In the first part of this four-part series, we explore artificial intelligence (AI) and the opportunities and risks within the software market.
The North East of England has emerged as a hotbed of world class innovation, driven by a vibrant and supportive business ecosystem and global reach. In Newcastle alone, tech firms brought in a combined turnover of £2bn in 2022 across 3,500 creative and digital businesses.
While it comes as no surprise that London outpaces the region in terms of tech investment, key locations such as Newcastle, Middlesbrough, Durham, Sunderland, and Northumberland have become magnets for attracting businesses, supporting innovation, and fostering homegrown talent.
Investments made through the Maven VCTs, North East Development Capital Fund and Finance Durham Fund, combined with our active portfolio management and access to our extensive UK network of contacts, have helped many ambitious tech-focused companies scale contributing to the growth of this dynamic sector in the North East.
Maven’s support across the region goes far beyond just the deployment of capital and we actively engage with the local tech community and collaborate with industry stakeholders.
Recently we hosted a technology roundtable, chaired by Senior Investment Manager, David Nixon, with a number of local tech founders, sector experts and advisors including Chris Wilson and Rob Cooper, Corporate Finance Partners at UNW; Alex Mouat, Head of Investor Relations and Strategic Partnerships at Sunderland Software City; Pete Daykin, Founder of Wordnerds, an innovative customer feedback analysis tool; Kevin Beales Founder of MySalesCoach, Refract and the Test Factory, Gilbert Corrales, Founder of Leaf Grow, an end-to-end performance marketing services platform; Zara Anita Paul, CEO of Choppity.com, an AI video editor for turning long videos into social media clips; Nigel Wright of Nigel Wright Consultancy; Paul Lancaster, Senior Consultant and founder of Newcastle Start-up week; and Chris Hughes, Corporate Partner at Mincoffs.
The discussion centred around four of the hottest topics circulating in the technology community today and enabled guests to share insights into their contribution to the growth and development of the North East’s tech ecosystem.
In the first part of this four-part series, we explore artificial intelligence (AI) and the opportunities and risks within the software market. In the UK, the AI Market is expected to grow from £17bn to £803bn in the next 12 years and today 68% of all large/enterprise companies have adopted at least one AI technology with Data Analysis & Management, NLP and Machine Learning most common across companies.
Pete Daykin: “With any new technology there’s always a perceived downside, but the risks with AI are often overblown. In natural language processing we can start using words and numbers predictively, and it’s a really exciting prospect with lots of opportunity. Whilst there is limited but existing risk as there is with most things, for those of us operating in this space we’re enjoying the prospect of pushing boundaries and exploring how we can better utilise AI in our everyday life.”
Gilbert Corrales: “We’re building and using AI in tandem and people are trying and testing ideas in a number of disruptive spaces. Inevitably there will be a generational gap between those who use this technology and those who do not. The key to this is embracing AI is rather than fearing it, learning to understand it without placing taboos on it, because in the next 10 years every business will be in some way powered by AI.”
Interestingly, the UK has twice the number of AI jobs than any other country in Europe and already contributes £3.7bn of GVA (Gross Added Value) to the economy. So, whilst this is clearly an area of huge opportunity, it’s also one we have to manage with the risks in mind. Statistics show that 42% of the UK population have concerns over job losses.
Zara Anita Paul: “One of the best things about AI is that companies with very little funding can build products and services very quickly. You no longer need to hire a team. This is also where the fear and negativity comes in. But AI is just a tool, blaming it absolves the individuals who use it negatively from responsibility, and stigmatises its use for everyone, even those who couldn’t afford to work without it.”
While some would argue that to fully leverage the value contained in data, the power of AI is essential, some are concerned at decision making without human intervention and 37% of the UK population have ethical concerns about data usage.
Chris Wilson: “Most of the UK’s businesses are unaware of the prospects surrounding AI, a lot of people operating in the tech space are making strides but the opportunity is large and growing for almost all sectors. With the thriving university ecosystem in the North East, the region is well placed to take advantage of the number of innovative and disruptive university spinouts paving the way for leaps in machine learning. AI presents the potential to improve efficiency across all industries and we’re at a very exciting stage in this development.”
Alex Mouat: “We have observed a growing trend across the region where an increasing number of businesses are engaging with the field of AI, and are keen to monitor this activity going forward, seeing how it ramps up over the coming months. The opportunity is huge. At Sunderland Software City, we’ve partnered with the Hartree National Centre for Digital Innovation to assist businesses in their adoption of advanced digital technologies. There are more and more companies approaching us, looking to understand how they can incorporate AI and machine learning into their operations.”
David, Nixon: “It’s clear that while the risks and concerns in this growing industry are valid, the opportunity and scope available to businesses who want to harness the power of AI is huge and growing. The local tech community is positioning the region as a thriving hub of technological advancement, catalysing on growth, creating job opportunities, and contributing to the North East’s emergence as a national technology leader.”
Maven is one of the UK’s most active private equity investors and is passionate about working with ambitious businesses to achieve their strategic goals and maximise growth potential. If your business, or the business you advise, is looking at private equity as a solution to fund future growth we would love to hear from you. Speak to one of our investment team by getting in touch at funding@mavencp.com