Early-stage NI firms attracting higher levels of funding

Early-stage businesses in Northern Ireland are attracting larger equity funding rounds than in previous years but could raise even higher amounts if more external investors were aware of the quality of companies emerging from the region, according to the managers of Co-Fund NI.

The £47.3m Co-Fund NI, managed by Clarendon Fund Managers, is an equity fund which provides growth capital to early stage, high-growth potential SMEs alongside lead private investors.

Part of Invest Northern Ireland’s Access to Finance suite of loan and equity funds, Co-Fund NI can provide co-investment in deals typically valued between £150,000 and £2m and to date has invested in over 80 local firms.

Clarendon announced recently that in the 12 months to March 31, 2021, despite the impact of the pandemic, Co-Fund NI invested £7.5m in Northern Ireland businesses, alongside £13.2m of private investment in 37 funding rounds, bringing the total it has invested to over £31m resulting in overall investment of £174m when private match investment and leveraged funds are included.

In the same 12-month period, its portfolio companies raised £56m of investment, with 15 companies raising Series A funding rounds averaging £2.9m – almost double the average value of Series A rounds raised the year before.

These included Cumulus Neuroscience raising £6m from DDF and Life Arc Science Fund, Neurovalens raising £5.2m from IQ Capital and Wharton and Cirdan Imaging raising £3.6m from existing shareholders and the Future Fund.

Innovative heart rate software company B-Secur has raised almost £8m in the first of half of the year, including $6m from a US-based fund.

Brian Cummings, investment director at Clarendon Fund Managers, said: “Co-Fund NI plays a vital role in funding Northern Ireland’s high potential businesses through co-investment alongside business angels and other private investors, with the aim of helping them accelerate growth.

“Demand for funding is high and the quality of the companies we are seeing coming through is increasing every year.

“It’s clear from some of the Series A funding rounds raised by Northern Ireland companies in our last financial year that a number of equity investors are starting to take notice of the potential in the region. But I would encourage others who aren’t already doing so to take a look at what’s emerging in Northern Ireland as we’d like to invest alongside more external investors.”

Alan Foreman, CEO at B-Secur, added: “Co-Fund NI first invested in B-Secur in early 2020 at an uncertain time for our business in the early days of Covid-19 and have followed on with significant investment twice as the business moved back to growth. I was thrilled that B-Secur was able to find a Northern Ireland investor that understands our deep tech proposition and the immense global opportunity we have, while supporting our growth ambitions locally. Co-Fund NI’s support since early 2020 provided a key endorsement as we sought investment from the US, a key strategic market for the Company.”

Just over a third (34%) of funds invested by Co-Fund NI have gone into tech and ICT companies, 31% to life and health sciences, 14% to creative and digital firms, 11% to advanced manufacturing, materials and aerospace companies and 10% into businesses in food, drink, tourism and consumer goods.

To support its increasing investment activity Co-Fund NI was topped up with £16m of fresh funding from Invest NI and British Business Investments, a commercial subsidiary of the British Business Bank. Invest NI provided £6.1m towards the funding uplift. British Business Investments has also committed £10m through its Regional Angels Programme.

Invest NI’s support is part funded by the European Regional Development Fund under the Investment for Growth & Jobs Northern Ireland (2014-2020) Programme.

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