Workspace and accelerator evaluation for Chester

Commissioned by CWAC and BID Team

August 2022

Steve Pette

Behaviour and trend changes

Impacting trends related to work, environment and business by 2025

Hybrid working / Remote first goes mainstream

and adopted by more businesses as a critical feature with options on the flexibility of workspace for employees as localised work hubs, to reduce costs.

Me Not We employees drive change in business from the bottom up, not top-down, centred around individuals, not the big company.

Gen Z is driving for in-person work experience wanting a more connected world for the workplace but having high expectations of the working environment moving companies to change approach.

Businesses adopt shorter working week to accommodate demand from employees, thereby looking to be able to attract and retain talent.

Rise of GiG economy and freelancer using skills and capability rather than a contract with larger businesses. Driving selfemployment and micro businesses growth. The side hustle concept grows.

Established businesses will reduce and repurpose office space whilst improving the environment and flexibility for employees.

Accelerators / Incubators look to position themselves around sectors and verticals within which they have influence and experience; corporate programmes align with specialists rather than the employee base. Return to physical with some virtual.

Investment continues to flow from angel networks with a focus on locality/seed stage, mainly if more localised. More significant deals for follow-on and series funding follow growth areas. Angel networks and crowdfunding dominate the seed stage.

Increased entrepreneurship start-up, particularly among younger people and those who are moving out of established jobs or through redundancy following a recession. The side hustle will gain more traction

Metaverse - will allow new opportunities and revolutionise business with the link to 5G completely changes the commerce and work environment landscape.

Impacting trends on future business in 2030

The Side Hustle

It is estimated that roughly a third of businesses with fewer than ten employees are now run as side hustles, compared to 20.8 per cent in March 2020’ and that most of these businesses are run by millennials (under 35’s). Another estimate is that side hustles generate £72 billion for the UK economy. In addition, Twitter reported a 231% rise in mentions of ‘side hustle’ on its platform.

Agri tech

The sector is projected to grow over the coming years and will contribute to net zero through the effective use of technology. As a sector, it has thrived over the pandemic and is attracting investment and start-ups. Uk ranks 5th globally for investment and it is growing.

E-commerce

The UK has the most advanced e-commerce Market in Europe and is one of the sectors with the highest number of younger entrepreneurs, with 24,000 start-ups in 2021, Manchester and Liverpool being 3rd and 4th cities for start-up growth in this sector.

Net Zero

Government funding support for net zero in 2050, unlocking investment for green energy, hydrogen and electrified vehicles. There will be a knockon effect on local industry and businesses that are supporting sectors coupled with a shift to companies who start to think more about their sustainability and regenerative products to remove from landfill.

Digital technology

The market is predicted to expand by 22% over the next eight years through the adaption of IoT (internet of things) and the growing use of smartphones and mobile devices; data collection and security will also mirror this rise

Creative sector growth

The sector growth is expected to account for £300 bn in GVA, with most businesses in the micro sector. With the rise of digital and online development, the demand for creatives and technology will increase.

Vision for Chester

What this could mean for Chester

! Chester defines itself with clear purpose and meaning, which aligns with a vision of growth and change within the city, driven by the local community in collaboration with the city borough council supporting the One City Plan. Chester has an active and engaged network for the city with a strong deal flow drawing on the high network of individuals in the city and surrounding areas to create change.

Inward investment is actively promoted for the city centre by leveraging the talent and capability of young people within the relevant sectors of the next ten years. These are digital, creative, net zero and agri-tech of the local area, clearly defining its ambition and vision for the future.

Chester aligns with relevant city partners and estate planning to codify the creative element of the university campus and look to create a shared hub within the city centre.

A pre-accelerator model is created to call for business growth around digital and creative technology. The plan of ambition is widely communicated to activate incubation and accelerator opportunities within sectors. Chester embraces e-commerce, allowing it to meaningfully build on its heritage as a retail jewel, acting as a call to action and activating local entrepreneurs to showcase their businesses physically whilst looking to attract digital native brands to the city centre (DNB) and into real-life, bringing vibrancy to the high street.

Chester formerly launches an intent to create workspace and acceleration space provision for relevant business growth within the city, creating a city of possibility.

A marketing message is created with relevant partners who are fully engaged, allowing it to state support for early-stage businesses within the digital and creative sectors. Defining a strategy to create a high-quality workspace within the city and leveraging its position as a recognised hybrid working city.

! Funding structures are built around start-up and early-stage businesses, with the council enabling to help facilitate shared investment into companies from the area to help create an evergreen fund with critical partners to deliver long-term economic development goals.

