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Any conversation centered on the U.K. tech scene often has a strong center of gravity around the south of the country \u2014 to many, \u201cthe U.K.<\/a>\u201d and \u201cLondon<\/a>\u201d may as well be the same thing.<\/p>\n A recent House of Commons Committee report on venture capital allocation<\/a> pointed to \u201cuneven levels of VC investment\u201d across the U.K., with the so-called \u201cgolden triangle\u201d of London, Oxford and Cambridge attracting some 80 percent of the country\u2019s total investment. The lion\u2019s share \u2014 around 70 percent of the total \u2014 is poured into the Greater London region, as per Dealroom data<\/a>.<\/p>\n And this is something Edinburgh-based VC firm Par Equity<\/a> is seeking to address, with a new \u00a3100 million fund targeting early-stage startups in the north.<\/span><\/p>\n While the fabled histories of Cambridge and Oxford attract some of the world\u2019s greatest minds, and the nearby capital London serving as a perennial draw for top talent via the likes of UCL and Imperial College, the rest of the U.K. isn\u2019t exactly lacking when it comes to academic credentials either \u2014 whether it\u2019s through the so-called \u201cred brick\u201d universities of Manchester, Sheffield, Liverpool, and Leeds, or further north in places such as Edinburgh where greats such as Charles Darwin<\/a> and Alexander Graham Bell<\/a> studied.<\/p>\n Throw into the mix the ability to garner more favorable terms away from the buzzy south, and it\u2019s easy to see why an investor might be tempted to lay their focus on locales further afield.<\/p>\n \u201cIn the north of the U.K. we have a combination of a rich manufacturing and engineering heritage coupled with academic institutions with world class R&D departments which are producing talent and innovation, accessible at sensible valuations,\u201d Paul Munn, Par Equity managing partner told TechCrunch. \u201cIn 2022, we backed an advanced materials business at one sixth of the valuation of its high-profile competitor based in the \u2018golden triangle,\u2019 which raised \u00a360 million with an inferior product. Fast-forward 18 months, and key members of staff are leaving this competitor and seeking to join our portfolio company.\u201d<\/p>\n Par Equity team in Edinburgh Image Credits<\/strong>: Par Equity<\/p>\n<\/div>\n Par Equity\u2019s roots can be traced back to 2008, starting with an inaugural \u201cinnovation fund\u201d constituting \u00a34.8 million in angel capital. It followed this up in 2012 with a \u00a340 million EIS<\/a> (enterprise investment scheme) fund, which is basically a tax-efficient investment initiative aimed at high-net-worth individuals.<\/p>\n In addition to this, Par Equity has also been deploying capital raised via its Par Investor Network angel community, British Business Investment\u2019s (BBI) Regional Angel Program<\/a>, and the Scottish Government\u2019s innovation-focused investment body Scottish Enterprise<\/a>. In total, Par Equity has deployed some \u00a3167 million in capital to date, incorporating 78 startups and 423 individual transactions including follow-on investments.<\/p>\n Today\u2019s announcement is all about Par Equity\u2019s first ever institutional VC fund, dubbed\u00a0Par Equity Ventures I LP, with Scottish National Investment Bank and BBI spearheading the bulk of the fund\u2019s capital, with additional input from the Strathclyde Pension Fund.<\/p>\n While Par Equity is targeting \u00a3100 million in total, its first close sits at \u00a367 million, and will be aimed at tech companies with \u201chigh-growth potential\u201d across the north of the U.K., particularly businesses with strong IP.\u00a0 Specifically, Par Equity will be looking at climate tech, industrial tech, and health tech, with the latter category serving up a lucrative exit for Par Equity when Best Buy acquired its Edinburgh-based portfolio company Current Health for $400 million in 2021<\/a>.<\/p>\n Now, the investment boundaries may blur somewhat as there isn\u2019t a straight line that divides the north and south. But for the purposes of its investments, Par Equity will focus on the Midlands up, which obviously includes Scotland and Northern Ireland across the water. And while the fund will be managed from Par Equity\u2019s central Edinburgh office, it also recently opened hubs in Leeds and Sheffield<\/a> which will act in a support capacity.<\/p>\n Historically, the South \u2014 and London in particular \u2014 have always been huge draws for budding startup founders, due for the most part to the availability of capital and talent. However, the remote-work revolution spurred by the global pandemic, coupled with the macro economic environment<\/a>, could be encouraging founders to rethink where they call home. And this is why now could be a good time to double-down on investments across the whole of the U.K.<\/p>\n \u201cWe have half of the U.K.\u2019s best universities in the north, many of which are ranked world class in within their science, technology and engineering departments,\u201d Munn said. \u201cSadly, over the last 15 years, we\u2019ve seen a constant drain of companies and talent leaving the north of the U.K. for London. There\u2019s no denying the capital\u2019s magnetic draw, however since Covid, and with the increase in the cost-of-living, we\u2019re seeing more graduates stay in the regions than ever before.\u201d<\/p>\n<\/p><\/div>\n\u2018Sensible valuations\u2019<\/h2>\n
The story so far<\/h2>\n