North East Venture Fund

Funding for the North East Region

The North East region is a hugely important focus area for Mercia. Even before the team was awarded its most recent fund, the North East Venture Fund, it was well established in the region having completed the first investment in 2003.  I think this should read as “The North East region is a hugely important focus area for Mercia. Even before the team was awarded its most recent fund, the North East Venture Fund, it was well established in the region having completed its first investment in 2003.”

Mercia’s North East team is based in City Quadrant in Newcastle and is led by Fund Principal, Ian Wilson. Ian is a Chartered Accountant (FCA) and holds the Investment Management Certificate (IMC) from the CFA. He is a seasoned investment professional having fulfilled both merger and acquisition advisory positions in practice and investment management roles in early-stage funds since 2006 and he has taken several software companies from first investment to exit in recent years. I think we should say “Mercia’s North East team is based in City Quadrant in Newcastle and is led by Fund Principal, Ian Wilson. Ian is a Chartered Accountant (FCA) and holds the Investment Management Certificate (IMC) from the CFA. He is a seasoned investment professional having fulfilled both merger and acquisition advisory positions in practice and investment management roles in early-stage funds since 2006. He has facilitated finance and support that has helped several companies grow from first investment to exit in recent years.”

I’m proud to be part of Mercia’s North East team in supporting and helping ambitious local companies towards their own objectives.Ian Wilson, Fund Principal of the North East Venture Fund – Mercia

North East Fund – now open for new investments

The North East Fund is a £120.0million investment programme available to SMEs across Durham, Northumberland and Tyne and Wear and can also be open to businesses which are relocating to the area. There are five funds, each with a different investment focus depending on the sector in which businesses operate and where they sit on the growth curve.

Mercia manages the Venture Fund under this programme which is a £27.0million fund investing up to £1.0million into innovative businesses across Durham, Northumberland and Tyne and Wear.

Funding is available to all companies with high growth potential and pre-start enterprises. The fund aims to provide a range of investment products, tailored to each specific requirement, including both equity and mezzanine debt. The Investment Team can either act as the lead investor or participate in syndication deals with other investors which the team has considerable experience in doing.

Larger investment rounds

There have been some great examples of Mercia being able to deploy its ‘Complete Capital Solution’ by combining other funds which it manages to build significantly larger investment rounds. This concept was well illustrated by the £8.0million investment into Total Resources which Mercia completed in May 2019 whereby the North East Fund invested £1.0million and the remaining £7.0million from several other funds. This deal completed on 30 April 2019.

The transaction includes growth, debt and venture funding which is helping the business to expand its existing depot network across the UK, creating up to 100 jobs from its head office in Boldon in South Tyneside, depots in Gateshead, Haydock and several other locations outside  of the region too.

 

Companies we have backed

Under our most recent fund, which was launched in April 2018, we have already invested more than £6.0million into 16 different businesses, and this number continues to rise each month. Investments span a range of different sectors ranging from software to metalwork and x-ray technology. With the exception of two smaller investments, our average cheque size from the North East Fund has been just under £500,000. This reads better as “The North East Venture Fund, which was launched in April 2018, has already invested more than £8.0million into 19 different businesses. Investments span a range of different sectors ranging from software to metalwork and X-ray technology. The fund is able to support businesses at an early stage of growth and its average investment is £500,000. Mercia is able to provide further capital as businesses grow.”

Rachel Richardson, Commercial Director, Troo

Mercia Meets - Rachel Richardson, Commercial Director, Troo

Troo is an energy benchmarking business, which provides a platform for firms looking to switch energy supplier.

Can you describe your early career before taking over as director of Troo?

I have over 10 years’ experience within the energy industry. I started out as an Account Manager at EIC, an energy consultancy in the Midlands, followed by heading up the Relationship Management team there. I managed over 200 high–profile Industrial and Commercial clients, including large manufacturers and retailers. My role allowed me to oversee all client services including account management, delivering fixed and flexible procurement solutions and supporting clients with energy assessment schemes.

Most recently before Troo, I was Commercial Manager in the Partner Channel at Utilitywise PLC, where I managed partner relationships with the likes of Chambers of Commerce around the UK.

Why did you choose Mercia as your investment partner and how easy was the investment process?

We chose Mercia as they have a great reputation with investing in and supporting start-up businesses. The calibre of the management team namely Ian Wilson and Jan Oosthuizen also heavily swayed our decision to partner with Mercia. Ian has a long-standing reputation in the industry and region for supporting growing businesses. Jan also was extremely insightful and helpful throughout the entire investment piece, which made for a smooth and stress-free process.

What’s your vision for the business in the next few years?