City borough council looks to help enable a sustainable accelerator approach with critical local partners in creative/renewable energy/ Food and Agri tech over four years. Delivering a variable sector focus yearly as an accelerator and starting with digital business activation.

Priority Actions

To deliver the vision for Chester City centre consider

the following interventions to stimulate

business growth and align the community

Angel network /

A city of possibility

CWAC should look to engage with Deepbridge and the wider entrepreneur networks within CWAC alongside key business individuals from the diaspora to create an angel network of local investors.

The investment ecosystem within CWAC is nascent and needs to be stimulated to attract and support early-stage business potential regardless of sector.

A compelling vision for business growth and micro business through workspace

To achieve ECON 1 & 2 within CWAC's strategic vision, there needs to be a clear strategy which builds on the changes and behaviour seen in work and lifestyle with the recognition that small and micro businesses are critical to the future development of the city, with particular focus on ICT, creative and digital as areas which will have future levels of growth. This can be achieved by bringing businesses together through workspace and addressing the “quality workspace” shortage. The approach can be staged, but the action needs to be planned to capitalise on the opportunity.

Stakeholder and community round table events for business growth and ecosystem-building.

The business community is a crucial strength of Chester. As such, it needs to be embraced across the board, codifying those who have always had a voice and bringing others to the table to ensure a shared voice, with explicit action and plan to ensure communication is open and transparent in future planning and setting business strategy and growth within the city. A collaborative approach with partners and the wider community will help define and build the ecosystem within CWAC, to grow stronger in those sectors that will expand.

Chester is not perceived as a city for early-stage or start-up businesses, so the narrative needs to adapt. The profile needs to be built in a broader context to show the region's advantages, leveraging its neighbours to highlight its talent and talent growth sectors. Chester needs to define itself as a start-up city with investment support - currently, it's not known outside of the area for its economy and infrastructure, which supports this growth. The profile and awareness must be built to attract and strengthen start-up and micro-business strengths.

Pre accelerator / Incubation / accelerator

CWAC needs to address the fragility of its sectors where a large percentage of employment is derived within the retail and visitor economy and increase the creative, technology and digital sectors to grow career awareness, talent and capability to build strength and growth markets. Identifying opportunities within the current ecosystem to develop businesses with the support of programmes which can deliver early stage growth in sectors which are high growth whilst building and retaining talent and businesses for the future.

BASELINE DATA

Engagement

Data sources reviewed

Many data sources were researched and evaluated alongside previously commissioned data and reports provided by the council. Data points available from various sources such as ONS and other strategies and evaluation reports relating to the economy and accelerator impacts from DCMS and Beauhurst were also explicitly reviewed where they associated with the North West region. Together these reports and market research have enabled an overview of events post covid and forecasting for the future. This was then aligned to the authors own experience of the start up eco system from the last 12 years and experience with cowering and accelerators.

Primary data gathered

Over a period of two months, virtual calls were instigated with a varied cross-section of key identified influencers within the CWAC region. This included internal council teams to the local councillor and MP, representatives from the BID team, community groups and individual businesses from creative, digital and property teams, and Chamber of Commerce and University representatives. All provided open, honest feedback and shared thoughts anecdotally about the city in its current state, its future and how workplace and potential business growth could be enacted. This was then aligned with the author's experience with the startup ecosystem over the last 12 years and lived experience within co-working and accelerators.

City visits

Chester was visited numerous times, and some discussions with those mentioned were held face to face when visiting, gaining insight and overview of the location and context of the city in line with the brief of this report.

What would workspace/accelerator bring to the

What type of businesses would this workspace appeal to?

Engagement review with the local community

What strengths does Chester have?

Environment

Areas mentioned in discussions as a frustrations

New business models required 18%

More residential needed in city 12%

Engagement can be difficult 16%

Words dont see action 24%

to live

New blood is required in leadership 10% Old guard approach 18%

What are the driving factors to advise CWAC for the future of Chester and work?

Community should write One City Plan 15%

New approach for city is required 12%

Community voice needs to be acted on 15%

Future direction needs to be created 24%

Chester needs a strong vision for growth

18%

One City plan to be clearer

18%

In terms of feedback, It became apparent that many participants were demonstrating a level of fatigue with ongoing engagement, best summed up as “There have been many talks, now there needs to be some action” - with several references made to the One City Plan as something which needed to be “released and acted upon” and that potentially the baton should be handed across to the private sector to lead the charge of change.

In relation to business growth, there was a strong appetite to have a workspace within the borough, and many felt that the most appropriate place would be within the city itself, as this area needed the injection of something to draw in footfall.

