Net gains for northern entrepreneurs

Internet start-ups are thriving again, but this time it's the north-east that's hosting the boom where high house prices and costs don't hinder risk taking, says Mark Tran

Paul Derwin used to develop websites for major companies such as the Bank of Scotland and Scottish Widows, until he decided to design a website for his own business.

Launched last year, is an interactive T-shirt company. The novel idea is that people suggest designs, which are then voted into production by some 2,500 members. Teetonic has come up with 60 designs, sold 1,000 T-shirts at £20 each and hopes to make money this time next year.

"We have a scoring system and we manufacture the designs that gain the highest score," the 29-year-old Glaswegian entrepreneur told Guardian Unlimited. "The feedback can be quite brutal."

Britain's south-east region, which includes London, remains the country's economic powerhouse. The seat of government, Europe's financial capital, the headquarters of most of Britain's biggest companies, London is also an entrepreneurial hub.

This was where the dotcom revolution took off in Europe in the late 1990s. But there are signs that the entrepreneurial culture the chancellor, Gordon Brown, bangs on about is taking hold in the regions as well.

Mr Derwin, who received support from Scottish Enterprise (the main economic development for Scotland) pointed out that Scotland had provided its fair share of inventors in the past and that people's mindsets have changed.

"People realise that there are no longer jobs for life," Mr Derwin said. "It's not easy by any means to start a business, but there is government support and good networking opportunities."

Newcastle even boasts its own "Silicon Alley" in Pink Lane, once the city's red-light district. Pink Lane now houses about 100 start-ups including, an online music library.

Started in November 2004 by Steve Bainbridge, beatsuite sells original instrumental compositions in different styles from chill-out, rock and jazz to any company that needs music, say for podcasts or conferences. Companies can play, licence, download and pay for any piece of music on the site, which has a team of 35 composers.

An unabashed fan of Tony Blair, the 30-year-old Mr Bainbridge credits the government for investing heavily in regeneration schemes in the north-east, especially the massive investment in broadband. He also has a good word to say about regional development efforts.

"The regional development agency used to be a nightmare, a real bureaucracy," Mr Bainbridge said. "The people who worked there used to be real skivers, now they are a lot better."

Matthew Mavir, 28, another entrepreneur in Newcastle, who sells self-assembly wind turbines to homes, used to steer clear of government agencies such as Business Link.

"I shied away from such organisations as I thought they hindered rather than helped start-ups," he said. "But I'm coming round to the idea. I think the government is doing something right."

The three examples arose from the recent awards given by the mobile operator O2, designed to recognise entrepreneurs outside of London. Data from the Small Business Service, part of the Department of Trade and Industry, indicates that something is afoot. Figures show that Internet new company start-ups/failures per 100,000 by region were strongest outside of London for 2004.

This is not to say that the north-south divide is about to vanish.

A recent report, Connecting England, from the Town and Country Planning Association, an independent charity, called for greater investment in the regions outside London and the south-east and faster rail links to close the regional divide.

The north-south divide comes across starkly in house prices. House prices are starting to widen once more after four years in which property values in the north started to catch up, the Rightmove property website reported last week.

Rightmove said a mini-boom in the south was the main driver behind the 0.8% price rise across England and Wales in June, which pushed the average asking price nationwide to £211,442. Rightmove's figures show that prices in the south are up 9.4%, while those in the north have risen by just 2.7%. Sellers in greater London are now marketing their homes for £33,106 (11.7%) more than in June last year, at an average of £315,224, while those in the north of England are asking just £158 (0.1%) more, with an average of £150,495. According to Rightmove, property is now 55% more expensive in southern regions than the rest of England and Wales, up from a low of 46% in September last year.

But high house prices and the cost of living in London could actually work to self-starters outside of the capital, Mr Mavir believes.

"The cost of living is so high in London that you'd think twice [before] quitting your job and starting out on your own," he said. "It would be harder to survive."

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