Does private equity 'get' tech in the North?
A leading voice in the North’s private equity scene says investors now have enough tech experience to accelerate growth in the sector.
George Potts is investment manager at NorthEdge Capital, which has a 17-year track record of TMT investment across the UK stretching back to 2001.
“While neither NorthEdge nor many other private equity investors will claim to dedicate themselves to tech businesses, it is no longer the case that private equity investors lack experience in the tech sector,” he told BusinessCloud.
“Our TMT track record is by no means unusual. Investments by PE houses are also being supported by highly-experienced sector experts introduced to portfolio companies, often as chairman, at the point of investment.”
Manchester-headquartered NorthEdge also has offices in Leeds and Birmingham and is responsible for £109 million of investment into 14 tech businesses to date, generating returns in excess of £300m.
This includes the sale of SaaS business Utiligroup, based in Chorley, to Energy Services Group for £100m. Under NorthEdge’s stewardship, Utiligroup quadrupled headcount from 60 to 229, increased turnover by over 200 per cent and invested an additional £3.5m into the development of a new software solution to enable the rollout of smart meters across the UK.
Potts says private equity partners can help build tech companies over a period of years and have the resources, expertise and networks to help them achieve ambitious objectives.
“Real-world examples of success are enticing entrepreneurs to ask themselves how they can accelerate growth, and in turn, make a decision to seek out an investment partner,” said Potts.
“Private equity is increasingly providing the answer with confidence, supportive partnership and funding key to their attractiveness.”
Recent data compiled by Tech Nation demonstrated that 2017 was the strongest ever year for Northern tech investment, with a total of £432m raised across 113 individual deals.
“The emergence of new incubators and accelerators are also giving high growth businesses the framework, network and confidence to succeed: Rise Manchester, Ignite in Newcastle and the Platform Building in Leeds enable entrepreneurs, tech start-ups and Series B-stage businesses to thrive in like-minded communities, where businesses can flourish through collaboration and knowledge-transfer,” added Potts.
Talent development and retention is also key. “The ‘brain drain’ that has historically seen young graduates move away from the North in favour of the South is slowing as expansive career opportunities, improved quality of life and an ever expanding Northern technology ecosystem begin to rival that of London,” Potts concluded.