NPIF & and public investment driving SME innovation
A new joint research report titled ‘Backing Innovation-led Businesses: the role of public investment’ reveals how the programmes delivered by the British Business Bank, UK Research & Innovation and Innovate UK play a fundamental role in supporting the success of innovation-led businesses.
The report acts as a timely reminder of the importance of securing appropriate funding to help launch companies and initiatives that have the potential to drive the UK forward, whether they emerge from SMEs, universities, or other institutes.
Evidence shows that a high proportion of businesses receiving either debt and equity finance from the Northern Powerhouse Investment Fund (NPIF) and Midlands Engine Investment Fund (MEIF) are using it for innovation purposes. 36% and 31% of businesses in the NPIF and MEIF equity portfolios respectively were ‘research council spinouts’ and/or had received funding for R&D projects from Innovate UK.
The report also references a recent independent evaluation of the Northern Powerhouse Investment Fund which showed that as a result of NPIF funding, 68% of debt recipient respondents reported introduction of more efficient processes and 65% introduced new products or services to market. Meanwhile, as many as 93% of surveyed equity recipients and 53% of debt recipients reporting increased investment in R&D thanks to NPIF finance.
Relative Insight, Slingshot Simulations and Materials Processing Institute (MPI) are three examples of Northern businesses that have been supported through R&D project funding and that have secured investment from the NPIF.
Lancaster-based Relative Insight was born out of a 10-year research project with Lancaster University’s linguistic and cyber security departments. In the beginning the company used its language analysis technology to help law enforcement agencies identify criminals masquerading as children in chat rooms. It secured a £1m investment from NPIF – Maven Equity Finance, as part of a £4m investment round in 2019.
Slingshot Simulations is a University of Leeds spin-out which allows businesses to use advanced computer simulations to test news ideas and make better decisions. It secured a £500,000 investment from NPIF – Mercia Equity Finance, to further develop its technology and break into new markets.
In Tees Valley, not-for-profit research and innovation centre, Materials Processing Institute (MPI), secured funding worth £750,000 from NPIF – FW Capital Debt Finance. The research centre, which focuses on advanced materials, industrial decarbonisation, and waste reduction in the circular economy, used the funding to invest further in its asset base and technologies.
Ken Cooper, managing director – Venture Solutions at the British Business Bank said: “The BBB’s regional initiatives are focused on unlocking potential and enabling growth across the UK. The findings from this latest report show that innovation and funding go hand in hand, that our funds are finding innovative companies to support from across the UK and, as a result, are having a measurable impact at a regional level.”
Neil MacDonald OBE, vice chair at South Yorkshire Mayoral Combined Authority LEP and NPIF strategic oversight interim chair, said: “The Northern Powerhouse Investment Fund has made a considerable impact on the region since its 2017 launch, supporting businesses in traditional and innovative sectors to develop their services and products. The North has always had a pioneering spirit and as demonstrated by the findings in this report, NPIF has been an important tool to the success of innovation-led businesses.”
The Northern Powerhouse Investment Fund project is supported financially by the European Union using funding from the European Regional Development Fund (ERDF) as part of the European Structural and Investment Funds Growth Programme 2014-2020 and the European Investment Bank.