby.

However like many UK business schools, LUMS provides the benefit of close links to major cities, including London, where a third of the MBA program is now taught.

Successful start-ups benefit from both strong connections to one place and the ability to build a network in others. Travel between some cities is now relatively fast – London to Cambridge by train, for instance, can be completed in 45 minutes.

“We are not limiting ourselves to Birmingham,” says Basel Hammoda, Aston MBA and founder of a management consultancy firm. “It is not uncommon that we find ourselves asked to work on projects in other cities in the UK,” he says.

He admits most consulting business is found in London but describes Birmingham as a city offering “golden opportunities” for start-ups, due to less competition and a collaborative environment.

“The city is buzzing with business clubs, social meet-ups groups and networking events,” he says.

Reading is a UK city that is just a 40 minute drive from Heathrow, the world’s second busiest airport that is based in west London. This has allowed Henley Business School, based just outside of Reading, to attract more overseas entrepreneurs.

“Geographical proximity matters. This area is densely populated,” says Maksim Belitski, lecturer in entrepreneurship at Henley, with mostly IT companies.

He adds that MBA students are like “gold dust” to start-up businesses nearby. “Companies compete to get the MBA students on-board to work for specific projects,” he says.

MBAs covet the connectivity afforded by the UK’s business schools. Anirban Jyoti Gupta, a former tech consultant at India’s Tata Consultancy Services, moved to Lancaster to begin an MBA with a “London connect”, but the experience has expanded.

He will spend time in Edinburgh, Scotland’s capital, and singles out Leeds and Manchester as attractive city destinations nearby. “Lancaster is ideally positioned to take advantage of the different opportunities that might arise,” he says.  

Leeds has a long tradition of banks and building societies, and is home to many healthcare companies. London-listed software supplier Emis, for instance, has collaborated with Apple to develop a new healthcare application for smartphones.

Sheffield has expertise in engineering. It has produced WANdisco, a cloud computing company, and infrastructure software group Servelec, both publically traded on the LSE.

The UK’s venture capital industry is still a relative minnow compared with Silicon Valley in the US, but business schools are helping to fill a gap in supply of finance.

Manchester Business School, for example, runs an industry-backed entrepreneurship competition that awards £10,000 in start-up funding to multiple winners.

Goldman Sachs’ 10,000 Small Businesses Program is located at Aston Business School, which helps to create opportunities for participants to access suitable finance.

Even a London location is not guarantee of finance or an access to talent, one of a start-up’s biggest hurdles. Peter Kovari, the co-founder of London-based minicab app Bounce, has had a difficult time trying to drive the company off the ground.

“It has been challenging to find good talent in London to join a tech start-up,” says Peter, an EMBA graduate of London Business School.

Technology has been the hottest industry for business school entrepreneurs. While most tech start-ups are clustered in the capital, Silicon Valley fever is spreading to regional destinations.

London is home to about 90,000 technology and digital companies, yet Birmingham and Manchester have about 6,000 each, while Newcastle employs about 32,000 technology workers.

For Gaurav at Door Ironmongery, Birmingham provides an aspirational business community that is more open to sharing ideas and forming partnerships, he says. “I believe in the long run Birmingham will be the new destination for every business in [the] UK.”