Are regional hubs the future for the UK’s tech startup scene?

Data released this week suggests that the vast majority of tech firms are now based in regional hubs outside of London, rather than in the capital itself, challenging conventional wisdom that you need to be in the big smoke to get your ideas off the ground. 

The research shows that government incentives and local schemes are driving growth, but that there also might be a wider shift in the attitude that you need to be based in the capital to succeed. 

London no longer the default for tech startups, report suggests

UK Tech Week and Startup Coalition looked at the 83,000 active tech companies across the UK, which are employing 3.7 million people. They found that 54,000 of those ventures are reportedly based outside of London, which is roughly two-thirds of the total. 

As Startups Magazine reports, the team also looked at the makeup of these businesses. They found that the average number of employees per tech company outside London was 38 and 57 in London, suggesting that it is smaller businesses that are willing to take a punt on life outside of the capital.

While London has traditionally been an expensive place to set up a venture, it’s often chosen for its deep pool of talented workers, highly developed startup ecosystem and venture capital opportunities. It is, of course, still the leading hub for tech startups and small businesses in the UK.

But just like any other city, it isn’t without its problems. Right now, for instance, there is increasing pressure on the availability of office space as RTO mandates push workers back to their desks, which is driving up prices. Realities like these, as well as higher business rates, are making setting up outside the capital a more attractive option.

New schemes aid development beyond the capital

The Government has, in recent years, launched a specific fund for tech scale-ups based outside of London. The £1m programme, dubbed the Regional Tech Booster, was unveiled by the Department for Science, Innovation and Technology (DSIT) in July 2025. 

A few months later, the government has provided more details on the first wave of ventures to receive funding in Wales, Scotland, the Midlands and the North. 

A good example is Game Space, which will “deliver a bespoke support programme for early-stage Scottish games startups, going beyond traditional accelerators by focusing on community building, peer learning, ethical strategy, and sustainable business growth.”

In parallel, the DSIT is planning to support more tech businesses founded outside of the capital by creating ecosystems that will support innovation and growth. 

Key localised initiatives include specialist UK Professional and Business Services (PBS) hubs in the Midlands, the North and Scotland. Wales, on the other hand, received £30m for a Local Innovation Partnership Fund, and additional money has been set aside to accelerate local growth through the British Business Bank’s Nations and Regions Investment Funds.

Regional hubs: top talent, lower costs

Among the tech ventures which won a place in this year’s Startups 100 Index, there were several stand-outs based in the North.

Soil Benchmark is based in Yorkshire and Humber and is simplifying farm management planning, while Literal Labs is developing logic-based AI models that are faster, more energy-efficient, and inherently explainable.

Pan Galactic caught our judges’ attention with its operating system, GalacticOS, which is designed to help space agencies and commercial businesses to securely process, store, and transmit data. 

Based in Yorkshire, founder and CEO Flow Collingwood explains that it made sense to build the venture where the team is from. He adds that it has been a “real advantage in our early stages”.

“There are strong and growing regional hubs across the UK, with excellent engineering and digital talent in places like Hull, Leeds, Manchester, Newcastle and Liverpool, as well as well-established ecosystems in Scotland. Being based in East Yorkshire allowed us to bootstrap more effectively, with significantly lower operating costs and access to great talent without the pressure of London overheads,” he shares.

While he recognises the draw of London and the “sheer volume of activity there,” he says that the decision to found Pan Galactic in Yorkshire has not limited the business at all. 

“With good transport links and the shift towards remote working, it’s entirely possible to stay connected to the national and international ecosystem while building elsewhere. We’re now also incorporated in the US and exploring European expansion, so geography has not been a barrier to growth,” he states.

Collingwood advises other founders to think carefully about what they actually need at each stage of the journey. He told us: “In the early days, managing burn and building a strong foundation is critical. Regional hubs can offer real advantages in that respect. London absolutely has its place, particularly for later-stage fundraising and network density, but it doesn’t have to be your starting point.”

Instead, he encourages founders to delve into what their regional hubs can offer, from financial support to networking to lower overheads. As he says: “Build where you can operate best, access talent, and stay financially resilient. You can always plug into London when you need to.”