The rapid growth of tech companies in the North of England creates great opportunities for investors, who play a vital role in fuelling that growth. In a perfect market, the best opportunities would secure investment easily.
But we know from research that the current investment ecosystem is imperfect, leaving great opportunities unrealised and companies moving away from the North.
Northern tech companies are less likely to benefit from EIS/SEIS tax-incentivised investments and find it hard to locate the right investor for them. Investors struggle to access deal-flow from across the North and new investors find it hard to engage with Northern tech start-ups. The Tech Nation report tells us that raising investment is the biggest or second-biggest issue facing tech companies in the North.
We want to see an investment ecosystem that can match the ambitions of tech entrepreneurs. Starting at the beginning of the investment journey, we need an angel community connected across the North with syndicates focussed on the full range of sub-sectors and new angels joining the community.
Links with super-angels and the venture capital market will be strong, enabling tech companies to easily navigate up the investment ladder. Northern-based VCs, and investors from other parts of the country will be embedded within the investment ecosystem. A healthy level of competition will ensure tech companies have a strong VC market to choose from. Professional services, advisors and banks play a key role in supporting all levels of the ecosystem.
This utopian vision is not unattainable, and helps to guide our direction of travel. Tech North has taken on this task and has been building solutions to support the investment ecosystem, to enable it to match the ambitions of the region’s tech entrepreneurs. After much consultation and help, we have focussed on the initiatives below:
In January 2017 we submitted a proposal to government to create a pan-Northern coinvestment fund which aims to coordinate investors, create a more competitive environment, make investors easier to access and support founders and angels to be investment-ready. We want to build a stronger ecosystem where private investment meets the needs of the best investor-ready companies.
The proposal has public-sector backing from across the North, support from tech entrepreneurs and already has over 30 investors declaring an interest in becoming investment partners. We are in talks with BEIS, DCMS and the British Business Bank about how to fund the proposal in the Autumn Statement from government.
We will be setting out the arguments for the co-investment fund In October and November, look out for more articles on our website.
Angel community support
Angels play a vital role in the growth of young tech businesses, and we have some great examples of this happening in the North. But finding the right angel can be hard. We are increasing the capacity of the angel community by supporting new tech angels and new lead angels through a series of workshops, pitching and networking events between now and March 2018.
We are collaborating on this programme with lots of our partners, with the aim of creating an open community with a philosophy of sharing deals and engaging with entrepreneurs. We want to see a thriving angel community that is well connected to venture capital firms, advisors, entrepreneurs and local support organisations such as the growth hubs.
The new syndicates and networks that form around the programme of support will support the co-investment fund as it launches, ensuring that there is sufficient local investment to utilise the fund and add value to the growing tech companies.
Image credit: Taylor Herring / Flickr