British Business Bank plans £150m Northern scale-up fund

British Business Bank plans to commit up to £150m to a new investment fund for high-growth companies across northern England, creating a larger-ticket source of capital for businesses that have moved beyond smaller regional finance programmes.

The proposed Northern scale-up fund is expected to make individual investments of between £5m and £15m in innovative businesses, including university spinouts, from Liverpool and Manchester through to Yorkshire and the North East.

Its intended investment range separates it from the Northern Powerhouse Investment Fund II, which provides smaller amounts of finance and supports companies at earlier stages of development.

The Bank said the new vehicle will reflect sector strengths across northern England, including creative industries, clean energy, space, and technology. It is also intended to attract additional private investment alongside the public commitment.

Leandros Kalisperas, chief investment officer at the British Business Bank, said the fund was designed to give northern businesses “the same opportunity to access the capital they need to grow and thrive” as companies elsewhere.

The proposal follows a sustained policy focus on regional equity disparities. The UK has one of Europe’s largest venture-capital markets, but investment remains heavily concentrated in London and the South East, particularly as funding rounds become larger.

A company may be able to develop its first product using angel investment, university funding, regional finance, and relatively small venture rounds. The capital requirement can rise sharply when it begins hiring at scale, entering international markets, investing in manufacturing, or funding extended research and development.

The £5m-to-£15m range is aimed at that point in the company lifecycle. Businesses receiving capital are likely to have established operations and a clearer route towards substantial commercial expansion than companies relying on start-up finance.

The geographic remit is broad. The Bank expects the fund to consider opportunities from Liverpool and Manchester through Bradford, Leeds, Sheffield, York, Hull, Newcastle, and other parts of northern England.

University spinouts are explicitly included, creating a potential route for research-intensive businesses emerging from northern institutions to secure larger amounts of follow-on capital.

Commercialising advanced technologies can require long development periods and substantial investment before revenue reaches a level capable of financing expansion internally.

Space and clean technology are particularly capital-intensive because companies may need physical infrastructure, specialist personnel, regulatory approvals, and long product-development cycles in addition to intellectual property.

The proposed fund sits within a broader expansion of British Business Bank activity. The Bank says it is the UK’s economic development bank and operates through financing programmes, guarantees, investment funds, and private-sector partners.

Its regional strategy increasingly combines different forms of capital rather than relying on one national programme. The Northern Powerhouse Investment Fund II, Regional Angels Programme, and proposed scale-up fund would cover different stages and investor types.

National funds and private-market commitments can then provide additional routes once companies have grown beyond regional mandates.

The Bank also announced a £75m cornerstone investment in Molten Ventures Growth Fund I on Monday, supporting a £175m first close for a later-stage technology vehicle targeting £350m.

Those programmes illustrate the attempt to create a more continuous financing pathway. Regional funds can address smaller rounds, dedicated scale-up vehicles can provide larger tickets, and national growth funds can support mature private technology companies.

The structure is intended to reduce the point at which businesses have to seek most of their capital outside their home region or overseas because domestic investors cannot support the size of the next round.

Regional investment programmes still depend on a sufficient pipeline of commercially viable companies. Allocating public capital does not by itself produce investable businesses, while fund managers remain responsible for selecting companies capable of delivering acceptable returns.

The Bank’s ability to attract private investors alongside public money will also influence the programme’s eventual scale. Successful crowding-in can make the available capital materially larger than the initial government commitment.

The proposed fund has not yet reached full launch. Its manager, detailed investment criteria, final structure, and deployment timetable will shape how quickly money begins reaching businesses.

If established as planned, it will add a dedicated £5m-to-£15m funding option for a section of the northern company base that has often sat between local early-stage capital and considerably larger national or international funds.