Capacity, Connectivity and Capability: the 3 Big ‘C’s That Can Help Regional Investment Landscapes Evolve
Jordan Dargue, Innovation SuperNetwork
Jordan Dargue, Head of Access to Finance at Innovation SuperNetwork, says changing economic conditions mean accessing finance for small businesses can be extremely challenging. The economic impact of Covid-19 has certainly had a significant effect on innovation-led and early-stage businesses seeking sustainable funding for the future, as detailed in the UK Business Angel Market 2020 report, by the British Business Bank and UKBAA.

Even before the pandemic, regional investment ecosystems, particularly that of the North East, were less mature, attracting less investment than elsewhere in the UK. Yet, nationwide there is a significant challenge in meeting the demand for high-growth potential investment opportunities with the supply of innovation-led start-ups and scale-ups. Enabling connectivity is key to build out capacity and capability and ensure that the North can continue to grow and develop through innovation.

Accelerating Investment in the North

Last year, we launched the Accelerating Investment and Innovation Summit as a way of bringing together the investment ecosystem’s key players in discussing the challenges facing both investors and early-stage businesses seeking finance.

We generated some interesting discussions amongst policy makers, and we’ve continued to work locally with the North East LEP, and nationally with Innovate UK, alongside other agencies on addressing some of the issues highlighted. One of the key things that came out most strongly was the need to build connectivity to further build capacity within our ecosystems. Next month (23rd September 2021) we’re running with this subject as the Summit returns for a second year, delivered in partnership with the British Business Bank.

Once again, we’re bringing together national and regional parties to discuss the challenges in overcoming supply and demand issues whilst exploring the future of early-stage investing across some of the fastest growing innovative sectors. Building connectivity is essential for regional investment success, but the backdrop we’re working against is distinctly different to more developed areas. For the North East and wider North, we should focus on our strength in bringing people together leveraging what we have available and addressing capacity gaps and capabilities where we see them.

At the summit we’re hoping to dive more deeply into the connectivity issues experienced by both investors and businesses in an interactive design-thinking session with both parties. But one pragmatic response to tackling the connectivity challenge and supporting the net-zero carbon emissions agenda is already being spearheaded by the City of London Corporation to support green entrepreneurs throughout the UK by connecting them to the Square Mile’s expertise and resources.

Building connectivity with finance for sustainable growth

The City of London Corporation is working with regional partners to showcase the North East’s initiatives in green innovation and associated enterprises to a wider investor base. The aim is to intensify the region’s connections to London and its global network to boost the flow of green investment to the region, which has been identified by the City of London as holding considerable untapped potential for investors in Green Tech and associated sectors.

The project sets out to do more to help businesses developing green innovations to access the finance they need to scale up. As it currently stands the North East has a good level of sustainable innovation activity, with a developed university research base and ecosystem.  The ecosystem is fairly well connected, with key players (NELEP, pan-University community, funds etc) already working together on various initiatives. However, this all needs to be made more visible to investors and connected with the London Financial Services sector and large corporations.

The Innovation SuperNetwork forms part of the Finance for Sustainable Growth steering team, working with programme partners in bringing the described ecosystem together, and we’re excited to welcome the City of London to the Summit to elaborate on the potential for the project.

Of course, this isn’t the only initiative to enhance connectivity between investors and innovators. The continuation of Innovate UK’s Regional Angel Investment Accelerator (RAIA) programme, which was originally piloted back in 2019, has seen a further investment of £6m to continue stimulating angel investment in the regions, including across the North. The initial £1m of funding, which we deployed in partnership with the North East BIC, NorthInvest and the UKBAA, helped to leverage over £1.7m of angel investment in early-stage companies.

The funding also played a role in catalysing the growth of the Newcastle Angel Hub, which has seen rapid growth and accelerated private investment capacity for the North East. However, we are still far behind other regions, and we need to consider new ways of connecting capacity and enhancing the capabilities of the investment landscape to shape the overall economic landscape in the North East and wider North.

To ensure we are able to tap into public investment funds, we have to build out capacity by developing the private investor landscape. Effective angel groups can lead to better pipelines of more impactful investment opportunities. Developing regional syndicates can support the ability to co-invest, giving new angels a landing place to learn and be educated alongside more experienced investors.

We launched the Accelerating Investment and Innovation Summit to bring policy makers together with investors and businesses to better understand and tackle the issues experienced by all sides. To join the discussion, register via: https://supernetwork.org.uk/investment-summit/

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