It has been a challenging funding environment for startups this year. Or as Jessica Jackson, investment manager at Manchester-based VC firm Praetura Ventures, puts it founders are finding it “incredibly frustrating”.
In the first half of 2023, total UK tech investment fell by 57% year-over-year. From Jackson’s vantage point at the North of England-focused investment firm, it’s particularly challenging for startups raising at the seed stage.
“And if they are, the baseline of the company that they look at has changed completely because it’s more risky, they’ve got less capital to deploy,” Jackson told UKTN, adding that angel investors are not as active either due to liquidity challenges.
Those hurdles are greater for those who don’t fall into the category of “typical white male tech CEO”, Jackson said.
“When you’re in a world where risk capital is in short supply, even less of it is going to go to the more ‘risky’ of the risky, in inverted commas,” she said.
Diversity funding gap
Jackson has direct experience of the difficulties that underrepresented founders have in securing capital. She is a founding member of Fund Her North, a volunteer group set up to help drive more investment into female northern founders.
It operates its own female angel and network community, including Women Angels of the North, which supports female and diverse founded early-stage startups. Before this, she was the head of investment at GC Angels.
Jackson is passionate about setting up a northern fund to provide diversity-focused funding or even an entire VC.
Underserved founders are “pissed off” and “over mentored”, she said.
“We’ve done all of that shit. We did everything you wanted us to do. We’ve now got a business which is chomping at the bit, growing and it needs investment,” the investment manager added.
Jackson joined Praetura Ventures in September 2022. The VC firm provides lending and equity for startups and SMEs, aiming to address the funding gap for businesses in the North of England.
The investment firm manages the £20m GMC Life Sciences Fund, launched in May last year. It draws on funds from the Greater Manchester Combined Authority, Bruntwood SciTech alongside Cheshire and Warrington LEP.
Brain injury prediction AI software Decently was added to the GMC Life Sciences Fund’s portfolio earlier this month.
In June, the investor launched a VCT targeting startups residing in the North of England.
Praetura’s headquarters is located in Manchester, often considered the UK’s leading tech hub outside of London.
Jackson points to Manchester being “well connected”, “cohesive” and “collaborative” as key strengths.
But there’s also room for improvement, says Jackson. Manchester can do more to tackle “friction” at the pre-seed stage by increasing the number amount of SEIS funding vehicles.
Corporate innovation schemes with a financial support element are another way for Manchester to offer more support to tech startups, she said.
While Manchester doesn’t need any more accelerators, Jackson said, the city could benefit from greater integration in the spinout ecosystem.
“I would love to see improvements in the integration of kind of the scientific community, the university spinout and tech transfer offices with the wider investment ecosystem,” Jackson said.
Beauhurst data shows Manchester and Bristol have the highest growth in the number of new spinouts in the UK.
Despite positive developments in the space, the Praetura Venture’s investment manager says “roadblocks” remain, such as university-heavy cap tables or knowledge gaps on certain technologies.
“We really like it when tech companies find a way to innovate in very traditionally slow-to-innovate sectors.”
Beyond the Capital, an interview series with tech investors and venture capitalists based outside of London, is published monthly. Last month UKTN spoke with South West investor QantX.