The British Business Bank has allocated more than £57m to five innovation clusters across northern England, directing over half of a £100m national programme towards companies operating in regional growth sectors. The money will be delivered through the Northern Powerhouse Investment Fund II as additional equity capital for high-growth businesses aligned with the government’s Modern Industrial Strategy.
Greater Manchester receives the largest allocation at £17.5m, followed by £13.5m for West Yorkshire, £12m for the North East, £9m for Liverpool City Region and £5.5m for South Yorkshire. PXN Ventures, Mercia Ventures and Maven Capital Partners will deploy the capital through their existing regional investment activities rather than distributing it as grants.
That delivery model means individual companies must still meet commercial investment criteria, while the public allocation can sit alongside additional private capital in funding rounds. The programme is therefore intended to increase the supply of growth equity rather than provide direct subsidies to businesses selected solely by geography.
The clusters cover companies operating across the eight priority sectors identified in the Industrial Strategy and adjacent areas, including clean energy, advanced manufacturing, digital and technologies, life sciences, and professional and business services. By concentrating finance around regional ecosystems, the Bank is attempting to connect capital with places where universities, specialist workers, established industries and growing companies already provide a base for expansion.
The new allocation builds on an existing regional finance platform rather than creating another fund from scratch. NPIF II is a £660m programme offering loans and equity to smaller companies across the North, with loans ranging from £25,000 to £2m and equity investments of up to £5m. Two years into the programme, the Bank says it has already facilitated almost £275m into more than 400 businesses.
Recent investments illustrate how that capital is being used. Newcastle technology company MySalesCoach secured £1m from Maven-managed NPIF II equity alongside £500,000 from existing investors, while Sheffield legal technology business FinLegal received £2m to support international expansion and create 26 jobs. Liverpool City Region ecommerce business Made With Intent has also raised £2.4m in a round led by PXN-managed NPIF II equity.
Those transactions demonstrate the cluster model more clearly than the headline allocations alone. Capital is directed towards regional companies with expansion plans, but the investment case remains company-specific and linked to commercial growth rather than automatic entitlement based on sector or location.
Equity finance can be particularly important for innovation-led businesses because product development, specialist recruitment, manufacturing capacity or international commercialisation often require capital before predictable cash generation makes conventional debt appropriate. Founders give up part of their ownership in return for that funding, making the availability of suitable investors as important as the absolute amount of finance in the market.
The British Business Bank has increasingly used regional investment funds to address the concentration of growth capital in London and the South East. NPIF II is intended to increase both the supply and diversity of early-stage finance available to northern smaller businesses, with local fund managers acting as the link between national capital and regional companies.
By allocating more than half of the £100m national pot to the five northern clusters, the programme places a measurable amount of capital behind that regional approach. Its effectiveness will ultimately depend on deployment, because fund managers still need a sufficient pipeline of investable companies and those businesses must then convert new capital into products, jobs, exports and sustainable growth.
The cluster allocations therefore add a more concentrated sector and geographic focus to an infrastructure that is already operating across the North. Greater Manchester, West Yorkshire, the North East, Liverpool City Region and South Yorkshire now have dedicated equity capacity intended to reinforce places where research, specialist suppliers and growing companies already overlap.
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