The top 9 angel and VC investments in Northern tech companies in 2016

funding, Early Stage, Late Stage

Vicki ShielVicki Shiel, January 19, 2017

This article was originally posted on the Tech North website.

It’s no secret that tech and digital businesses in the North of England find it more difficult to access capital than their London-based counterparts. We hear it from the startups we work with, but it’s also backed up by data.

According to investment data provider Pitchbook, there were 471 angel and VC deals in 2016 for London-based tech businesses. By comparison there were just 27 in the North.

With this in mind we decided to take a look at the top angel and VC investments in Northern tech last year.

This list features deals over £1m excluding grants, mergers and acquisitions, expansion and IPO deals, with the data taken from Pitchbook.

How does 2016 compare with 2015?

Overall the year-on-year trend is positive. In 2015 there were just 18 deals totalling £10.1m invested. In 2016 there have been 27 deals totalling £31.4m invested.

In 2015 there were just four VC deals over £1m according to Pitchbook data including Science Warehouse (£2m), Funding Options (£2m), Cocoon (£1.97m), and Realsafe Technologies (£1m).

But there is still a way to go to ensure tech and digital businesses in the North of England have improved access to capital, as Tech North’s Head of Investment Strategy James Bedford explains.

“Few would argue with the quality of tech companies in the North of England, with Tech North initiatives such as Northern Stars shining a light on the very best early-stage businesses. In fact, winners of that programme have found it far easier to raise investment with their pitch decks and are now sought after by investors. But for other tech companies, the process of finding investment is hard, as seen from the survey results in Tech Nation and feedback that highlights issues such as knowledge of how to access investors, lack of SEIS/EIS funds, fewer VCs and angels, insufficient pitching opportunities or investment-readiness support and the fact that there simply isn’t enough capital to meet demand,” he says.

Why the North needs a Co-Investment Fund

Tech North has been in talks with government over the last year about a co-investment fund and will be submitting a formal proposal later this month requesting £30m, for consideration in the March budget. “The fund will act as a hub for investment, coordinating a range of private investors and encouraging more to join a new, more dynamic investment ecosystem. For companies looking to raise, there is not only an easily accessible hub to engage with a range of investors, there is also new investment capital and partnerships to ensure all their growing investment needs can be met,” James explains.

“The North loses too many of its best companies to London, the US and other better-functioning investment ecosystems. We also fail to attract the best. The news is not all bad though. It’s positive that three times as much money was invested in 2016 compared to 2015, and a co-investment fund would look to help solve the problems,” he adds.

It’s difficult to identify trends based on the nine investments in this list but, James notes, it’s interesting that the larger investments came from investors based outside the North, reflecting the lack of Tier-1 VCs here. “It seems that external capital is happy to invest in large rounds with Northern companies without requiring tech companies to move their HQs, but there is less appetite to back growth in smaller rounds. It begs the question as to whether the public sector should try to ‘fill the investment gap’ more, and whether the private sector is being pushed out by the publicly backed VCs who backed many of the smaller rounds,” he adds.

Of the nine angel and VC investments over £1m, two of the companies are based in Newcastle and the remaining seven are based in the North West. James notes that the broad range of company types on the list is typical of a burgeoning rather than a developed ecosystem. “Even if we continue a trend of investing three times as much each year, it will take a long time to catch up with London and other tech hubs. Investment is happening though, and the information provided by the companies reveals some interesting clues about how to position your tech company in order to successfully raise.”

The top 9 angel and VC investments in Northern tech in 2016:

1. Performance Horizon

Performance Horizon

*Image courtesy of Newcastle Journal

Performance Horizon offers an enterprise SaaS platform for scaling partnerships. The platform enables customers to manage partnerships at scale, optimise partner performance, automate reconciliation, integrate data into existing workflows and systems via the open architecture, and process partner payments globally in over 60 currencies and 185 countries.

Based: Newcastle

Sector: Marketing-tech

Stage: Later-stage VC

Deal type: Series C

Deal size: £12.6m

Active investors: DN Capital, Greycroft Partners, Mithril Capital Management

Commenting on the investment, CEO Malcolm Cowley said: “The funding represents new investment from the Greycroft Growth fund and additional investments from existing investors Mithril and DN Capital as well as individual shareholders to accelerate our global growth. In 2016, Performance Horizon added several global 1000 companies in the travel, financial services, and retail verticals to its global customer base, as well as expanded relationships with global digital agencies. The company continues to capture market share across all target markets with its SaaS solutions. This growth reflects how brands are rapidly migrating towards scalable technology to drive maximum growth and ROI for their partner marketing programs.”

“Enterprises are investing heavily in performance marketing technology as a way to efficiently increase their digital sales and maximise their marketing budgets. By leveraging our global technology and services platform, our customers can rapidly build out revenue-generating partnerships around the world. This financing allows us to invest even faster in this huge market opportunity and execute on the next phase of our vision.”

2. Due Course

Due Course - founders

Due Course offers a cloud-based online platform for small and medium-sized businesses to access cash tied up in their unpaid invoices.

Based: Manchester

Sector: Fin-tech

Stage: Early–stage VC

Deal type: Series A

Deal size: £6.25m

Active investors: Alex Chesterman, Global Founders Capital, Rocket Internet, Simon Franks

Commenting on the investment Paul Haydock said: “It’s quite humbling to know the extended angel round of investment was actually oversubscribed. But by securing the largest investment for a fin-tech company outside London, we can only hope it will go on to inspire fin-tech companies, just like ours, searching for funding. As we aren’t a peer-to-peer lending marketplace, we do the lending ourselves, and £5m of the investment is to facilitate this. The other £1.25m is for growth, along with scaling and improving our real-time decision engine.”

