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Beyond the Capital with Newcastle’s Northstar Ventures

Northstar Ventures Beyond the Capital Image credit: Northstar Ventures / UKTN

“The North East is one of the most deprived areas, healthy life expectancy is one of the lowest in the country. So that is our North Star in itself,” says Rick Charnley, investment director at Northstar Ventures.

That is why healthy ageing, along with biotech and clean tech, are among the main focus areas for the venture capital firm.

Since 2004 the VC has been investing in high-growth businesses and social enterprises, writing cheques up to £1m.

‘Not much startup cash’

It has been a challenging environment across the UK. VC funding fell by 54% year on year, down from $27.9bn in 2022 to a projected $12.7bn in 2023.

“There’s not much startup cash about,” says Charnley. “The funds that we’re managing and the funds in the region are coming to the tail end. And because of that, they’ve been focused more on portfolio rather than new deals.”

Despite these hurdles, he believes that Newcastle’s angel ecosystem is “bubbling”, although it has some ground to make up on Manchester and Leeds.

It is also why Charnley wants to set up an angel group to steer more investment into North East businesses and increase the chances of a local unicorn exit.

Local tech firms

One of Northstar Ventures’ latest investments is in Newcastle-based Circadacare, which is working on improving the quality of health care through a blend of circadian lighting, with acoustic and vision data.

Another is MySalesCoach, a sales coaching platform, which last week revealed it had raised £700,000 from the North East Innovation Fund managed by Northstar Ventures.

Funds operated by the investor include a Social Investment Fund, Northern Accelerator Seed Investment Fund as well as a follow-on EIS fund.

‘Newcastle was ahead’

Compared with the tech industries of Manchester and Leeds, “Newcastle was ahead”, claims the investment director, but needed to get its “shit together a bit quicker”.

Manchester is experiencing growth from exited entrepreneurs setting up their own funds and have done that at a better pace than the North East, explains Charnley, putting the North West city two to three years in front.

“I think we’re probably on parallel for a lot of things with Leeds,” says Charnley. “There are just more people but equally, they are getting a lot more quality going through and I think the bar has been raised. That’s probably one area for us, there are a lot of companies doing good stuff – but great stuff not as many.”

A key resource of the region is its four universities, but Charnley says they are not being fully capitalised due to a lack of investment.

UKTN’s North East report Tech on the Tyne, published in February, found that 62% of entrepreneurs thought that a lack of funding was a barrier to growth.

“I think we’re still on a journey where we’re driving £100m exits,” says Charnley. “Whereas I think Manchester is now at a point where it’s hitting unicorns, that’s where everyone is aiming.”

Beyond the Capital, an interview series with tech investors and venture capitalists based outside of London, is published monthly. Last month UKTN spoke with Northern Ireland’s AwakenAngels.