Northern founders call for better support as funding gap costs UK economy £92bn

New research from Manchester-based venture capital firm Praetura Ventures shows the UK economy is losing a potential £92bn to GDP due to a lack of funding in the North.

The new report – What’s Powering the Powerhouse? – finds there is a capital shortfall via equity funding, accelerators and support which stands at £4.97bn in the North West, £3.8bn in Yorkshire and Humber and £1bn in the North East, totaling nearly £10bn. Based on current 2022 production per company figures in the North, the additional funding in each area would combine to create an additional £92bn of GDP.

A survey of 250 founders in the North of England found they saw this shortfall, with founders twice as likely to suggest their region lacked start-up capital compared to founders in London and the South. is. Business leaders in the North were also more concerned about their access to finance than any other region in the UK.

Britain’s tech and life sciences sectors have seen record funding figures for start-ups over the past 18 months, but this is increasingly centered around London.

80% of venture capital funds are based in London and deploy 69% of their capital directly into their surrounding businesses, according to consultants Beauhurst. The benefits of proximity to funding have been noticed and highlighted by others, with 65% of founders in the North of England suggesting they want investors to be present in their area.

78% of founders in the North of England want to be part of an active ecosystem because of the benefits it will bring, offering better access to funding (63%), support networks (41%) and events ( 41%) and improved support. attract talent (41%). It is also the region most likely to host public and private sector organizations to achieve this.

Founders in the North of England were most likely to seek funding that offered additional business support to help them grow their business beyond any other region. This was in direct contrast to London and the South East founders who most favored access to an investor’s network.

The founders of the North also revealed that success stories in the region, such as AO, THG and Very Group, were a source of inspiration. 57% of founders in the North suggest such examples have encouraged them to set up their business outside of London and stay in the region, with a number citing the role of the media in elevating these stories as a critical factor in their decision.

David Foreman, managing director of Praetura Ventures, said: “Despite the lack of funding, the North was the most attractive part of the UK to expand for businesses outside the region. As recent million-pound tech valuations come into question and a moment of scrutiny draws near, voices from across the region are calling for a rebalancing of the distribution of funding to help fuel further successes. The results of our research present a series of challenges that will require great collaboration. However, with the potential opportunity before us, it is a worthwhile opportunity.

Leave a Comment