There was a feeling that the outlying areas would not attract so readily if a workspace and associated services were situated outside the city.

This is primarily driven by its association with business and the high street, alongside the need to create interest, access to talent and infrastructure. Companies tend to cluster around economic activity within a city.

The need for a firm offer in the heart of the city, which is business growth related, would create an opportunity to place make. That potential needs to be crafted with the correct narrative and supported through messaging about the city.

A number viewed intervention and creation of a workplace as a space where there was an intersection of complementary businesses from creative to tech and digital whilst working alongside the community.

Thought leadership and a space to gather community where events could take place would help to animate the locality. Storyhouse was cited multiple times as an exemplar of how a well-designed space can attract and allow people to coalesce.

The accelerator element was secondary for many when providing quality workspace, which was the primary. The overriding belief was that if more businesses were attracted and supported for growth, it would help define the city's future and bring vibrancy to the city centre.

Accelerator and incubation opportunities coupled with workspace were perceived to benefit longer-term business growth by those who understood how these operate.

In terms of facilities, one clear message came through, whatever and however this works, it needs to be the best it can be, and that means creating a facility which is of quality and competes with or exceeds anything available in Manchester or Liverpool and Warrington.

(Statements made are included in the appendices section)

Office enquiries for Chester - Legat Owen

Legat Owen supplied inbound office enquiries data for Jan - March 2022. Of those 46 inquiries, 32 were looking for Chester City; the more extensive enquiries over 3000 sq ft were for areas outside the city centre.

SWOT / PESTLE

SWOT - Chester

PESTLE - Chester

Workspace

There is a need for the Council to play an enabling role in increasing the supply of quality business accommodation within the borough whilst leveraging this for its economic development and growth strategy. Due to the current market rent levels (which in the short term may decline) and the lack of substantial inward investment from the private sector, the activation of a scaled workspace needs to come from the public sector.

For the city's long-term prosperity, the council should act as the leading enabler (as it did with Storyhouse). However, this should be in conjunction with several other partners to ensure its animation, success and sustainability.

CWAC council acknowledges in various reports that there is a need to increase business activity and support within the city alongside growing skills which employers now require. This would also be supportive of key findings in the LEP consolidated evidence base 2018, and the Reimagining Chester report (2e employment opportunities)

If the borough grows economically and delivers on the jobs target set within its strategy, the supply and demand of commercial premises need to be improved; otherwise, businesses will migrate to areas where they feel best supported.

It’s important to note that this organic growth around business and entrepreneurialism will drive Chesters businesses and attract others. It has built its ecosystem outside of its two neighbouring cities to a certain extent. However, to increase and attract business investment along with growth, the borough needs to deliver relevant and appropriate facilities to allow these businesses to facilitate start-up and scale up further.

For Chester, creating a workspace will require Capex funding, as there is a market failure within the city for quality office space with flexible terms which target the micro and smaller SME sectors. The council needs to be the enabler.

The key recommendations for Chester would be to:

Investigate and develop funding capability for a Capex project such as this for long-term business growth. This should be a bold statement of intent, and the recommendation would be for a minimum-sized space of 10,000 sq ft.

In partnership with a developer or potentially the University, look to repurpose an existing space previously given to retail to utilise a vacant building.

Evaluate the current office stock that the council holds and understand if any suitable space is available.

Discuss with University the possibility of space within their portfolio which could be utilised.

Foregate street would be a key location due to its proximity to the station and surrounding media / creative businesses (more details are included in the appendices section). However, another key area could also be identified as development potential, which supports long-term planning and city development.

If CWAC can activate a development company, it may be that they can provide the Capex for a fixed return and then look to create a consortium of key partners with a waterfall profit structure.

Chester needs to retain its indigenous businesses and attract others into the area.

The current availability of suitable space would indicate limited short-term partnering opportunities within the city for workspace. This approach would reduce the need for high CAPEX requests and, where possible, should be explored further.

Assumptions made on workspace being the refurbishment of an existing space, with new M&E installed.

Expectations would always be a loss in year one and are subject to the ramp-up period of which these models assume a conservative approach. Smaller spaces will always be harder to make profitable, given restrictions and the membership levels applied. Rent is applied at £8 per sq ft, with service charges and rates also being applied - it may be that these costs could be reduced by using a council asset.

The recommendation would be to initially look at a space of 10,000 sq ft and then build from there subject to further demand.

1.Workspace for Business

Responding to the lack of supply of workspace is key to driving economic activity within the city and allowing businesses to start clustering in one place, which can drive growth for collective benefit.

