How Northern Gritstone is supporting deep tech and university spinouts in the north

Bridging the gap between world-class university research and global venture capital in the North of England

The North of England produces world-class research and technical talent, but historically it has lacked the capital and commercial infrastructure to turn that knowledge into global businesses. In 2019, only 2% of all UK University spinout venture capital was invested into universities in the North of England (1), Northern Gritstone was created to close that gap.

The business invests in deep tech and life sciences companies with the potential to scale globally. It has partnership agreements with the ‘Northern Arc’ universities of Leeds, Liverpool, Manchester and Sheffield, and also invests in companies across the North that are not university spinouts. It invests from seed through to Series A and beyond, helping ambitious teams take their science and technology to market.

Talent and ambition: The gap between great science and a great business

Kate Spencer, Head of Communications and Marketing at Northern Gritstone, describes. world-class research as the starting point, but it is never the whole picture. When Northern Gritstone assesses an investment, it looks just as closely at the founding team, the market opportunity and whether the technology can become something customers will buy.

“Talent is the scarcest resource. You need excellent academics and technical specialists, but you also need experienced entrepreneurs and commercial leaders with international expertise to turn science and technology into something that can scale.”

Kate Spencer, Head of Communications and Marketing, Northern Gritstone

The wider evidence supports that view. Research highlighted by McKinsey found that venture capitalists see the quality of the management team as a bigger factor in their investment decisions than the product or technology and link the ultimate success or failure of an investment more closely to the team than to the business itself (2).

Finding that experience can be challenging, particularly for early-stage companies moving from research into commercial growth. Northern Gritstone sees helping them build the right team and network as a core part of its role.

Support that goes beyond capital

The skills and networks a company needs to prove its technology are rarely the same ones it needs to build a commercial business. Access to people who have made that transition before helps companies spot gaps earlier and build capability for the next stage. In practice, that might mean recruiting experienced commercial leaders, making introductions to co-investors or strengthening the route to market.

The results are starting to show. Of the 33 companies to have completed Northern Gritstone’s pre-seed program NG Studios so far, around one in three to date has gone on to raise substantial seed funding, with a further ten companies currently on the program. Northern Gritstone’s average seed round is $4.7m, around 15% higher than the North of England average of $4.1m (3).

Northern Gritstone also encourages founders to think globally from the start. Startup Genome’s research found that early-stage startups with a majority of their customers overseas grow revenue twice as fast as those focused on their home market.

Why place and community matter

Connection matters as much as capital. According to Startup Genome, startups within strong, connected ecosystems grow 3.5 times faster than those operating in isolation (4).

Northern Gritstone itself has an office at 1 Circle Square, in the heart of Manchester’s Oxford Road innovation district, alongside one of its key ‘Northern Arc’ universities and accompanying ecosystem members such as Unit M. The company holds events in the Bruntwood SciTech campus where it gathers academic founders taking part in its NG Boot Camp and NG Studios programs, companies who have gone on to attract Seed funding, and the co-investor community alongside whom Northern Gritstone co-invests.

For Northern Gritstone, the ambition is clear: to make the North a place where great science consistently becomes great business, with the right people, networks and support in place at every stage.

(1) Source: Beauhurst (2) https://www.mckinsey.com/capabilities/people-and-organization/our-insights/achieving-hypergrowth-its-all-about-the-people (3) Source: Dealroom (4) https://startupgenome.com/insights/the-scaleup-report-the-dna-of-successful-startups