A new investment company founded by the universities of Sheffield, Leeds and Manchester to help boost the commercialisation of university spinouts and start-ups in the north of England has announced a first close of £215 million.
Northern Gritstone, chaired by Lord Jim O’Neill and led by Chief Executive Duncan Johnson, is expected to begin deploying capital and making its first investments in innovative start-ups over the coming weeks.
Professor Dave Petley, vice-president for innovation at the University of Sheffield, said: “We are delighted that Northern Gritstone has received such strong endorsement from investors, who have recognised the immense potential in our universities’ world-leading research and innovation.
“This investment power will help to unlock solutions to the world’s most pressing challenges through the rapid scale-up of spin-out companies at the forefront of a range of sectors. This is a significant milestone for Northern Gritstone, and for economic growth and prosperity in the north of England.”
Northern Gritstone has attracted funding commitments from a broad and diverse base of investors encompassing local authority pension funds, high net worth individuals, institutional investors and real estate investors active in the tech and science ecosystem of the region.
These include Greater Manchester Pension Fund, West Yorkshire Pension Fund, M&G, Columbia Threadneedle, Lansdowne Partners, Bruntwood and Greater Manchester Combined Authority as well as Andrew Law, the CEO of Caxton Associates, and Keith Breslauer, Managing Director and founder of Patron Capital, both in a personal capacity.
With plans to raise £500m overall, having hit this initial fundraising milestone the company will continue to welcome further backers over the coming months. Now that the first close has been achieved, Northern Gritstone plans to begin making its initial investments into its proprietary pipeline of world class science and innovation based businesses located in the north of England.
Having launched in July 2021, Northern Gritstone was founded by the Universities of Leeds, Manchester and Sheffield to support the commercialisation of science and intellectual property-rich businesses originating from these three research-led institutions. Many of these opportunities are in the UK’s most exciting emerging sectors such as advanced materials, health technology, cognitive computation and AI.
Northern Gritstone was founded with the philosophy of ‘profit with purpose’, combining attractive returns for shareholders with wider positive, societal and economic impact, including supporting Levelling Up and high-skilled job creation in the north of England.
It announced the appointment of its first chief investment officer, Marion Bernard, in December and this month has added James Hadley to its leadership team as chief financial officer, who brings more than two decades’ experience working in the financial services sector, including most recently as CFO at a tech-focused venture capital investor.
In its fundraising Northern Gritstone was advised by Lazard Venture and Growth Banking led by Garri Jones. Its legal advisers are Macfarlanes and Pinsent Masons.
Northern Gritstone chairman Lord Jim O’Neill said: “The strong endorsement of Northern Gritstone we’ve seen from investors is testament to the huge scale of the opportunity in northern England’s world class science and innovation hubs and the spin outs they are producing. By investing in Northern Gritstone, asset managers are directly buying into the brightest prospects for Britain’s future economy.
“Today marks a significant milestone as Northern Gritstone continues to build its investor base allowing the company to deliver its philosophy of ‘profit with purpose’ which underpins all we seek to do.”
Northern Gritstone Chief Executive Duncan Johnson said: “There is rightly huge excitement about the innovative, science-led spin outs emerging from our leading research universities and the ecosystems they support, and this has been reflected in our conversations with investors so far. We are greatly encouraged by both the size of our first close, and also the range and quality of investors that the Northern Gritstone proposition has attracted.
“Whilst fundraising will continue, this first close and the backing that Northern Gritstone has received from investors so far, allows us to begin making our first investments shortly. It also importantly enables us, alongside our friends and colleagues in the wider northern venture ecosystem, to accelerate the development of a northern innovation hub to rival the UK’s Silicon Fen and ultimately Silicon Valley.”
Jane Madeley, the University of Leeds’ chief financial officer and a non-executive director on Northern Gritstone’s board, said: “This successful first close for Northern Gritstone speaks to the ground-breaking nature and world-class quality of research and innovation taking place at all three universities.
“It recognises the tremendous strength of our pipeline of spin-out enterprises. These cover a broad range of emerging technologies that will be critical in offering innovative solutions to global challenges.”
The University of Manchester deputy president and deputy vice chancellor, professor Luke Georghiou said: “Northern Gritstone will transform the investment landscape for our spin-out companies and for the North of England more generally. Our academic entrepreneurs, supported by the University’s Innovation Factory, have produced record numbers of spin-outs in the past two years.
“This huge potential can now be far more easily realised as the investments will enable them to scale-up businesses which are there to solve the world’s problems. These include new treatments for devastating medical conditions, transformative applications of data analytics to farming and exploiting the amazing properties of graphene across multiple applications to name just a few.”