The quantity of available sites within the city driven by retail vacancy rates provides an opportunity to repurpose and create new purposes.

There is a level of market failure for workspace, with rent levels being low at a blended £12 per square ft and future market impacts of the recession, inflation and materials increasing, the private sector would need to take a longterm view regarding monetary return for the Capex investment.

There is limited availability of quality commercial workspace within the city currently; retail space which does exist is perceived to be of low quality (Northgate is excluded from this statement) and lease-based - when the market is now demanding short lease terms and flexibility.

There is proven demand for the city centre from micro and SME businesses and smaller footprints - The Steam Mill and Industry both have high occupancy. The creation of the new Blue Oak development underpinned by residential indicates the market is beginning to respond, though what is required is a workplace at scale.

There is currently within the city no space at scale, which provides an intersection for SME and micro businesses from creative/digital and tech.

There is currently no physical beacon point within the city which represents or provides a narrative for SME growth as a collective point. Many previous reports recommend the creation of such a space from Chester reimagined / GFN and perceptions study from LEP.

Actions

A staged approach to workspace should be considered to ensure a phased approach and market testing for workspace - start small at 3,000 sq ft and then move to 10,000 sq ft to deliver on demand.

Create a planned approach to a workspace with clear intent to invest while allowing for implementing funding mechanisms and capital grants.

Open discussion with University to understand their estate management approach and the potential for consolidating the creative and arts campus/extension into the city centre; this could be the key to the scaled strategy to take on a bigger workspace in a partnership or as part of a joint venture.

CWAC to evaluate the potential for capital projects to address the market failure and deliver a workspace environment in conjunction with the private sector. Industry co-working would be a prime candidate for this as they are already connected within the community, understand the market and looking at potential new opportunities.

Resource to be allocated financially to take leadership of workspace strategy and drive the initiative.

There are 14,000 businesses registered within CWAC, the majority in the micro sector. SIC codes should be investigated outside the usual main areas and look to understand those in commerce and newer industries to understand CWAC sectors; the council should look to understand this data through a business like Datacity or City Curator, alongside mapping side hustle businesses.

Santander is a supporter of the University Ventures programme; they are also building a multi-million creative hub for creative businesses in Milton Keynes; there is an opportunity to discuss a potential partnership for Chester.

CWAC does not have a dedicated localised angel network of note yet does hold high net worth capability within the borough

The Legatum Institute, in its prosperity report of 2021, identifies areas within CWAC where strength could be built in Investment / Enterprise / Infrastructure. CWAC Currently sits at 178 out of 329 authorities. Whilst workspace would contribute to enterprise conditions, access to investment is limited.

CWAC has access to three major areas of investment potential for smaller businesses and those in growth via Deepbridge Capital, Grosvenor Food and Agritech and also Oxbury bank, which specialises in agriculture

Crowdfunding capability for early-stage businesses within the North West stands at 5%, which is markedly higher than most other regions outside London and the South East.

Access to funding and investment is more visible in Liverpool and Manchester due to its angel networks and VC presence.

Liverpool recently announced its commitment to the earlystage business by setting up a £1M programme with LCR Angels.

The Beauhurst data report for CWAC shows that Aviva is investing the most money into the area but only across a small number of deals. The most active investor is Maven across their different funds, but they are working at an earlier stage with lower-value deals. ITS technologies are the recipient of the most funding, securing over twice the value of the next closest investment (Oxbury), with 27 companies that have secured raises.

Most raises of investment within CWAC are at the Seed stage.

Actions

CWAC to look at funding structures in association with its key players in banking and investment to evaluate mutually beneficial funding opportunities, and how CWAC can set up a seed stage fund for businesses.

If CWAC creates a plan of action for workspace, then investment structures and support can be discussed within the business community to support localised businesses with local investment partners.

Evaluate the potential and opportunity to create an angel network in Chester from the community and local investors as part of the approach to creating a “city of possibility.”

Explore the crowdfunding options as a council for business investment at the early stage to be able to integrate with an angel fund.

CWAC as a council should evaluate options for sidecar investments if incubators or accelerators are provided through part public funding.

CWAC to create a marketing campaign to involve those within the community who can “pay back to pay forward” through localised investments with a long-term future city approach.

Involving the community to drive possibility

CWAC's strength lies in its people and their close connections as part of a networked community.

The business community and those sitting within community groups are experiencing a level of fatigue from the lack of action regarding the city's future.

There is a level of frustration which needs to be addressed by CWAC with open, transparent communication on plans and how the city and borough will build resilience in times of challenges the economy will face over the next two years.

