Northern Irish start-ups continue to scale amid ‘slowdown’ in other regions

7 Jul 2022

Stuart Gaffikin. Image: Clarendon Fund Managers

Co-Fund NI, a £47.3 million equity fund, reported a strong second quarter for investments with many new faces in the start-up scene.

More than 20 co-investment deals were closed in Northern Ireland in the second quarter of this year, according to managers of the Co-Fund NI investment fund.

This indicates that there continues to be strong demand for investment from start-ups and early-stage businesses in Northern Ireland despite an economic downturn impacting companies.

Co-Fund NI is a £47.3m equity fund managed by Clarendon Fund Managers, which provides capital to high-growth potential SMEs alongside lead private investors.

Backed by government agency Invest NI and British Business Investments, the commercial arm of the British Business Bank, Co-Fund NI provides co-investment in deals typically valued between £150,000 and £2m. It also invests up to £1.75m over a series of investment rounds.

Of the 20 investments that closed before the end of June, many are follow-on investments and nine are transactions with companies that are securing backing from Co-Fund NI for the first time.

The total value of the deals closed in the second quarter of the year was £15m. Co-Fund NI invested a total of £4.8m in the deals, matching £7.9m of investment by private investors.

“Even as we are seeing a number of reports suggesting there has been a slowdown in investment across the UK and Ireland, Co-Fund NI has seen very strong demand from high-quality, fast-growing companies,” said Clarendon investment manager Stuart Gaffikin.

“Co-Fund NI continues to play a vital role in funding Northern Ireland’s high-potential businesses through co-investment alongside business angels and other private investors, which is essential to helping them to scale and accelerate growth outside of NI.”

Companies that have secured investments include insurtech firm Broker IQ, life sciences spin-out VascVersa, e-commerce retail business Haru, bioinformatics business Sonrai Analytics, medtech firm Sapien and The Boatyard Distillery.

Clarendon Fund Managers said the demand for investment from local businesses demonstrates the importance of continuing to have an available supply of equity finance.

“It’s been apparent to us over the past couple of years that an increasing number of large equity funds and private investors have recognised the calibre of companies emerging from the region and they are starting to make significant investments here,” Gaffikin added.

He thinks that Series A investors will not be attracted to invest in companies unless local funds like Co-Fund NI and private investors put their money in first, as it “helps prepare the companies and de-risk them for the bigger investors”.

“Sustaining the provision of local equity funding is therefore essential for our economy,” he said.

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Vish Gain is a journalist with Silicon Republic