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23rd October 2023

The Northern Powerhouse Investment Fund: backing university spinouts across the North

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Northern Powerhouse Investment Fund

Debbie Sorby, newly appointed Senior Manager to NPIF portfolio at the British Business Bank discusses the vital role of university spinouts in the Northern economy, and how the Northern Powerhouse Investment Fund is becoming a driving force behind some of the region’s most innovative university-backed entrepreneurs.

The North of England is home to some of the most innovative and forward-thinking businesses and entrepreneurs in the country. The latest UK Innovation Survey (2021) highlighted a jump in innovation active businesses across Northern regions; 48 per cent and 45 per cent in Yorkshire and the Humber and the North West respectively, a 9 per cent increase from 2019 in both areas.

Since its launch in 2017, the Northern Powerhouse Investment Fund (NPIF) has been at the heart of this, becoming a catalyst for innovation and backing more than 1230 companies with over £1bn of direct and private sector co-investment to date.

Innovation-led clusters

This month, British Business Bank’s 2023 Nations and Regions Tracker revealed the extent of this shift in recent years, with several Northern territories pinpointed amongst 33 innovation-led clusters identified in the UK. These clusters, which include Greater Manchester, York & Harrogate, Lancashire, Leeds City Region, Liverpool, Cheshire, and Sheffield City Region, are marked as key drivers for growth and technological progress across the UK.

Greater Manchester is leading the charge in the region, identified as the second most active innovation-led cluster outside of the Golden Triangle, having attracted 342 deals worth £1.1bn since 2011. Elsewhere in the North, Tyne and Wear was listed fifth of the 33 innovation-led clusters in the UK. Despite a decline in overall equity activity in the region with 76 equity deals worth £166bn in 2022, eight of these involved university spinouts, worth a total of £14m.

Spearheading the Northern spinout ecosystem

The strong and long-standing relationship between academics and the business community in the North is paving the way for unlocking potential in the regions. We are home to some of the largest and most impressive universities in the UK, not to mention the number of academic-led innovation hubs, including Sci-Tech Daresbury, Alderley Park, and Liverpool Science Park. It is therefore no surprise that academic spinouts are fast becoming a driving force for innovation-led change across most Northern regions.

In the South Yorkshire Mayoral Combined Authority area , for example, 33 per cent of Technology and IP related deals between 2011 and Q2 2023 were the result of spinouts concentrated in hardware and software, a much higher share than the UK average of 18 per cent. Powered by its high-profile engineering and manufacturing research offering, the University of Sheffield is dominating the local spinout ecosystem, making up 27 of the 34 total spinout deals in the region in the same period.

NPIF has backed several university spinouts since launch across Northern regions, all with notable success. In 2022 Dr Tim Craggs, an academic from the University of Sheffield who has developed a device that could revolutionise biological research, secured a £150,000 investment from NPIF – Mercia Debt Finance. Dr Craggs’ EI-FLEX device is a low-cost benchtop instrument that incorporates advanced software and will make single-molecule spectroscopy accessible to a much wider range of researchers and scientists. The funding, which was used to help fulfil the first two orders from the University of Massachusetts and Arizona State University, will also help the innovator to make further sales worldwide.

Elsewhere in Yorkshire, Slingshot Simulations secured a £750,000 finance package from the University of Leeds and NPIF – Mercia Equity Finance in 2021. Allowing businesses to use advanced computer simulations to test new ideas and better decisions, Slingshot Simulations struck up a partnership with Leeds University due to its strong record in transferring academic research to industry, in addition to access its innovation hub where academics and business collaborate to maximise commercial opportunities. The funding helped the Nexus-based business further develop its technology and break into new markets where it hopes to define a global standard for an Internet of Simulation to be used by anyone, anywhere.

NPIF has also supported Lancaster-based Relative Insight with a £1m equity investment. Established initially as a 10-year research project with Lancaster University’s linguistic and cyber security departments, Relative Insight now works with a range of blue-chip businesses such as DFS, McCann and John Lewis, to help in understanding language differences between key audiences. This intelligence is then applied in marketing optimisation, customer experience and employee engagement activities to improve business results.

The £1m investment from NPIF – Maven Equity Finance was part of a wider £4m funding package to support its expansion into the US with a new office in New York, while developing its technology platform to help companies drive business value from language data.

The future of innovation

Innovation-led businesses are transforming the future of the Northern economy and paving the way for a new era of technological advancements. By providing investment at critical points in the journey, NPIF is successfully supporting these businesses and entrepreneurs through R&D, geographic and product expansion, growing the team and diversifying into new markets.

The Northern Powerhouse Investment Fund project is supported financially by the European Union using funding from the European Regional Development Fund (ERDF) as part of the European Structural and Investment Funds Growth Programme 2014-2020 and the European Investment Bank. 

Editors Notes