Merseyside emerges as hub for start-ups

What do Helsinki, Silicon Valley and Liverpool have in common? The answer is a cluster of innovative, digital businesses looking for investment and opportunities to grow.

Though the city on the Mersey could seem the odd one out, it is rapidly becoming the first port of call for high-growth start-ups from Finland and the US.

HammerKit, a Helsinki company whose software enables novices to design websites, is setting up its first international office in Liverpool.

Mark Sorsa-Leslie, its chief executive, said the move was inspired by its backer, the Finnish state venture capital company Veraventure. It had links with the city through Liverpool Vision, the inward investment agency, and suggested he take a look.

Mr Sorsa-Leslie, a Scot, said that there were three reasons for choosing Liverpool, which he expects to be the company’s European hub, including the vast BBC-led MediaCity development 30 miles away in Salford, opening in 2011.

“The first thing was a well-networked creative and media industry. The second was MediaCity. It is stunning and it is undoubtedly going to have a halo effect for all of us. It is the media equivalent of Docklands and I wanted my company to be close to that. Third, we were made to feel wanted,” he said.

The company will employ about 10 people and receive three months’ free rent at the Liverpool Science Park, where there is a cluster of such businesses.

While just five years old and still smallish, with €700,000 (£594,000, $936,000) annual turnover and 1,000 customers, Mr Sorsa-Leslie said: “We have to break out of Finland very early. It is a market of 5m people. We have built a system that lets you create your own website 100 per cent through your browser. We have done for web design what desktop publishing did for the print industry.”

As for choosing Liverpool over Greater Manchester, he said: “I do not see the distinction.”

Steve Smith, ICT director at Liverpool Vision, says many would follow in HammerKit’s wake. He has spent four years cultivating Finnish investors and companies. The Software City convention, bringing together start-ups and investors, has become a key event in the sector.

Last month 10 business bosses pitched ideas to investors including Mikko-Jussi Suonenlahti of Veraventure after heats in Silicon Valley and Finland.

They included Paava Backman, of Steam Republic – software designers that bring musicians, including Dizzee Rascal, and their fans closer together and increase revenues – and Elina Arponen of Tribe Studios, which has created online multiplayer games that people can complete in one evening.

Lou Hong, of GameAttain, a Silicon Valley start-up, said: “The best way to launch our internationalisation strategy is to enter the UK. England and the north-west are of particular interest because of its geography and the high concentration of gaming-related developers and content publishers. It is perhaps, strategically speaking, the best way to gain entry into the EU and to grow our user base.”

Taneli Tikka, a serial entrepreneur involved in many start-ups around London’s Old Street, dubbed the “silicon roundabout”, has also been lured north.

Mr Tikka, an investor in the likes of Dopplr, which tracks users’ travel, and Muxlim, a social media site for Muslims, said: “Liverpool is emerging as another hub for these kinds of businesses.”

However, success is not guaranteed. Bizarre Creations, the studio behind the popular Project Gotham Racing games for the Xbox, has been put up for sale by its owner after disappointing sales of its last two games.

Activision of the US said in November that it was “exploring options regarding the future of the business” and its 200 staff feared redundancy.

After two years of development Blur, its new racing game, shifted just 500,000 units, compared with 6m for Gotham. James Bond 007: Blood Stone also received mixed reviews.

However, there is reported interest in buying a studio that has had a string of hits, with Microsoft, the Xbox’s owner, tipped. It has refused to comment on speculation.

Nevertheless, with Sony, which tests all its European games in Liverpool, committing to the city for the long term, the sector as a whole is well placed for the future.