Co-investment Fund

Improving access to finance for tech companies in the North

Accessing investment finance is considered by tech companies in the North to be their biggest issue alongside skills.

For northern entrepreneurs there are several barriers that hamper their ability to raise. Investors too are disadvantaged by having a sub-standard eco-system in which to operate. Tech North are proposing a co-investment fund to address these challenges.

The current investor market does not function properly in the North, evidenced by the fact that over 70% of the digital economy sits outside London but only 44% of investments are made into companies outside London and the many examples of great northern companies now based in London and the US.

Co-investment fund
Angel of the North

Northern investors are spread disparately across a wide geography with investor networks based around cities leading to a rarity of investment deals involving investors from different areas. Start-ups struggle to find tech investors due to lack of accessible networks and pitching opportunities.

Despite significant wealth in the North, there are far fewer funds and investors than can satisfy the investment opportunities available. The ‘uneven playing field’ requires the ability to ‘onboard’ new and existing investors who are not investing in tech.

Government initiatives such as investment tax breaks are under-utilised with less than 8% of SEIS finance invested in Northern companies. Previous attempts to rectify the issues have had little impact. Other programmes on offer don’t coordinate and incentivise the private investors to enable a legacy of an engaged and dynamic investment eco-system.

The Tech North Co-Investment Fund will coordinate investors, building a new pan-northern network which can access more investment opportunities across the North. Leveraging additional capital, more rounds will close more quickly and an open network will enable more competitive negotiations. Tech companies can access the fund via the investment partners or can come directly to the fund and then be directed to appropriate investment partners, thus making it so much easier to find investors.

The proposal is being put to government with the promise of up to 120 companies receiving investment, over 1500 jobs being created and safeguarded and a strong return on investment. Co-investment funds work well in Scotland, London and across Europe, the North needs one to meet the demands of the fast growing tech sector and to support the investment community. Our proposal has already won an award from the UK Business Angel Association and has received very strong backing from the public and private sectors.