Northern Gritstone secures £50m with up to ‘£100m in the hopper’

Northern Gritstone £50m Duncan Johnson CEO of Northern Gritstone

North of England-focused investor Northern Gritstone has closed a further £50m to support spinouts commercialising technology in the region, with “another £50m-£100m in the hopper”, UKTN can reveal.

Northern Gritstone CEO Duncan Johnson said the firm will be closing its “initial fundraise” of at least £50m at the end of June.

He said the firm is “going through the final levers” on the next tranche of funding, which will include capital from “local authority pension funds”.

Local authority pension funds are the largest contributors of capital to Northern Gritstone. It comes as the government is exploring ways to encourage more pension funds to allocate some of their cash into technology startups amid concerns over a lack of liquidity in capital markets.

“Everybody is moaning in this sector as you know about pension funds, don’t invest into this, don’t do that. Well, three-quarters of my money comes from pension funds,” Johnson told UKTN.

The influx of extra finance would mean the investment firm manages between £350m and £400m.

Johnson helped launch Northern Gritstone in 2021, to back “IP-rich businesses” based in the North of England, particularly those spinning out from the universities of Leeds, Manchester and Sheffield.

“The bit we really needed that was more important was the income that comes off the capital, to allow us to build a business of sufficient scale to be able to do what we need to do – because we are not just money,” Johnson said.

In March, Northern Gritstone received £30m from British Patient Capital to continue supporting spinouts and startups in Leeds, Manchester and Sheffield.

Startups from the North benefiting from the investor include a cat skin-like material, virtual training platform and an infrared sensor startup.

Northern Gritstone initially raised £215m last year.