Report hails Birmingham as an innovation hotspot - but funding gaps remain for tech firms

The Birmingham city-region is a hotbed of innovation, in a boost to its growing tech sector, according to a detailed analysis by Mills & Reeve as part of its Top tech cities campaign.

The law firm’s report shows the West Midlands, powered by Birmingham city region’s cluster of innovative tech companies, is one of the best performing regions for the granting of patents and the area’s universities are among the best in the UK at incubating and spinning out high-tech firms. 

Innovation and higher education institutions with a track record of nurturing early stage tech companies are recognised as important components in developing world-class tech clusters. 

The West Midlands – an economy driven in large part by Birmingham city region – is home to over 140,000 tech workers, with startups valued at £15 billion, according to TechWM, which represents the region’s tech economy.

In Top tech cities, Mills & Reeve analysed a range of data points from authoritative sources to create a rounded picture of the various components that make a city region competitive in nurturing high-growth tech businesses.

The firm’s experts found the West Midlands, including Birmingham, as the best-performing UK region outside the south of England for patents granted by the Intellectual Property Office (IPO) – 398 in 2023 and 406 in 2024.

Three universities in and around Birmingham – the University of Warwick, Coventry University and the University of Birmingham – are in the top 15 in the UK for incubating and spinning out early-stage businesses in high-growth sectors, according to the Higher Education Statistics Agency.

However, in 2024, the West Midlands accounted for only 1.6 per cent of all venture capital and private equity investments by value, data from industry body the BVCA shows.

Looking at two tech-focused sub-sectors (information and communication technology, and biotech and healthcare), 35 West Midlands businesses secured investment worth £200 million. 

Office take-up in Birmingham in Q2 2025 was only 110,000 sq ft compared to 262,000 sq ft in Manchester and 133,000 sq ft in Cambridge, data from CBRE shows.

And in Birmingham, technology, media and telecoms (TMT) businesses accounted for only 8 per cent of space let in the 12 months to June, versus 31 per cent for Manchester and 74 per cent for Cambridge.

Mills & Reeve’s analysis of LinkedIn jobs data, using keywords to evaluate openings, shows about 7,600 tech roles which indicates the sector is at the centre of job growth in the region. 

Mills & Reeve’s tech sector specialists said the research demonstrates that Birmingham has the foundations, in the form of an innovation ecosystem and leading universities with a track record of spinouts, to become a top tech city.

But it has work to do to provide businesses with the support infrastructure to scale up and rival the most successful tech hubs in the UK and globally. 

Jayne Hussey (pictured), partner and head of Mills & Reeve’s Birmingham office, said: “It’s really encouraging to see our analysis confirm what we believed – that Birmingham has an ecosystem of innovators and top-class universities that help to provide brilliant foundations for building a truly world-class tech city. 

“The research also points to areas that Birmingham should address to improve its offer to tech sector businesses.

“The venture capital and private equity funding for businesses in scale up mode is not as abundant in the city and the wider region as in other areas, and in Birmingham, tech businesses aren’t taking as much share of the office space market as we would like. 

“The path to Birmingham’s goal of becoming a multi-billion-pound tech economy must be built on the foundations of collaboration.

“TechWM is doing great work in bringing together organisations with a stake in the region’s tech future and it’s reassuring to see West Midlands mayor Richard Parker put the sector at the heart of his ambition to boost the economy and create 100,000 jobs.

“At Mills & Reeve we’ll continue to play our part by providing advice and support to the tech businesses that will drive Birmingham's growth, giving them the confidence to fulfil their potential.”