Due Course is one of the 10 winning companies of our 2016 Northern Stars programme.

Related: Watch how these 10 startups won Northern Stars 2016

3. Purple WiFi

Purple WiFi provides cloud-based WiFi services. The company teams up with businesses in the retail, hospitality, and leisure sectors to provide, secure, content, filtered access to free WiFi for visitors to those businesses, while tracking real-time analytics on those users.

Location: Ashton-under-Lyne

Sector: Cloud services

Stage: Later-stage VC

Deal size: £4.5m (£3m new round, £1.5 new funding from existing investors)

Active investors: Bob Willett, Iain MacDonald, Juno Capital, Terry Leahy, William Currie

Commenting on the investment CFO Pete Lee said: “We managed to secure £3m of venture debt which is obviously less dilutive for existing investors than pure equity. Venture debt as a proposition is becoming more and more prominent in the market. Many entrepreneurs are looking to access capital but are reluctant to give part of their business away. I’d encourage those business owners to explore it as an option. We used a niche lender, rather than one of the big four. We’ll be using the funds for future growth and product development.”

4. Eviid

Eviid offers a mobile technology platform that enables users to stream live events from their mobile phones to central servers.

Location: Liverpool

Sector: Mobile

Deal type: Later-stage VC

Deal size: £1.5m

Active investors: Enterprise Ventures, The North West Fund

Note: This information has been taken from Pitchbook and has not yet been verified by Eviid who were unable to respond before publishing.

5. Screach

Screach offers an interactive digital marketing platform for venues. The company offers a software platform that enables businesses to drive customers to their venue through the use of TVs, digital media, mobile and social.

Location: Newcastle

Sector: Marketing-tech

Deal type: Later-stage VC

Deal size: £1.13m

Active investors: Angel CoFund, Hotspur Capital Partners, Max Capital Partners, Northstar Capital, Northstar Ventures

Commenting on the investment Screach CEO Robert Rawlinson said the new round of funding will enable the company to build on its success in the pub market, and to target large addressable markets in other sectors: “We see great application for Screach’s dynamic, data-led, and content-focused approach to digital signage across the broader hospitality sector, as well as in retail – both in individual stores and in shopping centres. Meanwhile, the ever-increasing popularity of ‘in-play’ betting on live sport creates interesting opportunities in gaming and gambling. This funding will also help us take on more opportunities outside the UK.”

6. 360 Studios

360 Studios was founded by games and tech industry veterans Rick Giolito (creator of EA’s Medal of Honor and Knockout Kings) and Sean Salloux. The company was formed with a mission to create an immersive social mobile game set in the world of Mixed Martial Arts. Their hit game, MMA Federation is available on both Android and iOS in over 120 countries, reached #3 in the USA, #1 in Brazil, Singapore, Hong Kong, #5 in the UK,  and is played by over a million people worldwide.

Location: Manchester

Sector: Gaming/apps

Deal type: Angel

Deal size: £1.5m

7. Ruler Analytics

Ruler Analytics - team

Ruler Analytics has developed a visitor-level website analytics and call-tracking tool. The company provides cloud-based website analytics software that enables customers to measure their marketing activities. It also helps businesses to track website visitors, enquiries, phone calls, bookings or purchasing behaviour of customers and can push this data by way of API integrations to CRM products, case management platforms, Google Analytics, AdWords and DoubleClick.

Location: Liverpool

Sector: Data and analytics

Deal type: Early-stage VC

Deal size: £1.02m

Investors: AXM Venture capital

Commenting on the investment, director Daniel Reilly said: “We initially funded the sales, marketing and development of a prototype and beta product ourselves in order to establish a product-market fit and to get us to proof of concept and early-stage revenues. At this stage we decided to reach out to traditional investors and institutions and found a good fit in AXM pretty early on. The key for us was to stretch our own resources in order to test our own hypotheses and see if our idea was viable and could be sold and retained by more than 20 marketing departments in credible companies. Once we had proven this we felt comfortable pitching the business to VCs as we had actually built something, it was not just an idea.”

Related: Announcing the 20 startups taking part in our Northern Stars Grand Final

8. Peak

Peak Business Insight

Peak offers a subscription-based data analytics service that’s fully outsourced, deployed quickly, and delivers value immediately. The company helps its clients grow revenues and profits by solving complex problems with technology and intelligence using their company data.

Location: Manchester

Sector: Data and analytics

Deal type: Seed round

Deal size: £1m

Investors: Praetura Capital and other undisclosed investors

Commenting on the investment CEO Richard Potter said: “The purpose of seeking investment for Peak was to accelerate our strategy of becoming the pioneers of Data Analytics as a Service (DAaaS). Having been a profitable bootstrapped company from day one, we found ourselves in a strong position to select the right investor for us, meeting as many investors as possible, and ensuring the terms of any deal were favourable. We’ve used our funding to hire key talent into our product, marketing and sales teams, allowing us to invest in the development of our service and acquire new customers at a significantly increased rate.”

The company received the investment after taking part in Tech North’s Northern Stars 2015 programme.

Related: Peak raises £1m to make businesses smarter with data

Related: Peak – the dons of data-as-a-service

9. Data Centred

Data Centred provides cloud computing services, for both computer and storage infrastructure.

Location: Salford

Sector: Cloud services

Deal type: Early-stage VC

Deal size: £1m

Investors: Enterprise Ventures, Greater Manchester Investment Fund, Individual Investor, Jonathan Moulton, Perscitus Advisers, and debt funding from Barclays Bank PLC

Commenting on the investment CEO Mike Kelly said: Existing investors have continued to support the business, alongside debt funding provided by Barclays. The funding allows the business to expand the cloud infrastructure to support our key markets of central government, the research community and compute heavy commercial users.

Have we missed any? Let us know in the comments below…