Challenges of the next two years will be felt more acutely in the retail, hospitality and construction sectors; for CWAC, that impact will be painful due to the business demographics of Chester.

CWAC must consider repositioning jobs with a new lens for the retail and business sectors and how it can build talent and skill sets.

The business community wants a clear direction and vision for the city.

The creative and cultural sectors are equally as important within CWAC as digital and technology - their voice needs to be heard and acted on.

Actions

Allow the business community and groups to participate in engaging and delivering the updated One City Plan actively - they are asking for this to happen and want to be involved.

Ensure participation from relevant parties and those with strong social media outreach to ensure representation and inclusiveness.

Create “set challenges” back to the community, so they can respond around the investment and business ecosystem so there can be a direct interface and ensure that it is done with pace.

Update and respond to all who participated in this work, and share a plan of action that has meaning for them, which signals change within the city.

The city borough council needs to re-evaluate its communication platforms for the community; they currently are not working as effectively as they should.

Let those with extended social media platforms start communicating and pushing out the city's messages, so all are supportive in promoting and attracting businesses and there is a clear and unified “message” and approach.

Chester as a city is currently not known for start-up or earlystage businesses; it needs to change the messaging for these businesses to create a new future.

Chester is known for its heritage and tourism but not for its business capability despite the city having its heritage in trade.

Create a targeted campaign which speaks to early-stage businesses in growth to both attract and showcase businesses locally and regionally.

CWAC must evaluate future job sectors with a new lens for declining retail and business sectors so it can build talent and skill sets to drive resilience.

The business community wants a clear direction and vision for the city, to understand their part and how they can contribute to shared success.

The old guard approach, usual suspects and outdated business models must be addressed with new clarity to deliver new thinking.

Compelling statements and commitments need to be made around Chester's future not just as a city of heritage and tourism but as a city of possibility that recognises its sector focus and how it is responding to change.

Build a new narrative for the city which holds relevance, purpose and meaning for a city looking forward 10 years.

Actions

Key partners from the city should be integral in discussions to assist with activating early-stage businesses. As an example, the University has spin-outs which could represent an opportunity to support local businesses while retaining talent.

Utilise the strengths of the economic development teams within the University to develop the action plan for the city's future.

Use the city's and its people's strengths to ensure that incoming businesses are welcomed and introduced to the right people as a campaign for attraction and provide incentives for business in place.

Work with the university to ensure courses are relevant to future skills and development for CWAC, so talent is pulled through and aligned with local businesses.

Engage on a deeper level with Code Nation to increase skill population and cross-learn with relevant courses that play to future strengths, supporting the programme through marketing and activity powered by CWAC.

Leverage the city's strength and creative and cultural sector to appeal to start-ups by holding programmed cultural events and referencing the creativity.

Develop the marketing message of the connected city by using the hybrid working accolade.

Develop a programme of meet-up events with key speakers for events and utilise local partners who have experience and scars from “building a business”.

Actively pursue those websites that evaluate start-up cities via start-up support, grant funding, quality office space at reasonable rates, networking events for business, and meet-up groups.

Over the last ten years, the number of programmes designed to accelerate business growth has grown exponentially. Effective accelerator programmes have become one of the most important ways to nurture young companies from startup to scale-up and beyond. Since their inception in Silicon Valley with Y Combinator in 2005, these programmes have helped entrepreneurs grow their ideas from just that: ideas into successful, fast-growing businesses.

There are many programmes across the UK, though, like any programme, there are those that deliver and those that don’t. The last couple of years have seen a slow in programme growth, but their impact on business growth is undeniable. An accelerator offers programmes to help start-ups grow. These programmes have increased dramatically in the last few years, with accelerators specialising in everything from niche verticals to a specific stage of company growth. Attending an accelerator is a good indicator of a company’s potential to proliferate.

Beauhurst data of 2018 showed that 77% of accelerators declare sector specialism. When broadly grouped into categories, most of these are focused on tech, with 48% defining themselves as tech accelerators. This comes as no surprise since, by definition, most accelerators are for technology businesses.

For Chester, the opportunity to run a programme to accelerate businesses, whilst aspirational, will require a different level of understanding and discussion with key partners.

Outlined over the following pages is an evaluation of programmes all designed to help boost business growth.

The key recommendations for Chester (and CWAC in part) would be to:

Develop the investment capability and angel network within the region

Build relationships with local partner organisations, such as Deepbridge / Oxbury Bank / University / Grosvenor Food and Agtech, to activate an accelerator programme within suitable timeframes and identify the relevant sector focus for the partner. Having an appropriate sponsor for each themed programme would create an advantage for long-term sustainability.