Continued growth and expansion to our Troo team and customer base. We want to help as many businesses as possible to pay a fair price for their energy. We are making great strides in getting our message out there on how different we are in the energy industry, but we need to increase our profile nationwide in order to do that. We are investing more in marketing in order to raise awareness on our ethical and transparent way of working. This is no mean feat and will take time, but we are making great progress, especially with the support of Mercia behind us.

What value has Mercia added post investment?

Mercia’s support has been incredible post investment. Jan Oosthuizen is an observer on our Board and contributes to our present and future plans with constructive advice and counsel. We always know he is at the end of the phone too, which is very reassuring. When Mercia invest in a company, it certainly isn’t just about the financial element, they are with you every step of the way to ensure the business’ success.

What would be your “if only” piece of advice to anyone considering investment?

To find an investment partner that is a good fit for you and your business, who you can see yourself working with for years to come. You need a partner who is in it for the long haul and by your side every step of the journey.

 

Jason Hobbs, CEO of North East Fund Limited

Mercia meets – Jason Hobbs, CEO of North East Fund Limited

What are the objectives of the North East Fund?

Our vision is for the North East to be a vibrant place for businesses to start up and grow, and for that to happen, our companies must have access to the finance that this requires. Unfortunately, this region has historically not been particularly well served by the traditional providers of capital, and hence the rationale for implementing the North East Fund. We want to ensure that investment finance is readily available for all North East companies, regardless of their size or where in the region they are located.  We invest in companies with only one or two employees, as well as those with up to 250, and cover the whole of the region – from Berwick to Sedgefield, from Hexham to South Shields, and everywhere in between. Our aim is for those companies to develop and grow, increasing both employment and economic prosperity in the region.

What impact has it had so far?

Almost 250 businesses have received investment since the fund was launched in April 2017, with over £93m of funding having been provided, either directly or in conjunction with co-investment partners. These are all businesses that for whatever reason, have been unable to raise finance elsewhere. We are investing in a whole range of sectors, from manufacturing to healthcare, engineering to marketing agencies, as well as digital and IT, so we are really impacting on the whole of the economy. We expect to invest in over 600 different companies over the course of the next few years, and increase employment levels by over 3,500 – that’s a major impact on our region.

What’s the best single piece of advice you can offer North East entrepreneurs seeking finance?

Don’t think that these funds are not for you – they are! We offer a range of finance packages, to businesses of varying sizes, sectors and locations, just like yours. Pick up the phone and talk to either us or one of our fund managers. It’s not necessary to have a fully formed business plan before you go to see them. We have tried to make the North East Fund as accessible as possible, so my one piece of advice would be to start the conversation now.  We are here to support North East SMEs – why shouldn’t your business be our next investment?

How would you describe Mercia as an investment partner?

We are delighted that Mercia is managing part of the North East Fund, as they share our vision for what can be achieved here in the region. Fund managers help to create that vibrant market for investment finance that makes the North East such an exciting place to do business. It is pleasing to note the significant amounts of private capital being invested alongside the Venture Fund, much of which has come from Mercia’s own funds.This means that we can support much larger deals than we would be able to do on our own. We look forward to continuing to work with them in supporting ambitious businesses here in the North East for many years to come.

Ian Wilson, Fund Principal of the North East Venture Fund

Mercia Meets - Ian Wilson, Fund Principal, North East Venture Fund

Can you explain what your role is in delivering the North East Venture Fund?

I head up the North East Venture Fund which is investing £27.0million into businesses across the region as part of a £120.0million initiative supported by the Regional Development Fund. My role is to manage the local investment team, provide input into our investment decisions, provide support and guidance to our portfolio and network in the market to identify target companies for investment. I also play a part in promoting the Mercia brand in the region.

What sort of businesses are you looking to invest in, and are there any types of businesses that you can’t back?

Mercia has a broad focus in the region. We’re looking for smart and ambitious entrepreneurs who have a clear growth strategy for their business. We’re looking for businesses that are addressing a specific market need with an innovative product or solution, in markets where we have built up experience and where we can add value.  Most businesses could be eligible for venture funding so we encourage business owners to get in touch directly. If something isn’t a good fit for Mercia, we will be happy to try to introduce to other providers of finance which may be more suitable.

What role can the financial community play in helping to make the fund a success?

The financial community can engage with Mercia by introducing clients who may wish to seek funding, or even those who want to understand a bit more about what their options might be. We talk to lots of business owners who are just starting to consider finance, it takes time to build trust and we’re more than happy to get to know companies early on in the process.

What’s the best single piece of advice you can offer North East entrepreneurs seeking finance?

The best advice I could give to anyone would be to recognise there is always support available.  Reach out to people and talk about your objectives and your ambition. You may gain some insight into your market that you wouldn’t otherwise have got or you may meet someone who can help you on your path. Everything starts with a conversation.

 

 

 

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