With some of the fastest growing digital clusters in the UK and a higher than average startup rate for digital businesses, the North requires substantial investment opportunities in order to realise its potential.
Several large funding services of European origin exist, including JEREMIE (the Joint European Resource for Micro to Medium Enterprises), which allows EU member states to use part of their allocated funding to finance small and medium business enterprises. The funds have a key role to play in the investment journey of Northern tech companies.
Recent news that the second round of JEREMIE funding may be allocated through a broader ‘Northern Powerhouse’ agenda has been received with much scepticism. Worries over whether a centralised funding structure will understand the varied local differences and most pressing issues within the North have been spreading.
The last round of JEREMIE funding is closing with a mixed legacy; there are four key lessons we must feed in to the second round of funding in order to create a new programme that directly addresses the needs of the Northern tech sector.
Firstly, whilst a pan-Northern fund has obvious advantages of scale, entrenchment within the tech communities in each of the North’s key cities is the only real way to avoid top-down perspectives that fail to take account of local economies. It is the networks of people within the North who provide the real link between opportunity and investment.
There should be at least two tech funds operating across the North to give the necessary competitive opportunities to tech companies. These tech-focused funds should be able to exclusively make equity investments. Other sectors supported by JEREMIE 2 are more suited to debt, the fund as a whole should be balanced to reflect this.
Co-investing alongside others is good practice, emboldening the linkages between investors and widening the investment network for the company. Making this a condition of delivery promotes the idea that JEREMIE 2 is part of a network and not a disconnected pot of funding offering terms that may be objectionable to those elsewhere in the network.
Finally, JEREMIE 2 must be practical and flexible when tackling issues such as follow-on funding and short-term investment contracts. The tech sector is growing fast, creating high quality jobs and economic growth across the North. Dedicated, long-term, purpose-built tech funds that reflect the needs of the industry could accelerate growth and provide strong returns.
If key lessons can be extracted from the closing funds and new thinking fed into the second round, then JEREMIE could become a vital part of the investment journey, delivering on the aspirations of the North’s people and businesses.
The potential for tech to be a key driver of economic growth in the North is clear. Despite the issues with the previous JEREMIE programme, there is significant potential for a refined second round of JEREMIE funding to make a significant impact on the investment landscape for tech.
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