Investment: unpicking the intersectional challenges that face regionally based founders

20 October 2023

Last month we launched our new Pathways to Funding programme. An Access to Finance and investment ecosystem co-ordination programme, funded by the North of Tyne Combined Authority with the aim of improving opportunities for businesses to access suitable finance.

At the same time, we’re finalising and mobilising a project with a similar remit on behalf of the Tees Valley Combined Authority.

The importance given to this work from policy makers in the region highlights the significant need for the funding journey regional businesses take to be simplified and enhanced. Not least as the region navigates a challenging macro-economic landscape with changes to publicly backed funds made available to North East businesses creating a greater gap for early-stage equity investment. This is especially important for those founders who see themselves as being ‘non-traditional’ or who come from a traditionally underserved community in business.

So it came as no surprise last week when both British Business Bank and Beauhurst highlighted critical disparities within the investment landscape, particularly affecting diverse founders and early-stage startups in specific regional clusters.

Whilst it was reassuring to read that Tyne & Wear is listed as one of the top five ‘innovation clusters’ outside of the Golden Triangle for securing equity investment in the British Business Banks Nations & Regions tracker 2023, Beauhurst’s report on Diverse Founders in Advanced Digital Technology highlighted that non-male and ethnic minority founders still face significant hurdles when trying to secure equity finance.

Businesses located in areas located outside of the Golden Triangle, or within an area where the ecosystem is poorly connected and supported face multifaced challenges, ranging from access to suitable funding avenues to the need for more robust support networks. Visibility with investors and funds for these businesses is limited. When founders are from under-represented groups, these issues are exacerbated further with additional hurdles in their way.

At Innovation SuperNetwork our role is not just as facilitators, but as active enablers, leveraging our network, resources, and expertise to drive meaningful change.  So how do we – as an ecosystem – come together to achieve this change?

Empowering Diverse Founders: First of all we need to think about equitable opportunity for businesses to access finance. Dedicated funding avenues and structural support for entrepreneurs from historically underrepresented groups is critical to moving the dial on this issue. This empowerment extends beyond capital provision; it encompasses mentorship, business and opportunity refinement, and the forging of expansive networks. We know investors are more likely to support a business that has a founder they identify with. So it is critical that we grow the diversity of investors within a two-hour radius of the region to ensure our founders have increased opportunity for success.

Cultivating Innovation Clusters: By invigorating innovation-led clusters with not just capital but intellectual and infrastructural resources we can better facilitate relationships between startups and seasoned organisations to provide a collaborative space for innovation. One way to do this is to work with funds, investors, policy makers and corporates who have an interest in supporting innovation in key areas. This could be industrial or societal, but by zeroing in on a challenge area – like Net Zero for instance – we can better support businesses to collaborate, connect, innovate and secure investment for new to market products and services that could make a real difference.

Economic growth in specific geographies. British Business Bank highlights specifically the challenges facing businesses in coastal areas. Like other geographic areas that don’t see an equitable share of investment – like the North East as a whole – a holistic strategy is needed. One that recognises the complex and specific nature of these challenges and delivers interventions that breaks down the biggest hurdles facing business in these areas. This will encourage pioneering investments in innovative technologies and digital transformation.

Facilitating more Angel activity within two hours of the region.  Investors are more likely to invest in a business if they’re located within two hours of that company. Increasing the number of active investors within this radius is critical to ensuring we can bridge the gap left for early-stage equity investment. We have already grown an investor network for the region, bringing relevant deal flow to support North East companies. By further animating this space and encouraging more investors to get involved we will continue to increase opportunities for businesses.

Synergizing Angel Syndicates and EIS/SEIS Funds: This requires collaborative venture. Furthermore, our role with EIS and SEIS funds could be pivotal, serving as a linchpin between these financial instruments and the burgeoning startups eligible for such funding. Critically education is key and we need to work with both investors and businesses to ensure we’re unlocking the potential in these funds.

Through the Pathways to Funding Programme, we are uniquely positioned to provide targeted support, bridging the gap between investors and enterprises and democratizing access to essential resources and funding.

With dedicated policy on these issues coming from both the North of Tyne and Tees Valley Combined Authorities, ecosystem coordination is a proactive response to the identified challenges.

Focussing on both the demand and supply of investment and funding we’re taking a two-pronged approach to enable more businesses to secure investment and ensure the investment landscape they’re tapping into is more robust and better connected. Catalysing economic growth for the region.

Tailored Support for Diverse Founders: By recognizing the unique barriers faced by entrepreneurs from diverse backgrounds, we can customize our support programs to address these specific needs, thereby fostering an inclusive investment culture.

Enhancing Regional Investment Appeal: We will actively showcase the North East’s investment potential by highlighting success stories, organizing pitch events 2.0, and facilitating direct interactions between investors (locally, nationally and globally) and local startups.

Educational Programs and Resource Provision: We provide comprehensive educational content covering various facets of funding, legal aspects, pitch crafting, and more for both businesses and investors.

Building a Collaborative Investment Community: Beyond connecting startups with investors, we are cultivating a community where experienced entrepreneurs, mentors, and investors can exchange value through knowledge-sharing, feedback, and collaborative opportunities.

Learn more about the work we’re doing and how you can get involved.

By Estelle Blanks, CEO
Innovation SuperNetwork

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