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The Early-Stage Investment Ecosystem in the North

Last week we delved into the early-stage investment ecosystem in the North during The UKBAA Early-Stage Investment Summit in Manchester, exploring the challenges and discussing the realities of investing outside of the South East. 

Research carried out by Praetura Ventures and Beauhurst for their ‘What’s Powering the Powerhouse’ white paper found that only 16% of the UK’s high-growth companies are headquartered in the North and that only 7p out of every £1 invested in the UK in 2021 went to Northern businesses.

While investment has grown in the North, the disparity with London and the South East is still evident.

What is the government doing to redress the funding imbalance? 

In February 2022 the UK government pledged to increase domestic public investment into Research & Development (R&D) by at least 40% across the North, Midlands, South West, Scotland, Wales and Northern Ireland in its ‘Levelling Up’ white paper. The Department for Business, Energy and Industrial Strategy (BEIS) has committed to investing at least 55% of its domestic R&D funding outside the Greater South East by 2024/5.

The ’Levelling Up’ white paper also announced the launch of 3 new Innovation Accelerators, centred on Greater Manchester, the West Midlands and the Glasgow-City region. The pilot will see £100 million of new government funding made available between 2022-25 to local businesses and researchers to turbo-charge local growth.

The aim is to spread opportunity and prosperity across the UK and to allow devolution of powers, empowering local communities in every part of England.

What sectors and trends are emerging in the North?

The pandemic has resulted in the ecosystem exploding thanks to the shift to digital in terms of meetings and pitch events. Making the North more accessible to investors, rather than just those based in and around the major cities, talent is staying in the regions instead of moving to London, which has historically been the case.

Businesses in the North are tackling a variety of sectors but there are definitely some strengths beginning to emerge. With a real global focus on sustainability right now, there are lots of ‘profit for purpose’ opportunities across the North, and sectors such as A.I., Data Science, HealthTech, FinTech and HRTech are proving to be particularly strong.

What is in place to help investment in the North? 

The North has a budding early-stage investment landscape with angel groups, investment funds, and support mechanism in place, which come together to mobilise investors and drive more equity finance into businesses.

For entrepreneurs and investors alike, there are a variety of places they can turn to for help in the North. Whether that be for accessing investment or for support as a business prepares for investment, or for investors seeking inroads to new angel groups or co-investment opportunities – the North is emerging as a hot spot in the UK.

Below a few organisations are listed that actively work across the North to support the early-stage ecosystem:

ACF Investors 

ACF manage active co-investment funds that seek to achieve consistent returns by partnering with experienced syndicates of angel investors to help fund and scale early-stage businesses. Over the past 10 years they have invested £65 million in over 100 companies. 

https://www.acfinvestors.com/

Angel Groups 

Angel Groups matches angel investors with high-growth SMEs across all sectors through pitching sessions and an online member hub where angels can browse investment opportunities.

https://www.angelgroups.co.uk/ 

Manchester Angels 

A new angel network that specialises in investing, nurturing and mentoring high-growth potential and game-changing tech businesses based in the North West of England.

https://manangels.co.uk/

Northern Gritstone

Based in the North of England, Northern Gritstone is founded by the Universities of Leeds, Manchester and Sheffield. With the aim of being one of the largest investors into academic spin-outs in the United Kingdom, Northern Gritstone looks to finance companies in sectors such as advanced materials, energy, health technology and cognitive computation.

https://northern-gritstone.com/

NorthInvest 

A not-for-profit organisation that helps diverse and digital start-ups across the North of England raise angel investment and provides access to expert support to help founders and entrepreneurs. 

https://northinvest.co.uk/

Praetura Ventures

Praetura Ventures offers founders, advisers and investors expert support to help them build the best business they can. From growing a business to staffing and investment, they help business owners realise their full potential.

https://www.praetura.co.uk  

River Capital 

River Capital is based in Liverpool and it helps small and medium-sized businesses accelerate their growth. As well as providing flexible funding solutions, they offer their expertise to help founders and entrepreneurs grow their business. 

https://rivercapitaluk.com/

The Strength in Places Fund (SIPF)

A UKRI programme, the Strength in Places Fund is open to any sector, area of technology or research discipline. It helps areas of the UK build on their existing strengths in research and innovation to deliver benefits for their local economy.

https://www.ukri.org/what-we-offer/browse-our-areas-of-investment-and-support/strength-in-places-fund/

 

Useful resources

UK Research and Innovation’s Plan for Action

Praetura Ventures’ ‘What’s Powering the Powerhouse’ research

 

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By UKBAA 06 Dec 2022