An incubator could be activated earlier in the city with relevant space if space could be located within Industry in Hand bridge.

Programmes which look to build business rely on proximity and community. Having these based within a physical building would be strongly recommended. The shared learning and knowledge transfer as much as the programme creates success.

Perhaps more interestingly, a significant portion (10%) of accelerator programmes are “impact” focused, looking to encourage innovative businesses that will benefit society. The remainder is agnostic with no specialism.

Virtual programmes can be successful, but they will rely on a physical space at critical times. Previous experience would indicate that virtual programmes do not deliver the same outcomes for those teams present.

It will take time to build a reputation to attract businesses for incubation and acceleration, so the suggestion would be to create a workspace first to gather businesses and establish the city's reputation.

Programmes designed for growth

INCUBATOR

£103,000

A startup incubator is a collaborative program designed to help new startups succeed. Incubators help entrepreneurs solve some of the problems commonly associated with running a startup by providing workspace, seed funding, mentoring, and training.

OPERATION

It can be run by non-profit or public organisations and is usually associated with university/business school.

TARGET They are generally targeting local entrepreneurs who are looking to create and build a business; no specific theme or sector is targeted

TIMELINE

Programs can last a defined time, six months - 2 years, and all services and facilities are provided.

£5,000

PRE ACCELERATOR ACCELERATOR COST PURPOSE / OFFER

£250,000 - £300,000

Pre accelerators act as an early stage sourcing model to identify potential businesses ready to move to accelerator with a specific business idea that can be built and validated through discussion.

Accelerators follow a predetermined operation playbook to fast-track a business to investment and funding. Over the course duration, it looks to iterate and evolve businesses through the engagement of mentors and alumni. Due to mentors and reputation, they will have access to funding and investment networks.

Generally run by an accelerator's programme team, it will test fit and filter the opportunities for the accelerator.

Explores the local ecosystem for target businesses, subject to sector focus of programme.

Operated by a dedicated team of programme directors and start-up leads, the programme runs over a set period and follows a structured process.

Programmes are aligned around particular sectors and can be specific or wide-ranging. Businesses can be local / national / international

Usually, a weekly 6-week meet-up for businesses to register and come for advice, with the iteration of ideas on a group basis.

Most programmes run for 3 months, intensive on site ( virtual is now operating hybrid), with a follow on office space support.

STRUCTURE

Programs are lightly structured, so monitoring and tracking success can be challenging

Structured through calls for early stage attend who have an interest in accelerator potential

Well-structured programmes and cohorts are expected to attend all events and days organised by the team

PARTNER POTENTIAL

INCUBATOR PRE ACCELRATOR ACCELERATOR

Nat West has extensive experience running incubators through entrepreneurial spark and recently launched an NW accelerator inhouse. They have a site in Manchester currently. The University in Chester would also be valuable as a local partner if approached as a JV partner.

STRENGTHS

• Office space and services offered to businesses are seen to be positive

• Cost effective for the business and lower costs for public sector

• Increases survival rate

• Localised businesses means they will stay local

WEAKNESS

• Programmes are only as good as those running them, and experience

• Mentor network can be limited

• OPEX is usually supported by the public sector or large businesses that are supporting

EQUITY STAKE

• Equity stakes are usually not taken its about activation though seed capital can be provided in exchange for equity

SEED FUNDING

FUNDING

• Small seed funding can be provided if for-profit incubators 5K - 10K

Corporate sponsors or as part of ecosystem build-out by the public sector

Deepbridge would be a valuable addition to this early stage approach for the accelerator, as they have expertise in business evaluation and could work with the University business school to develop a sixweek course approach.

Nat West / Barclays / Deepbridge are all potential partners; though, for the latter, there may well be a cost; Deepbridge is uniquely positioned as a critical player within the CWAC region, alongside Grosvenor Food and Agtech, and they have both network and funding capability. Oxbury Bank is another potential partner.

• A low-cost approach to gauge interest and viability

• Sets out an agenda and intent for something bigger

• Useful to validate and discover business ideas within CWAC

• Maps out potential businesses by sector

• Theme / Sector needs to be very clear and to achieve the most interest it needs to be well promoted

• Provides a snapshot only around potential No equity stakes are taken this is about awareness and discovery

• Businesses attract and raise more funding on average if they attend an accelerator

• Accelerators are geared to growth and success

• Programmes are a talking point and positive PR

• Sector focus and well structured

• Programmes which are well run and successful are not free or cheap

• Call for cohorts may include outside of the area - and there is a risk they leave after the programme

• CWAC does not have a reputation it will need to build, and that requires commitment in years for the programme delivery

Equity stakes 4%- 8% of the company split with the operating partner and investors in the programme.

