Start-up and growth funding across the UK has changed dramatically in recent years. Northern Ireland is no different, particularly with a growing ecosystem around the start-up community.
Following our Start-up Series we look at the funding and support available to help grow and scale your venture here in Northern Ireland.
Alongside increasing access to funding, which we will discuss in more detail, there is now an emerging "hotbed" of services supporting the entrepreneurial community. We have seen increased education and collaboration, including a number of local accelerators and co-working spaces being established such as Barclays Eagle Labs, IGNITE Propel at Ormeau Baths, the Ulster Bank Entrepreneur Accelerator, the Catalyst Belfast Fintech Hub and relatively new entrant, Raise Ventures. We've also seen an increase in private sector co-working and flexible office space options, ideally suited to start-ups, emerge across the province.
We're excited to be part of the entrepreneurial community here in Northern Ireland and partner with regional and national players to grow local business.
An increasing young population and high quality education system in Northern Ireland result in a workforce of highly skilled employees and entrepreneurs. Research institutes at local universities are globally recognised in technology fields and Northern Irish expertise leads the way in areas such as fintech, cyber security, software development, life sciences and med-tech.
Northern Ireland offers an attractive cost base for start-ups with lower prime office rental costs for those moving on from collaborative working spaces and typically lower salaries and operating costs than the rest of the UK and Europe. That said, competition for talent in some specialist fields is causing salaries to rise to match elsewhere.
From an investor perspective, valuations can typically be more realistic than those seen in other regions which command a location premium, such as London.
Whatever the stage of your start-up journey there is likely to be some government-backed support available to help you grow.
Organisations such as Invest Northern Ireland, InterTradeIreland and UK Research and Innovation can offer a wide range of advice, practical support and access to grant funding. This can range from financial support for innovation and R&D, establishing Proof of Concept for innovative technology or funding for a graduate to work on a project for your company.
If your venture has international or export potential Invest Northern Ireland offer a range of support and funding opportunities. InterTradeIreland can also help source the expertise you need to target cross-border markets and offers funding for employing cross-border salespeople, for example.
Invest Northern Ireland provides a range of debt and equity funding options under the banner of "Access to Finance" with seven funds supporting deal sizes from £10,000 to £3 million.
These include debt funding from the Northern Ireland Small Business Loan Fund, Growth Loan Fund II and the Growth Finance Fund (which is also backed by the British Business Bank and NILGOSC, and managed by Whiterock Capital Partners).
Co-Fund NI II (managed by Clarendon Fund Managers) offers equity funding by co-investing alongside business angels and other private investors in deals typically around £150,000 and TechStart NI manages a collection of funds supporting NI entrepreneurs, seed or early stage SMEs and university spin-outs with a technology focus.
Catalyst, a not-for-profit organisation helping grow the entrepreneurial ecosystem, has produced an NI Deal Tracker report which found that the majority of capital invested into companies in Northern Ireland in 2018 continued to come mainly from Northern Irish sources.
Regional VC investors include Belfast-based Crescent Capital which has a generalist mandate to invest in manufacturing, tradable services and technology companies in Northern Ireland. The Bank of Ireland Kernel Capital Venture Funds invest across Northern Ireland and the Republic of Ireland with a focus on technology. They primarily focus on leading Series A investments alongside their network of institutional investors and portfolio co-investors. Cordovan Capital manages a syndicate of investors and is typically involved in deals with a transaction value between £500k and £5m.
The Catalyst report highlighted that 39% of deals in 2018 had at least one investor from outside Northern Ireland and a small uplift was seen in venture capital being attracted from outside Northern Ireland.
We've been encouraged to see venture capital and private equity players such as Par Equity, BGF, YFM Equity Partners and ADV (Accelerated Digital Ventures) investing, and in some cases establishing offices, in Northern Ireland.
Although not specifically a Northern Irish source of funding, crowdfunding platforms also offer a route to raising finance for your growing business and we have seen local businesses raise funds through platforms such as Kickstarter, Indiegogo, Crowdcube and SyndicateRooms for example.
In addition, Ulster Bank and Crowdfunder have partnered to launch Northern Ireland's first crowdfunding platform for female entrepreneurs, Back Her Business.
Brexit uncertainty aside (particularly as a number of funding opportunities are supported by EU programs), we see a positive outlook for the funding landscape, particularly in a market which is focused on continuing to attract investment from outside Northern Ireland and growing the local start-up ecosystem. Increased deal activity may lead to more competition among investors but with this comes the potential for growing valuations and increased appetite for investment.
Our Corporate team is firmly embedded in the UK's start-up ecosystem and heavily involved in the entrepreneurial scene. Fast Growth companies are a key focus for us and our capabilities and contacts in that area allow us to really add value to our clients.
We have extensive expertise in acting for both investors and investee companies in venture capital and private equity transactions and have been active in utilising our extensive network to introduce entrepreneurs and investors (both inside and outside Northern Ireland) with a view to further stimulating deal activity and the wider the Northern Irish economy.
This publication is intended for general guidance and represents our understanding of the relevant law and practice as at November 2019. Specific advice should be sought for specific cases. For more information see our terms and conditions.