Northern Gritstone, the new investment business focused on university spin-outs in the north of England, today announces a first close of £215m having seen strong interest from investors in its proposition.
The company, 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.
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 and West Yorkshire Pension Fund as part of Northern LGPS, M&G, Columbia Threadneedle, Lansdowne Partners, and Bruntwood 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 IP-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 CFO, 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.”
Deputy President & Deputy Vice Chancellor at the University of Manchester and Non-executive Director of Northern Gritstone 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.”