When attracting equity investment to the North we shouldn’t just level up, we should leapfrog!

By Estelle Blanks, CEO at Innovation SuperNetwork

As we are curating the content for our upcoming Accelerating Investment and Innovation Summit on 23rd September 2021, we gathered a group of investors from within and outside the North East to discuss specifically how we might better connect, through technology and networks, investors and innovators across our investment ecosystem. This round table discussion was another eye opener for me.

I would like you to consider for a moment that the North East Access to Finance landscape is ready to catapult and level up its investment ecosystem without having to “play catch up” with other regions in the UK and the world.

How? By deploying and enabling our well connected, sophisticated and diverse community of investors and innovators.

Why? Because no investment Ecosystem is perfect.

In the UK and elsewhere, even well-developed regions are looking for ways to better connect their investors and entrepreneurs, ways to enable truly innovative and emerging sectors to access finance, and ways to create a more diverse, greener and sustainable investment landscape.

At the Innovation SuperNetwork we regularly receive calls from London and South East-based entrepreneurs looking to tap into our investors, grants and support. Likewise, we hear from out of region investors on the hunt for “something exciting and different” to diversify their portfolio.

So why should the North East and other northern regions go through the same stages and pain points? Why should we try and replicate imperfect systems when we already know what can make a difference to our region and tailor it to our scale and aspirations?

This is, of course, not a denial of the existing challenges we face.

We know that the North East and other regions still receive a disproportionate amount of public and private finance to support the growth of businesses. Some of the figures are depressing, with less than 5% of the total early-stage funding available in the UK reaching North East businesses.

We also know that our investment landscape on all sides of the equation is not diverse enough and thereby missing out on huge growth opportunities.

Our early-stage and later-stage finance is scarce with a clear lack of a critical mass of investors, and despite some tremendous innovation assets in digital technologies, energy, advanced manufacturing and ageing, the finance landscape is not currently permitting the region to truly take advantage of our capabilities to address today’s societal challenges.

And yet, I still believe that we have a tremendous opportunity now to transform this rather bleak picture.

Over the past few years, the Innovation SuperNetwork has worked with Innovate UK, in partnership with the North East BIC, NorthInvest and the UK Business Angel Association to deliver the pilot Regional Angel Investment Accelerator (RAIA). It is this project, alongside other initiatives in the region such as the Northern Accelerator and CPI to name a few that have given me the conviction that there is another way for our region and that we are ready to deliver a 21st century investment ecosystem.

What have we learnt from the RAIA project?

  • Demand is ripe
  • Angel investors are ready to invest, co-invest and collaborate and can be geography agnostic
  • Well invested grants accelerate and leverage private investment. It doesn’t hinder it.
  • Collaboration works
  • When you dedicate time and resources in promoting diversity, you get more diversity

And the net result, £2.5m invested in regional start-ups and scale-ups in less than two years leveraging £1.7m worth of Angel investment. A rising number of women investors (up to 20%, and well above the national average) and female-led businesses achieving success. Up to 100 new angel investors and follow-on investors onboarded and connected to our network, and the creation of Angel syndicates with a firm anchor in the region. This is without mentioning the investment in truly innovative technologies paving the way to a more sustainable future and creating jobs and growth for our region.

So what next?

We have recently received the good news from Innovate UK that RAIA will be extended. RAIA is a perfect example of a solution to meet the ambitions of the recently published BEIS UK Innovation Strategy. Indeed, with its first Pillar, the Government pledges to “fuel businesses who want to innovate” and commits to:

  • Increase annual public investment to £22billion
  • Develop an online finance and innovation hub
  • Deploy a £127m Strength in Places Fund to develop R&D capacity and support local growth

The key drivers of this strategy are to make it easy for businesses to innovate, address the gaps and “information asymmetries” and create a more connected supply of public and private sector finance in order to facilitate the “increase in private sector investment in innovative activity”.

These things won’t be easy to achieve, but the North East does not need to “catch up” to be part of the UK’s efforts in meeting its investment and innovation challenges. I’d argue that we have in fact “leap-frogged” our way to the forefront in creating the skills, connections and networks to enable this change, having already learned and trialled how to connect public and private investment. We can now be a key player to help deliver the UK Innovation Strategy and “fuel” our innovative businesses.

From our recent round table to the upcoming Accelerating Investment and Innovation Summit, we are having meaningful conversations with all investment ecosystem parties to drive the connectivity central to success. I am genuinely looking forward to discussing this in a lot more detail with national and regional partners, policy makers, investors, and innovators on 23rd September. We’d love for you to join us!

To learn more and register visit: https://supernetwork.org.uk/investment-summit/

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