This article was originally posted on the Tech North website.
Investment in Northern tech businesses is continuing to thrive, but will the growth in investment keep pace with the ambitions of tech entrepreneurs? We investigate in the first Tech North Investment Index report.
2016 was an excellent year for investment in Northern tech companies with a total of £201.2m invested, according to the new Tech North Investment Index. This represents a rise of 916% from £19.8m in 2007, with the most significant growth taking place in the past three years as the sector began to take off.
More deals were done in 2015, with 93 deals to 2016’s 70 deals. And the biggest jump in capital invested from one year to the next was seen in 2014 when the figure jumped from £23.7m in 2013, to £169.6m in 2014.
The data confirms that 2016 marked a promising year for the sector, reflecting a growth in ambition as well as the digital ecosystem of co-working spaces and accelerators, as Tech North’s head of investment strategy explains: “It’s encouraging to see the 916% growth in investment finance going into Northern tech companies over the last 10 years and even more encouraging to see that last year was the best year to date. And the fact that more than half the top angel and VC deals were done in the last two years indicates an improving investment ecosystem.”
But the growth in investment must keep pace with the huge ambitions of the region’s tech entrepreneurs, he adds: “The North’s digital ecosystem is still at an early stage but it has huge potential. This potential will only be satisfied if the ambitions of the entrepreneurs are matched by an ambitious investment ecosystem. The recent growth is promising but investment is still seen as a key issue by Northern tech companies. This is something we highlighted in our proposal to government for a pan-Northern Co-Investment Fund”
The top eight deals over the past 10 years were all private equity growth or expansion deals. But the largest number of deals over the 10-year period were either early or later-stage VC deals, with the largest VC deals being The Hut.com (£19.4m, £13m and £10m), and Performance Horizon (£10.8m).
The dominant sectors throughout the 10-year period when it comes to capital invested are e-commerce, fintech, and SaaS. But when we look at the number of deals, SaaS is the clear leader. Notable SaaS deals include Reality Mine market research technology (£11.49m, 2015), Performance Horizon marketing software (£10.8m, 2016), Performance Horizon (£8m, 2015), Due Course financial software (£6.25m, 2016), and Purple WiFi wireless services (5.32m, 2016).
The North West leads for number of deals over the 10-year period with 48% of all deals recorded, with the North East at 28% and Yorkshire and the Humber at 24%. Newcastle’s Performance Horizon stands out as one of the most prolific raisers over the past 10 years having made seven deals since 2010, securing finance each year except 2014. In Yorkshire and the Humber top deals include Team 17 Digital (£16.57m, 2016), Pharmacy2U (£10m, 2016), and Ten10 (£5.5m, 2015).
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