British Business Bank boosts Northern Gritstone to GBP £40m
The British Business Bank has made a GBP £10 million cornerstone investment in Northern Gritstone's GBP £20 million rolling close, increasing the Bank's total investment in the firm to GBP £40 million.
The new commitments are the first tranche of a one-year fundraising programme that builds on Northern Gritstone's GBP £362 million permanent capital base, taking total capital to GBP £382 million. Existing shareholders joined the latest close, alongside hedge fund executive Andrew Law.
The investment company backs life sciences and deeptech businesses in the North of England. Active since 2022, it says it has made 51 investments across areas including semiconductor design and manufacturing, novel materials, secure computing, artificial intelligence, health technology and gene therapies.
Many of those businesses have emerged from universities in Leeds, Liverpool, Manchester and Sheffield, which Northern Gritstone describes as its Northern Arc. According to the firm, those institutions attract close to GBP £800 million in research funding each year, with 92% classed as world-leading or internationally excellent.
The latest commitment adds to the British Business Bank's activity in venture and growth capital funds. The state-owned lender says it is the largest investor in UK venture and venture growth capital funds and that, between 2022 and 2024, it supported almost a quarter of university spinout deals.
Regional focus
The transaction highlights continued investor interest in university spinouts and science-led companies outside London and the South East, despite a difficult fundraising backdrop. It also marks the start of a broader push by Northern Gritstone to raise additional capital over the course of the year.
Its strategy centres on backing companies linked to research institutions in northern England and helping them grow into larger businesses. That places the firm within a wider effort by public and private investors to channel more funding into regional innovation clusters.
"We are very grateful for this further support from the British Business Bank and Andrew Law to continue developing global businesses in the North of England originating from our 'Northern Arc' university ecosystem. In this way, investors are contributing to future higher value-added activity and the North's productivity," Lord Jim O'Neill, Chair of Northern Gritstone, said.
"This strong start to Northern Gritstone's rolling close in today's challenging fundraising environment shows the belief in innovation coming from the North of England. The region is now an integral part of the UK's Technology Diamond, and we are proud to support the incredible talent of the North, helping to commercialise groundbreaking research into internationally commercial businesses," said Duncan Johnson, Chief Executive of Northern Gritstone.
Bank backing
The British Business Bank said its increased commitment reflects a broader ambition to support science and technology businesses with strong intellectual property. It has used cornerstone investments in other funds to attract additional institutional backers.
"The UK's universities are a powerhouse of breakthrough research, and Northern Gritstone plays a vital role in transforming world-class research from the North of England into high-potential, IP-rich businesses. Our increased commitment reflects the Bank's ambition to scale life sciences and deeptech businesses, which are critical to the UK's future growth," Christine Hockley, Managing Director and Head of Commercial Equity Funds at the British Business Bank, said.