A prominent investor in the North East has expressed confidence that the region will witness a robust flow of deals in the forthcoming years. Maven Capital Partners, which oversees various funds in the region, including the equity component of the Northern Powerhouse Investment Fund II (NPIF II), has indicated optimism due to its current deal pipeline and the diversity of businesses that have sought its financial support.
Rebecca MacDermid, an investment manager at Maven’s Newcastle office, reported that previous impediments to business growth, such as inflationary pressures and high interest rates, are beginning to diminish. This change has resulted in a renewed interest in growth capital among regional firms. MacDermid stated, “We have been in the region for quite a few years now, and we’re feeling very optimistic about what the next year/two years looks like. Not just because of NPIF II but because of the deal flow that we’ve got and the range of businesses that we’ve seen come to us for a chat.”
Since the launch of the £660m NPIF II in March, Maven has received over 150 applications from North East companies and entrepreneurs across various business types and stages. This influx is particularly noteworthy given the British Business Bank’s recent data, which highlighted that the North East lagged behind other UK regions in terms of deal volume and value between 2021 and 2023. The region accounted for merely 2.7% of the UK’s overall deal activity, with the total value of investments dropping by 40% to £91m.
The North East’s smaller size and lower business density partly explain its disadvantage in national league tables. Moreover, MacDermid noted the scarcity of angel investors to initiate the investment journey before equity funding becomes viable. To mitigate this, Maven has adopted a “back to basics” approach to educate entrepreneurs about equity funding and to alleviate fears regarding investor control over their companies.
In addition to Maven’s efforts, other groups such as Innovation SuperNetwork and Lifted Ventures are working to bridge the gap in angel investments. MacDermid emphasised, “I work with some fantastic organisations such as Innovation SuperNetwork and Lifted Ventures, who really are trying to dig into how we can change this because we know it’s a problem, we know getting angel investment is really difficult but let’s stop talking about it and start thinking about how we can change this.”
Another focus is on creating identifiable success stories to inspire confidence. Maven has invested in several non-North East businesses that have established operations in the region. Examples include the ecommerce specialist Revlifter and fintech company Pockit, both of which have set up offices in Newcastle, as well as the innovative Cambridge chip manufacturer Pragmatic Semiconductor, which has launched a multimillion-pound factory in Durham. MacDermid remarked, “It’s a really good example of some world class tech, which didn’t start in the region but has come to the region and now there’s a commitment to stay in the region. We don’t want people to come to the region and then leave because they can’t raise investment, for example. The fact they’ve been able to raise a substantial amount of capital is really attractive – case studies will build confidence.”
In summary, Maven Capital Partners’ optimism about the North East deals market is supported by a solid pipeline and growing interest from diverse businesses. While challenges remain, concerted efforts by Maven and other organisations aim to foster an environment conducive to investment and long-term growth in the region.