Economy

In Birmingham, High-Tech Hub Rises From British Industrial Rust

The UK's second-largest city has struggled to reinvent itself for the post-Industrial age, but it's now looking to thrive as a startup hub known as the "Silicon Canal."

Birmingham's Selfridge Building
Birmingham's Selfridge Building
Isabelle Lesniak

BIRMINGHAM — "History in the making." Signs with those words are nailed on numerous construction sites in the center of Birmingham to remind passersby that a new chapter in Britain's second-largest city is being written right in front of their eyes.

The city’s main roads haven't seen so many trenches and work sites since the end of the World War II bombings. The monumental library, the biggest in Europe, opened to the public in the summer of 2013, but several giant shopping centers and some office complexes are still in the works.

Soon, the city will start construction for the High Speed 2 Railway, which will connect Birmingham to London in 49 minutes, compared to the current 80 minutes. The project is expected to be completed by 2026.

John Lamb, spokesman for Birmingham's Chamber of Commerce, says some 14,000 workers will be employed to build the new Curzon station alone, good news for a city whose unemployment rate is up to 6.5%, above the national average.

"There's no doubt, we are witnessing the rebirth of the city on the ruins of businesses that were born from the Industrial Revolution," Lamb says.

And the rennaissance will go on: The Birmingham City Plan, which everybody is talking about, forecasts 20 years of massive investments on multiple fronts.

"Silicon Canal"

One key hub of all the new energy can be found along the canal, a few kilometers from downtown, where a wave of start-ups have come together at the Innovation Birmingham Campus. This 3,500-square-meter co-working space hosts 80 new companies that can share advice, equipment and support.

Birmingham often boasts about having more canals than Venice — 180 kilometers! — and the city used to depend on these water traffic lanes to transport its heavy industry to the markets that could sometimes be quite far away. Today, those canals are the symbol of the high-tech community that recently chose the "Silicon Canal" moniker.

“A lot of things happen here, but the authorities never knew how to handle and promote this private energy,” says Nick Holzherr, a leading local entrepreneur. This 28-year-old Switzerland native founded Whisk, a popular culinary website that allows users to buy ingredients online from supermarkets like Tesco, Waitrose or Asda.

Holzherr graduated from *Aston University, a prestigious business school in Birmingham, and later took advantage of his participation in the BBC show The Apprentice to help find advertisers and commercial partners. Now he wants to help the city find top talent in the UK's other big city. “It's time for us young entrepreneurs to speak with one voice and assert Birmingham's assets,” Holzherr says.

No Google worries

Birmingham still suffers from a negative public image, even with its impressive statistics. It's the fastest-growing big city in Britain, the ideal place to invest in real estate and the second-best place for start-ups after London. According to the association StartUp Britain, which links private entrepreneurs to public authorities, the city had 18,337 companies in 2014.

Most of those are potential clients for Will Grant, whose fledgling business Droplet aims to compete with big banks thanks to an app that enables payments by telephone. "This city is really full of opportunities for small businesses," Grant says. "It's so much easier to start here than in London. Housing prices are much cheaper. We can recruit people from the six universities around the city, and we don’t even have to compete with the $130,000 salary Google offers to recent graduates in London!"

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Birmingham's library — Photo: GARETH1953

The population's demography is striking: 38% of its residents are under 25 years old. And Grant cites another asset. "I can live in the countryside and come easily to the center of Birmingham to work in one of the many cafés that provide heating and Wi-Fi." His business partner lives in Norwich, in the east of England, four hours away.

"Where is our start-up based? It’s a good question," he quips. "With the Internet, we can start anywhere, and Birmingham is better than other cities to build your business."

European regional development funds constitute another financial opportunity for young companies such as Droplet or Soshi Games. The latter offers paying mobile games, inspired by famous songs, which bring a new source of revenue to the music industry. Within three years, this new enterprise had raised $2.2 million thanks to a combination of investors, public loans, European grants and crowdfunding.

"Our business is super attractive but also very risky, so it's good for us to diversify," says Cliff Dennet, founder of Soshi Games. This former telecoms employee is set to launch a game dedicated to the group Queen that will be launched this month, a year after the start of negotiations for the music rights with the surviving members of the group.

This community of young entrepreneurs appears to be too busy improving its products to take a real interest in the UK's upcoming general election, or to have a real opinion on the possibility of the country exiting the European Union. More established companies have a clear opinion on the latter question: 86% of the members of the local Chamber of Commerce want the country to remain in the EU.

*Correction: An earlier version of this story said Aston University was located in London. It is in Birmingham. Sorry.

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