THEMES FOR CWAC

Creative / Digital / Technology

Not applicable

Seed funding of £20-30K per team

Funding could be through sponsorship/marketing budgetspublic or private sector

Creative / Digital / Technology / Energy

Most programmes run through corporate sponsors, / Public sector, / Collection of investors, and angels

Net Zero / Digital / Creative tech / AgriTech

In terms of the programmes available, the allocated costs are based on previous experience with accelerators and incubators.

Programme costs

Incubator

Incubator costs are based on a cohort of 20 pax with an average price for space at £200 per person over 12 months.

An allocation of an FTE at 30K per annum, with £15,000allocated for speakers and events and a £10,000 allowance for the programme.

Accelerator

Costs vary depending on the operator; most programmes will run with ten teams, have a fixed time duration of 3 months, and include seed funding for groups of circa £15,000 + in return for equity.

The programme leads x 1 and coordinators x 2 are built into these costs, alongside speakers. Mentors will usually give their time FOC.

These costs are based on Ignite 100 and include three-month office space. Some programmes will allow follow on space three months after the course.

The most successful programmes will have a defined theme to gather and attract teams around a particular sector. The wider the theme is directly proportionate to the numbers who apply.

It is important to note that building a reputation for quality applications takes time.

Pre accelerator

Costs are based on a six-week delivery, one day or evening per week with a key member of an accelerator team and usually held within a city location, which invites teams to apply and attend. This is about validating concepts and building outreach to discover teams for the accelerator. It is a light-touch approach to discovery.

The following table explains the different providers that have already expressed interest in running or supporting an early-stage business approach. The table summarises the key components offered by those three providers.

Formally approached CWAC to run programme

Barclays

Deepbridge NatWest

Programme cost

£300,000 + £50k staffing

Network capability

To be advised

Access to programme FOC

Investment and mentor experience

Local to Chester

Previous accelerator experience

Sector focus

High-growth digital and tech / Agritech and net zero

Required physical space

Notes

Recommendation

Technology / Life Sciences

Climate led / Purpose led ! ! Virtual

Expressed interest in the city centre if space could be found. Programmes delivered by Greenborough Management or 10x10

Renewable energy

Want to be present in the city centre and be a part of the ecosystem. Unable to receive a response on costs and how they see a programme working

Have a hub in Manchester

Explore the possibility of being present in Chester

Chester partners should explore partnership opportunities and draw on the strengths of their programmes to ensure a strategic fit for the needs of the city and borough. There might be an advantage in Chester considering a hybrid approach that brings different provisions together as a broader programme to support establishing a more robust, better-connected ecosystem. The city has a broad business base, it’s walkable, and the community is willing to play their part. Chester should seek to scale the programme with components such as sector themes potentially being phased, subject to the provider. The accelerator should be named and held by Chester, with the provider being the operator. This provides ownership and continuity if programmes run over several years.

There is a well-supported opportunity to create a new future for Chester with workspace creation. Whilst previously it’s been about individual business, this approach would act as the glue to the area and pull people together, signalling as a beacon for change and new opportunities. The appeal would be for all types of businesses to coalesce, starting with creative and digital and then reaching out to others as this continues to build.

Figures support and show that start-up rates for the local economy are viable to look at further development. The feedback from the business community supports creating a space focusing on the early stage, micro businesses and smaller SMEs within the city centre.

The building blocks are already in place for the development to allow these businesses to grow and take up space as the site is developed.

A key challenge for the digital, software and creative tech sectors is the scaling-up phases of companies and development, often through several steps and a number looking to achieve multimillion-pound equity investment. Partnerships and investment partners alongside an angel network should be developed to ensure investment is generated to support rapid growth from the seed stage through to series A.

Accelerators do what they say. They supercharge the process from 18 months to 3 months and create the environmental conditions to fast-track it. This is why a mixed approach works, and accelerators generally look to base within dynamic workspaces, but to establish and truly create impact, there needs to be a commitment to the program over a sustained time to truly see the combined impact.

Chester, as a destination, needs to provide high-quality office and incubation facilities; this would be essential to realise long-term business growth.

There is a demand for an accessible and affordable hub within Chester City that supports business growth and development, allowing for scale-up.

With proven demand, there is a need for an inspired and relevant workspace. However, It needs to be created and activated correctly with collaborative thinking from all relevant partners previously referenced to help define and secure a positive future for Chester.

