North West firms are defying the economic gloom to bid for investment from a £660m Northern fund a year into its life, the British Business Bank says.
And the bank’s senior investment manager Sue Barnard told BusinessLive that manufacturers and female founders are seeing particular success from the Northern Powerhouse Investment Fund II (NPIF II). The fund was launched last year to support small and medium businesses across the North with loans from £25,000 to £2m and equity investment up to £5m.
It followed on from an earlier Northern Powerhouse fund, which ran from 2017 and delivered more than £1.1bn to Northern businesses, supporting 8,500 jobs. The new fund is designed to be more flexible to support more businesses in more sectors, including retail and tourism.
It aims to back businesses that might otherwise struggle to get support – when it launched, one bank boss vowed: “The computer might say no but our fund managers may still say yes.” Sue told BusinessLive that companies are proving resilient and ambitious despite the tough economic backdrop.
“I think we're very surprised actually at the quality of the investments that are being undertaken at the moment,” she said. “Businesses are very resilient. We saw that with NPIF II, where when things happened, they could diversify quite quickly and they really understand the business that they're working in.
“The entrepreneurs we meet are constantly looking for something else to do outside of their normal work. They're always looking for that next big contract or that next new innovation. They do come across as being extremely ambitious with that drive and you do get the feel – because I do have the opportunity to meet many of the portfolio – that they just get on with it. It's something this week, something next week…
“They've got the support of our fund managers so it's not just about the investment that goes in on day one. Our fund managers actually work with that business, whether they want to do international trade, find new markets, bring in a non-exec… so the businesses are not left to worry about what to do next.”
In the North West, fund managers, River Capital and GC Business Finance, will provide businesses with smaller loans from £25,000 to £100,000. FW Capital will provide debt finance options from £100,000 to £2m, and Praetura Ventures will manage equity deals up to £5m.
Delyth Edwards, the bank’s senior network manager for the North West, said a bank study into small business finance last month (March) showed there were some great positives in the North West economy.
She said: “In terms of utilisation of external finance for North West businesses – 50% of smaller businesses in the North West used external finance in the first half of 2024, up from 47% in the second half of 2023. What's great about that is that it was the highest increase reported in the Ƶ, demonstrating that the businesses in the North West are actually accessing finance to help their businesses grow. And their business confidence actually rose in the first half of 2024.
“There’s a lot of talk that business confidence has been on a downward spiral because of the economic backdrop and so on, but actually our data for businesses in the North West seems to be bucking the trend.”
Later this month, the Bank will release its annual figures for NPIF II. While Sue was keeping the latest figures under wraps, she said the bank was “very pleased” with how it was going.
She said: “We're just coming up to our one year anniversary. We're very pleased with the way it's going. We are already ahead of target. At the end of December we'd invested £50m across the North of England across all our three regions.
“We've seen a good spread of investments into female founders across a range of different stages including start-up early stage growth and expansion companies. We're seeing a lot around tech – and manufacturing is actually our biggest sector, which surprises some. We are seeing quite a few manufacturers doing some really innovative and fantastic activities across the whole of the North West."
Sue is also pleased with the success of the small loans element of the NPIF II programme, which allows the bank to invest in a wider range of businesses. That is also helping the bank to reach more female founders.
She said: “We are doing a lot of investments into female founders and around retail, hospitality and tourism, which is an area which we didn't invest in previously. We're really keen to get that message out that we can do that sort of investment alongside the manufacturing, life sciences, tech businesses that we support.
“We have quite a number of female investment managers this time round, and we're seeing they are actually attracting female entrepreneurs, which is obviously good to see. We're quite keen to do a lot of deals in the hard-to-reach areas, such as Cumbria, Lancashire, And we know all areas of Greater Manchester have also got hard- to-reach areas, so we really want to shine the light on the investments being made across the North West.”
Sue and Delyth talked about several memorable North West NPIF funding deals to showcase the breadth of the fund’s work. They included December’s £200,000 investment from NPIF II – Praetura Equity Finance into Cumbrian firm ScrubMarine, which uses robot submarines to clean ships.
Sue has also had to pose for many photographs with successful businesses. One of the most striking photos – as seen at the top of this story – came from the £700,000 funding package for Knowsley-based electromechanical specialist Central Group. That support will help the business to create jobs and to work with Liverpool John Moores University and the University of Liverpool on a Knowledge Transfer Project.
Just this week, BusinessLive reported that healthcare firm SiSU Health had won a £1.25m NPIF II investment, via Praetura Ventures, t to grow across the Ƶ and Europe. Meanwhile ID card maker Swype celebrated a “six-figure” investment, through NPIF II – FW Capital Debt Finance, that it said would “future-proof” it for years to come.
NPIF II’s small loans elements allows it to support small businesses it could not help in its first round, including those in the retail, hospitality and tourism sectors that are so crucial in parts of the North West. That also helps its mission to serve businesses in areas beyond the big cities.
Sue said: “We're currently looking at a hotel at the moment with one of our funders. We've seen retailers, patisserie type cafes, small businesses who are selling into local areas with artisan products – a whole range of different types of retail tourism. We're doing high-scale restaurants as well. We've done Nell's kitchen in Altrincham – you can't get (a table) in there at the moment! We are seeing companies outside of cities actually coming forward and asking for support to expand their businesses.”
In manufacturing, Sue and the team are seeing investments in areas from eco-friendly small-scale manufacturing and food and drink producing to innovations in drilling and exploration.
She said: “We have seen some early stage investments into the sort of new ground-breaking innovations that potentially could turn into big contracts with the likes of marine and ship building businesses.
“Really we're touching all different types of manufacturing, especially new innovations, especially with a big focus on ESG (environmental, social and governance) as well. That focus on net zero and diversifying to new markets is obviously something that all businesses need to consider going forward and we help them on that journey.”
NPIF II has been supported by the strong professional services ecosystem in the area, especially in Greater Manchester and Merseyside. Just as fund managers are helping to work with businesses beyond the cities, they are also looking to work with professional advisers in the region’s smaller communities.
Sue said: “Because we've already delivered NPIF, which was launched in 2017, we did a lot of work over that five to seven-year period with the corporate services world. We do a lot of partner events, road show events, business breakfasts, to try and ensure that the intermediaries – whether that be a bank, an accountant, a solicitor – are fully aware of what's available potentially, not just to their client now, but to potential clients going forward.”
She added: “We are constantly ensuring that our fund managers are doing a lot of business development activity on the ground. Because you've got to keep going back – you can't just do it once.
“That move now needs to go into Cumbria, Lancashire and outside of the cities because there's some really good accountants out there that potentially don't necessarily come into the city for events.”
