Funding a new generation of businesses

For more than 20 years, Northstar Ventures has invested in the best of the North East’s technology companies, from the highest potential university spin-outs to the most ambitious entrepreneur-led start-ups.

And its numbers are profound.

During those last two decades, the Newcastle-based firm has invested upwards of £130 million into more than 400 companies, helping to create in excess of 2000 jobs.

That support has been integral too in shining a spotlight on the evolution of the region’s commercial landscape from heavy industry to digital pioneers and clean energy and healthcare sector firsts.

Alasdair Greig, director at Northstar Ventures, says: “The region’s technology base has been a vital factor in the development of a cluster of high growth companies in the clean technology and healthy ageing sectors.

“Our five universities and growing number of key regional institutes, including the two National Innovation Centres for Ageing and Data, and the Offshore Renewable Energy (ORE) Catapult, have all helped establish new businesses in the area, and also act as a magnet for companies wishing to relocate.”

Maintaining the momentum

Having established its investment credentials over more than 20 years, the firm is leveraging its momentum through the Northstar EIS Growth Fund.

Launched last year, and focused on climate technology and healthy ageing themes, the tax-efficient fund gives investors a way to back innovative, scale-up businesses with high growth potential.

The first tranche of the fund will soon be fully invested, with a second tranche now open for investment.

Alasdair says: “Until a year ago, it was very hard for individual investors to back the exciting high growth companies that we invest in.

“All that changed in 2024, though, when we launched the Northstar EIS Growth Fund.

“The fund gives investors the opportunity to invest in a diversified portfolio focused on the most promising opportunities in our portfolio.

“Investors in the 2024 tranche now have stakes in companies such as NunaBio, MySalesCoach, OnHand and Wordnerds.

“These companies span a varied range of technologies, from DNA synthesis to using artificial intelligence to provide business insights to retailers.

“What they all have in common is that they are rooted in our region and are using technology to tackle some of society’s biggest challenges.”

The Northstar EIS Growth Fund has several key features, which include:

• A conviction-led approach to investment that backs the transformative technologies of the future

• A focus on investee companies that have already demonstrated strong commercial traction and are primed for high growth

• A supportive approach that enhances operational performance and exit opportunities

Furthermore, the fund offers:

• Targeted returns of £2.50 for every £1 invested*

• Significant EIS tax reliefs, including 30 per cent income tax relief, capital gains tax-free growth and inheritance tax business relief*

• Potential to utilise income tax reliefs in the 2024/2025 and 2025/2026 tax years, and hold over chargeable gains from the previous three years

• A diversified portfolio designed to reduce risk while enhancing tax free returns

* The value and availability of any tax reliefs will depend on the individual circumstances of investors. Past performance is not a reliable indicator of future performance.

A tested approach

A commitment to supporting companies and the teams it backs goes hand-in-hand with the cash that Northstar Ventures invests.

Alasdair says: “Strong management teams are an essential part of generating strong investment returns.

“This is all the more vital in early-stage businesses, which are often led by first-time founders.

“A successful venture capital fund is about more than just investing cash.

“Potential needs to be turned into tangible cash returns.

“In May last year, one of Northstar Ventures’ investee companies – Houghton-le-Spring- based construction sector management software firm Clixifix – was bought by European software as a service operator Smartcraft ASA.

“The deal generated a cash return of nearly five times the sums invested by Northstar Ventures.

“It marked the first step for Smartcraft outside its core Nordic market, and Clixifix is now acting as a catalyst for its continued growth in the UK and Europe.

“Our investment in Clixifix exemplifies the way in which venture capital can catalyse the creation, and support the growth, of the businesses of the future.”

Northstar Ventures
www.northstarventures.co.uk
LinkedIn: Northstar Ventures UK