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Launch of the Northern Powerhouse Investment Fund II provides £660m boost for small businesses

Press release 21 March 2024

The British Business Bank has launched its new Northern Powerhouse Investment Fund II, a £660m fund set to cover the entire North of England.

The Northern Powerhouse Investment Fund II (NPIF II), aims to build on the success of the initial fund, with the purpose of driving sustainable economic growth by supporting innovation and creating local opportunity for new and growing businesses across the North.

The Northern Powerhouse Investment Fund II will increase the supply and diversity of early-stage finance for Northern smaller businesses, providing funds to firms that might otherwise not receive investment and help to break down barriers in access to finance.

Providing loans from £25k to £2m and equity investment up to £5m, the Fund will continue investing into companies operating within the North West, Yorkshire and the Humber and Tees Valley. It is now expanded to include the whole of the North East enabling businesses across the whole of the North to access the Fund to start up, scale up or continue on their growth journey.

Since the launch of the first Northern Powerhouse Investment Fund in 2017, over £1bn of direct and private sector co-investment has been facilitated to businesses.

One of these is Nova Pangaea Technologies (NPT), a Teesside-based cleantech company that has created a revolutionary process, converting wood residues and agricultural waste into advanced biofuels which are then used to produce Sustainable Aviation Fuel (SAF), a crucial tool in the effort to decarbonise flight.

Securing £2.3m in 2019 and £900,000 the following year from the first Northern Powerhouse Investment Fund, NPT used the funding to help launch the operation of its demonstration facility and expand its senior leadership team. The funding has also provided the pathway to delivering its first first-of-a-kind commercial plant which will create a significant number of highly-skilled local jobs.

Louis Taylor, Chief Executive of the British Business Bank, said:

The success of the first Northern Powerhouse Investment Fund has proven the instrumental change that access to finance can have for small businesses. From creating hundreds of jobs to developing ground-breaking products, we have seen companies that previously lacked funding options accelerate forward in their growth journeys, which has ultimately benefitted the whole of the Northern economy.

This is why it was important to continue the Northern Powerhouse Investment Fund into into its next phase. With further funding available, and a greater geographical reach in the North East, the Northern Powerhouse Investment Fund II will engage more stakeholders across the regions, bringing the business community closer together to create more opportunities for entrepreneurs everywhere.

Kevin Hollinrake MP, Minister of State for Enterprise, Markets, and Small Business, said:

This new fund will unlock millions in equity and loans for SMEs across the North to realise their full potential and builds upon British Business Bank’s vital work ensuring that any small business owner in the UK can scale up and grow.

SMEs are the engines of growth for our economy and across government we are improving access to finance, cutting red tape and removing barriers to ensure that they can go further and faster than ever before.

Sarah Ellerby, CEO at Nova Pangaea Technologies, said:

The Northern Powerhouse Investment Fund’s involvement is one of the key reasons as to why we are in the strong position we are in today. Our NPIF fund manager was willing and able to look deeper into our business and it was clear that the Fund was commited to empowering a Northern business dedicated to offering climate solutions. Since the Fund’s involvement, we’re now partnering with our country’s leading commercial airline, and have established ourselves as a leader in the production of sustainable aviation fuel.

Nine fund managers have been appointed to manage the Northern Powerhouse Investment Fund II. In the North West, GC Business Finance & River Capital will manage the smaller loans part of the fund (£25,000 to £100,000), FW Capital will be responsible for larger loans (£100,000 to £2 million) and Praetura Ventures will manage equity deals (up to £5 million).

In Yorkshire and the Humber, Mercia will deliver debt finance (£100,000 to £2 million), as well as equity finance (up to £5 million) to smaller businesses with Business Enterprise Fund (BEF) delivering smaller loans between £25,000 and £100,000.

With NPIF II now set to cover the entire North East, NEL Fund Managers (NEL) will provide both smaller loans (£25,000 to £100,000) and debt finance (£100,000 to £2 million) to North East businesses with Maven Capital Partners managing equity deals up to £5 million.

Following today’s official launch in Leeds, the British Business Bank will be holding a roadshow of events for small business finance intermediaries across the region to provide more information about the Fund. Destinations include Newcastle (18th April); Manchester (24th April), Sheffield (30th April).

Further dates for roadshow events in Liverpool, Hull, Lancashire, Tees Valley, York, Cheshire, Durham, Cumbria and Northumberland will be announced shortly.

Further Information

If you are a journalist and have a media enquiry, please contact [email protected].

Notes to editors

About Nova Pangaea

Nova Pangaea is a Redcar-based business cleantech company that converts biomass, such as agricultural residue, into sustainable sugars and biocarbons. Specifically it Nova Pangaea’s patented process converts woody and agricultural residues into high-value sustainable products that are used to manufacture sustainable aviation fuel and a range of biochemicals. The process also produces Biochar which is crucial for carbon dioxide removal and soil enhancement.

Since NPIF investment, it has entered a partnership with British Airways and LanzaJet to launch Project Speedbird, a ground-breaking initiative to develop sustainable aviation fuel for commercial use in the UK. It also opened its first comercial plant, creating a large number of jobs in the low-carbon sector.

About the Northern Powerhouse Investment Fund II

  • Operated by the British Business Bank, the Northern Powerhouse Investment Fund II (NPIF II) provides a mix of debt and equity funding. NPIF II will offer a range of commercial finance options with smaller loans from £25k to £100k, debt finance from £100k to £2m and equity investment up to £5 million. It works alongside the Combined Authorities, Local Enterprise Partnerships (LEPs), and Growth Hubs, as well as local intermediaries such as accountants, fund managers and banks, to support the North’s smaller businesses at all stages of their development.
  • The funds in which the NPIF II invests are open to businesses with material operations, or planning to open material operations, in: Cheshire, Cumbria, Greater Manchester, Lancashire, Merseyside, City of Kingston upon Hull, East Riding of Yorkshire, North Yorkshire, South Yorkshire, West Yorkshire, Hartlepool and Stockton-on-Tees, South Teesside, Darlington, Durham, Northumberland, Tyneside, Sunderland.
  • Supported by Nations and Regions Investments Limited, a subsidiary of British Business Bank plc, the Bank is a development bank wholly owned by HM Government. Neither Nations and Regions Investments Limited nor British Business Bank plc are authorised or regulated by the Prudential Regulation Authority (PRA) or the Financial Conduct Authority (FCA).

For investment by NRIL at the sub-fund level

  • The investment from the Nations and Regions Investments Limited into [.] does not amount to any endorsement or warranty from Nations and Regions Investments Limited, the British Business Bank plc or the government of the United Kingdom.

For investment by NPIF II sub-fund at the investee company level

  • The investment from the Northern Powerhouse Investment Fund II into [.] does not amount to any endorsement or warranty from Nations and Regions Investments Limited, the British Business Bank plc or the government of the United Kingdom.

Smaller Loans from £25,000 to £100,000 – GC Business Finance & River Capital (North West), Business Enterprise Fund (BEF) (Yorkshire and Humber) and NEL Fund Managers (North East).

Business Loans from £100,000 to £2m – FW Capital (North West), Mercia (Yorkshire and Humber) and NEL Fund Managers (North East).

Equity Finance up to £5m – Prateura Ventures (North West), Mercia (Yorkshire and Humber), and Maven Capital Partners (North East).

Applications for funding are made directly to the relevant fund managers who can be contacted via the NPIF II webpages northernpowerhouseinvestmentfund.co.uk.

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