Final concluding thought and update

The Council, alongside a number of interested parties, have already made some progress in identifying existing and emerging workspace across the City, which could potentially lend themselves to piloting some collaborative ventures, supporting a hub and spoke model that could work well across different locations in the city and widerborough in time, supported by strong and innovative programming.

There is an opportunity as part of the UK Shared Prosperity Funding to enhance the physical offering with the provision of some dedicated business support, which would target pre-start, earlystage and established entrepreneurs alongside established and scaling businesses with the ability to grow. There is a key role to play in facilitating the community to come together and in connecting early-stage businesses with established small, medium and large enterprises to drive forward innovation and collaboration.

As with many areas in the UK, CWAC as a region faces the challenge of supporting entrepreneurs and SME growth in the early stage.

In the short term, it is envisaged that this approach will build the enterprise ecosystem within the City and, in particular, create a cohort of talent within various locations across the City, providing a platform to scale activity in the future.

EVOLVING FOR THE FUTURE - CHESTER

REPUTATION

RETAIL / WALLS / AMPHITHEATRE

MODERN INDUSTRIAL REVOLUTION- BUSINESS 4.0

TALENT + BUSINESS GROWTH

CATEGORY POSITION

EXPERIENCE DESIGN

PARTNERSHIPS

MANUFACTURING /RETAIL / FINANCE / F&B LED

VARIED

ENVIRONMENTS

REACTIVE TO OPPORTUNITIES

VACANT / UNINSPIRED / TRADITIONAL / HERITAGE

DIGITAL & CREATIVE LED

CITY OF POSSIBILITY

INSIGHTS LED

VIEWED AS A MEANINGFUL PARTNER

ACTIVATE NEW WORKSPACE AND BUSINESS MODELS

PART OF A COMMON NARRATIVE

PARTNERS SEEK THE BUSINESSES OUT to INVEST + WORK WITH

CONNECT + CELEBRATE SUCCESS

BUSINESS GROWTH

PEOPLE & CULTURE

COMMS

PRODUCT CITY

MIXED - REATIL + F&B LED

ALIGNED TO THE THE NEW STORY

BUSINESS GROWTH NURTURED

INCONSISTENT

NURTURED / SUPPORTED

FRAGMENTED / WANTING MORE

INTERNALLY FOCUSSEDREGIONAL

NOT ACHIEVING ITS BUSINESS POTENTIAL

ESTABLISHING PRIDE + BELIEF

ORGANIC EMPOWERED & PASSIONATE

CITY CENTRE

DISCONNECTED

HONEST & AUTHENTIC - TRUE GRIT

BUILD REPUTATION REGIONALLY AND SUB REGION / CROSS BORDER

CHANGING & RELEVANT

INSPIRED + POWERFUL

BUSINESS

FOCUS

LOW VALUE GVA/ TOURISM / VISITOR

CREATIVE / EMERGING / CHANGE

ICONIC DESTINATION

DRIVE NEW ECONOMY / WORK / PLAY / LIVE

SUSTAINABLE GROWTH + CITY

Active angel networks - potentially relevant for Chester

GC Angels

Known investments 2011–2021:

Connectd

Known investments 2011–2021:

Angels Den

Known investments 2011–2021:

40 rounds

35 companies

GC Angels is a sector-agnostic fund that invests in the Greater Manchester area. It was formed by the merging of Growth Company’s Co-Angel Investment Service, North West Business Angels, and the GM Co-Investment Fund, to respond to imbalances in the North’s early-stage equity market.

33 rounds

29 companies

Connectd offers an online platform that facilitates fundraising events and matches early-stage startups with relevant angel investors. Unlike a crowdfunding platform, Connectd is a closed community of sophisticated angel investors who are vetted before being given access to the forum.

40 rounds

38 companies

Angels Den is a network of over 6k registered angel investors. The fund tends to focus on technology startups, investing between £50k and £1m, with an exit horizon of 3-5 years. It has participated in at least 40 funding rounds, into 38 companies to date.

The group typically invests between £25k and £2m, with the GM Co-Investment Fund providing £150k of its own capital and leveraging co-investment from angels. Between 2011 and 2021, GC Angels participated in at least 40 fundraisings, into 35 companies.

Between 2011 and 2021, the group has facilitated 33 fundraisings for 29 companies.

On average, 90% of businesses that attend one of Angels Den’s SpeedFunding events attract at least one interested investor. Alongside the angel network, Angels Den also operates an online crowdfunding platform under the same name, which was first launched in 2013.