This paper presents a collaborative initiative within the North East of England which aims to grow and sustain a software industry, based on the strengths of regional players, including in particular the local university. The project Sunderland Software City has the ambitious aim of developing the people, the infrastructure and the business and enterprise culture to create and sustain a software industry within the North East. This paper focuses upon the role which the University of Sunderland plays within the project, and presents and reflects upon the model of knowledge exchange used. We also outline early results achieved and significant successes to date. Conclusions are drawn and comments made on the future directions of the project.