An investment company chaired by former Treasury minister Lord Jim O’Neill has raised more than £300m to back northern start-ups.
The fundraising includes £150m from local authority pension funds, made up of South Yorkshire, West Yorkshire, Greater Manchester, Merseyside and East Riding. Other investors included M&G and Columbia Threadneedle.
The Treasury has been pressuring pension funds to unlock more funding for start-ups by backing venture capital funds.
In July, nine of the country’s defined contribution funds agreed to allocate up to 5pc of their assets to unlisted equities by 2030, as part of Chancellor Jeremy Hunt’s Mansion House reforms.
The hope is the changes could unlock as much as £75bn to invest in high-growth businesses that typically do not receive cash from retirement funds.
Northern Gritstone has already backed 15 start-ups in the North of England.
The fund is targeted at investments outside of the so-called “golden triangle” of London, Oxford and Cambridge, which have typically attracted the vast majority of UK start-up funding.
These include Manchester’s Imperagen, a company spun out of the University of Manchester developing novel enzymes for chemical manufacturing, and Re:course AI, an AI-powered education company for the healthcare sector.
Northern Gritstone confirmed its first fundraising tranche of £215m in May last year, with the remainder raised since then. Bankers from Lazard advised on the effort.
Lord O’Neill, the crossbench peer and former chairman of Goldman Sachs Asset Management, said the funding from pension managers was a “show of faith in the potential for growth in the northern economy”.
