Backing scale-up companies across the UK
04min read
We recently sat down with Investment Directors, Mark Lyons and Ben Leslie who are heading up our presence in the North of England and Scotland. Given the continued growth of scale-up businesses being developed outside of London, we discussed our rationale for setting up dedicated teams in these regions and the key trends dominating the scale-up ecosystem.
Ben Leslie, Investment Director
Mark Lyons, Investment Director
- What was the rationale behind setting up dedicated investment teams in Manchester and Scotland?
Mark: Previously, while Puma had invested across the UK, as a firm we were lacking in brand recognition in the Northern cities. In my view, to access the primary deal flow within a particular region you need to have brand awareness and to drive that you need to have people on the ground attending relevant events and building relationships.
Ben: Focusing on the Scottish market, there is a well-developed ecosystem of early-stage investors across Glasgow and Edinburgh. With strong access to talent, and Edinburgh alone attracting more than $1bn of investment last year(1), it was a natural progression for us to set up a dedicated presence in Edinburgh, focusing on investing across the Central Belt.
- What trends are you seeing from scale-up companies in your respective regions?
Ben: There are particular sectors within Scotland that we are focusing on as a business. Firstly fintech, leaning into Edinburgh’s heritage as a financial services hub. Within the financial services sector, firms such as Barclays and JP Morgan have heavily invested into bases in Glasgow. With Scotland’s universities, particularly University of Edinburgh, leading on AI development we are now seeing the blend of commercial and technical skill becoming a key strength for a number of companies scaling up in the market. On a broader level Scotland has real competitive advantage within life sciences, energy transition and areas such as aquaculture. While these sectors are not focus areas for us, we’ve seen innovation thriving within the broader ecosystem as a result which creates opportunities for us to get involved.
Mark: There are definite parallels in the Northern markets to Scotland with a strong focus on digital and technology, specifically fintech and AI. Creative and media are also areas where we come across a number of opportunities and in Manchester we are seeing the increasing emergence of beauty and apparel brands dating back to the city’s strong heritage in these sectors. In Manchester, the new £1.7bn science and technology innovation district has recently launched, predicted to generate over 10,000 jobs and contribute £1.5 billion to the economy every year in Manchester(2).
- What challenges and opportunities are scale-up companies facing in the current environment?
Ben: Scale-up businesses are facing similar challenges across the UK, with transactions taking longer and companies struggling to reach that next stage of growth. However, we have links into the early-stage VC funders so we can help to build a strong pipeline to support companies as they reach their next stage of growth. Within Scotland, historically scale-up companies have found it harder to access funding at a local level and have had to go further afield. Once they get funding it’s easier to source follow-on rounds but getting over that first hurdle is a challenge.
Mark: Focusing on positive initiatives, the British Business Bank’s Northern Powerhouse funds have to date facilitated over £1 billion of direct and private sector co-investment to new and growing businesses across the North of England(3). This is a huge benefit for early-stage businesses to access this source of funding, to get them to the point where a Series A investor such as ourselves would be interested in investing. In addition, we are seeing the emergence of hubs and programmes that are providing invaluable support to early-stage companies such as Liverpool’s tech accelerator run by Baltic Ventures, funded in Lancashire and Ampere Ventures in Sheffield.
- How are you approaching finding great potential deals to invest in?
Mark: What I believe really differentiates Puma is our focus on building long-term relationships with management teams who may not necessarily be ready for us to invest today (because they may not have reached that point of maturity) but when they are ready we’ll be on their radar. Building our brand presence in our local regions with the companies themselves, their advisors, their early-stage funders, or their non-executives means we’re more likely to be front of mind when they’re seeking investment.
Ben: Similarly, in Scotland, we’ve spent a significant amount of time building relationships with the broader ecosystem. We have made a concerted effort to raise our profile with scale-up companies, plus the broader network of introducers and investors. We know it will take time to build strong brand presence which is why we’re taking a long-term approach through recruiting and opening a dedicated office.
- Can you give us some examples of companies you’ve backed?
Mark: Last year, we led the £3.4 million Series A extension round into Chester based specialist cycle and e-mobility insurer, Bikmo to accelerate their European expansion and drive product innovation. The B Corp certified insurer protects over 75,000 riders in the UK, Ireland, Germany, Austria and Belgium and we were really excited to back this growing business. Since our initial investment they have hit some significant milestones including a new partnership with Trek across their retail stores.
Ben: This summer we led the £11m Series A round into Aveni to deliver market-leading generative AI solutions for the UK financial services industry. One of the largest Series A investments into a Scottish business this year, we invested alongside Par Equity, Lloyds Banking Group and Nationwide. The impact that Aveni has made in delivering AI solutions to the financial services sector is already significant and there is huge opportunity for growth going forwards.