News

3rd May 2022

Why investment is key to building on the North’s success

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Northern Powerhouse Investment Fund

Sean Hutchinson, senior investment manager at British Business Bank, says it’s a well-known fact that investment can have a significant impact on a business – from productivity improvements and innovation to digital transformation and expansion. The positive impact of business growth on the wider community is a less obvious benefit of investment – but one that’s equally as important.

The work of the £500m Northern Powerhouse Investment Fund (NPIF) is a great example of how the British Business Bank is driving economic growth and prosperity in the North. A new report by independent research company SQW released in April 2022, evaluates the impact that NPIF has had since its launch in 2017.

By February 2022 NPIF had invested more than £320m and attracted a further £437m of private sector co-investment. The analysis, which surveyed 274 businesses that have benefited from NPIF funding, revealed that 73% had increased workforce skills, and 62% had reported additional investment in research and development. In addition to this, 6,071 new high-quality jobs have been created through the Fund – already almost 1,000 more than originally planned at full investment.

In many cases, this investment created a domino effect for businesses, leading to further growth and funding. The report found that NPIF investment also led to increased business resilience for 92% of businesses, and 87% said that they had greater confidence in their ability to raise finance from private sector sources in future. Of those surveyed, 45% of businesses went on to secure follow-on funding from sources other than NPIF, totalling over £63m* or an average of £540k per firm. Meanwhile, 86% of equity recipients saw increases in their company valuations.

In addition to these direct benefits for companies, investment has a positive impact on the wider community, creating employment and enabling businesses to invest in products, services and initiatives that have wider health and environmental benefits. 68% of surveyed businesses said that the NPIF investment had funded the development of new products or services. Of these, 48% said their innovations would reduce carbon emissions, 52% said that they would lead to broader environmental benefits, and 42% said they would improve health or the delivery of health services.

Manchester-based developer and software provider to the legal sector, Summize, grew its team by 80% after NPIF funding. The business completed a £1m funding round led by NPIF – Maven Equity Finance in December 2020 and used the funding to invest in its talent and SaaS product offering.

Castings Technology International (Cti) is another business that has expanded rapidly after it secured a £2m fundraising round, led by Nucleus Commercial Finance and NPIF – Mercia Debt Finance. Based in Rotherham, the manufacturing and technology business has since invested further into product development, sales and marketing.

In April 2021, Tees Valley utilities firm Everflow secured a £750,000 investment from NPIF – FW Capital Debt Finance. In 2021 alone, the group made 55 new hires and turnover rose to more than £75m, a 35% annual increase. The business has since announced plans to make 30 new hires in 2022 as it continues to scale its operations and customer base.

This report, and the growth of NPIF portfolio businesses, truly demonstrates the impact that funding can have on organisations. Since its launch, NPIF has provided vital access to finance, enabling organisations to fulfil growth plans, increase employment, launch new products, as well as expand across the UK and internationally

The Northern Powerhouse Investment Fund project is supported financially by the European Union using funding from the European Regional Development Fund (ERDF) as part of the European Structural and Investment Funds Growth Programme 2014-2020 and the European Investment Bank.